Who wouldn’t love to know exactly what to invest in now?  The fact is it’s still a very strange market, and it’s impossible to determine what to invest in based on recent past history.  One thing for sure is you don’t want to think only like a long term investor at this point.  The returns may or may not be there.  And, the volatility still could come back. 

Depending on who you talk to, this market could either continue to go up the way it has since early 2009, or it could take another nose dive, as it did after the great depression in 1937.  How is the average investor supposed to know where to invest their money in 2010?

The most important thing to remember is that you must now be an educated investor if you expect to make money.  The days of parking your money in a buy and hold strategy, and watching everything go up over the years, is long gone.  If you aren’t willing to do the work and learn to invest money, you’re just going to lose your shirt.  Bottom line, there are people making money in the market every day, but they know what they’re doing and they have the time to watch their investments and pay attention to where the smart money is right now.

Even so, there are some simple rules of thumb to decide where to put your money.  First, you want to avoid handing your money to a broker and telling them to take care of you.  The reasons for this are easy.  First of all, the returns you will make on any investment today may not be enough to cover your brokerage fees.  When you calculate broker fees and also the fees to trade, you could wind up in the hole even if your investments make some money.  If you must use a broker, make sure you force them to outline all of the fees and charges involved in using their services. 

Remember too that the broker does not have to have your fiduciary interest at heart.  One of the pieces of legislation before Congress right now would include language to force a broker to have the same interests as a lawyer does that represents you.  Right now, a broker has no obligation to do the right thing by his or her clients.  The fact that so many investors thought otherwise is a direct cause of how so many people lost money. 

You must use a self directed account.  You can set up a self directed brokerage account, a self directed IRA account, and other accounts where you decide to best invest your money. This is important since there are many opportunities now to invest that cost very little in the way of fees.  If you have the education and know where to put your money, you can really save a lot by making your own decisions.  Since the truth is that even if you use a broker you should know how to invest, why give away your fees to a broker when you can save that money by placing the orders yourself using a self directed account. 

You also should select among the different discount brokers that are available.  There are many discount brokers who would love your business, but the fees are still all over the place.  A discount broker could charging $15 per trade at one firm while another broker like TradeKing which charges just $4.95 per trade.  So what else do you want to look for when you’re looking for brokerage accounts?

Clearly if you’re learning to invest money, you want to look for educational resources provided by the broker.  Most brokers offer plenty of charts and other real time data to their customers.    But not all brokers offer things like discussion groups, options trading lessons, and other information that will help you learn all the many ways to make money in this difficult environment.  Make sure you can get a tour of the broker interface and the resources available so that you can find out whether you’re going to have many more opportunities to learn about making money in the markets.  Consider also using a broker that doesn’t spend a fortune advertising their company on television.  You know the companies; these are the ones that run non-stop advertising on stations like CNBC.  The reason they’re going to charge you more money per trade is because they’re financing their advertising.  How does that benefit you?  The fact is it doesn’t.  There are plenty of companies that don’t advertise and pass the savings on to you in the form of lower per trade fees.

If you’re going to figure out how to make money in today’s market, you will have to learn how to invest in different types of vehicles besides mutual funds.  Today you have many options like ETFs, options, bonds, Treasuries, and so on.  Mutual funds are not the best investment vehicle, especially in this type of market.  The reason is that mutual funds come with fees of their own, as well as investment minimums.  Even where a broker says you can invest in mutual funds without a fee, they are not referring to the fees the mutual fund itself charges, but rather only their fee for you to purchase the fund.  Be sure you understand the difference between all of these types of fees and factor in all of the costs before you invest in any particular vehicle. 

This is why if you are looking for where to invest your money now, you need to do some leg work and education effort before investing your money in something that may be new to you, but which does offer returns in a market such as this.  Arm yourself with education, and a good low fee discount brokerage account at a company like TradeKing, and you will be ready to invest your money today in vehicles that will make you money for decades to come.   

A big question in this crazy market it, “What should I invest in right now?” – especially if you are looking for investments that will protect your principal and also possibly make money.

The days of just parking your cash in an index mutual fund and waiting for 20 years are long gone.  It might be helpful to talk a little bit about setting up some self directed accounts, including a self directed IRA, what that means and why you shouldn’t be afraid to buy individual stocks, as well as options and other types of investments.

When you invest in a mutual fund, you are giving all the control and authority to the fund manager to pick and choose stocks, to buy and sell as they see fit. (If you’re investing in a 401(K), you are giving all the control to your plan administrator – you can’t pick and choose among ALL mutual funds, only among those they decide are good for you.) You have to trust that fund manager to make choices you agree with. You have to trust that they understand what’s going on in the market.

However as so many experts are fond of noting, the large majority of fund managers failed to beat the stock indices, like the S&P 500 Index. So, lots of people started parking their money into what they thought were best index funds. For a while there, the funds did follow the stock markets, and did as well as the indices did, which wasn’t bad – until the markets crashed, and kept crashing. And so did all the index funds.

How can an average investor ever again feel confident or secure enough to get back into the markets? If you still think it should be as easy as just sending in your check, then you are better off putting your money in a cash savings account or under the mattress. To avoid losing, you need to learn something about investing.

Here’s just one solution. First, you need to learn to invest money. No matter how expert you are, or how many years you’ve been in the market, there is always something more to learn. But abandon the idea that you can just send your check to the mutual fund every paycheck. That’s over. You need to learn more about the funds, about stocks, and about what options are out there if the markets turn down again. One good choice today is to learn about using Exchange Traded Funds (ETFs) instead of mutual funds – they trade like stocks, don’t have the same management fees and minimums to get invested, and you can buy a broad range of index funds, currencies, commodities and other investments that would otherwise be tough to get into for a new investor.

Next, you need to open an account where you can make all the decisions. If you currently have a retirement account through your employer, you should seriously consider opening up a self directed IRA as well. the reason is, many Americans can take advantage of an IRA when they don’t have access to other retirement options, or take an additional tax credit. For small business owners, there are self directed IRA plans such as a SEP-IRA that you can also open.

There are plenty of discount brokers out there. There is also a ton of websites where you can learn more about stock investing that you ever wanted to. This site recommends TradeKing as the best - fees are low, and they have awesome forums, educational materials, trading platforms and they have the Trader Network allowing you to follow top traders, ask questions and much more.

When you open a self directed account, you can open a regular brokerage account, or retirement accounts (IRA) or custodial accounts (UTMA, UGMA, Coverdell) for your kids’ investing. You can also open small business owner retirement accounts like SEP-IRA. Here is where you can take control of your retirement investments, and not delegate it to someone without knowing more. You can put a little money here to work with, until you learn more and step by step take back control of your investing.

All self directed means is that you decide and make the trade yourself, usually online, without having a broker or financial advisor do it for you. Using a discount broker with a lot of educational materials is key, and also to take small steps. You can buy safe investments in your self-directed account, like CDs or bonds, but you can also buy mutual funds, or exchange traded funds (ETFs) instead of mutual funds if you choose. You can also, as you learn more and bcome more comfortable with risk, branch out into options trading to help hedge your investment risk.

There is a lot involved in learning to invest money, and do well in the markets. With a self directed account, and taking the time to learn what should you invest in right now, you can learn what you need to know to profit from the incredible opportunities that will be coming up in the future.