Stay out of stocks entirely. This may seem odd, but it is possible to make a decent return in the market by not buying stocks.  How?  By buying “junk” bonds.  These bonds were a very big deal in the 1980s and parts of the early 1990s, but today are mostly ignored.  A junk bond is simply a bond issued by a corporation or municipality that is rated below “investment” grade by the major ratings agencies.  While it is not advisable to buy individual junk bonds, it is possible to buy a bond fund that invests strictly in junk bonds.  One such fund is Vanguard’s “High Yield Corporate” fund. The advantages of a junk bond fund include a risk profile very similar to the stock market (most of the bonds held by junk bond funds are issued by companies that are publicly traded on the major stock markets) including the potential for appreciation of principal, but also a nicely steady income.  You can expect to receive distributions of 7-12% a year on your purchase of such a bond fund, but be prepared for the principal to wildly fluctuate depending on the condition of the stock and credit markets.

Use quasi-insider investment strategies. This tip comes mostly from Peter Lynch’s seminal One Up on Wall Street (a book you should read if you are interested in the stock market at all).  If you have a job, you have the inside track on information that is relevant to the price movement of any number of stocks.  For example, if you work at a news media company, you have a much better view of the direction of the media market than the market at large.  As such, you will be better able to predict the fortunes of publicly-held companies in news media.  For example, if you know that ESPN is going to release a new website that will make its competitors effectively obsolete for the next few years, you may consider investing in its parent company, Disney.  This is just one example; you already have access to all kinds of insider information with regard to the stock market based on your current job and/or hobbies.

Get a job in the stock market. This is the only truly guaranteed way to make money in the stock market.  Financial service companies are always hiring and have surprisingly low barriers to entry.  This is because education and experience are poor determinants of future success in finance.  Accordingly, most financial firms are willing to hire at the entry level nearly anybody with a bachelor’s degree who can display intelligence and organization.  The average entry level salary, especially after bonuses, in financial services is far above average.

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1. Investing For Dummies
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What does a financial planner do?

A financial planner deals mainly with individual clients who are typically investors or high income professionals looking to build a retirement fund.  The primary responsibility of the job is to plan the financial future of your clients.  This requires a medium to high level knowledge of investing, the stock markets, mutual funds, fixed income products, and at least a low level knowledge of economics.  While you will be expected to get returns at or close to market levels for your clients, the intelligent management of assets and income is a far more important skill.  For example, it is much more important for a financial planner to understand how much of a client’s income needs to be invested month over month to meet a retirement goal than to be able to recommend a high-performing bond fund.  Additionally, financial planners should have some understanding of insurance products and their uses.

Who can become a financial planner?

The ideal candidate for a financial planning job is a college graduate with excellent communication skills.  Because financial planning and analysis jobs ultimately depend more on building client relationships than technical expertise, you must be willing to spend at least part of every day selling your services and dealing with clients.  As such, financial planning is significantly different than, for example, an actuarial job or most accounting jobs.  Additionally, most financial planners eventually move on from working for a wealth management firm to running their own business, so if you plan to significantly advance your career you should have some entrepreneurial spirit.

If the job sounds right for you, you need to review the qualifications and testing process to become a “Certified Financial Planner (CFP).”  You can find the requirements at www.cfp.net .  This certificate is recognized in most of the world and is good enough to get an entry level position at close to any financial planning firm that is hiring.

A short list of the requirements:

• A certification course, or equivalent certificate (such as CPA, JD, or Ph.D in economics or business).  Note that some business, accounting, and economics degrees qualify you as “certified”  to sit for the CFP examination depending on your coursework in school, even if you did not take a formal CFP certification course.
• Any bachelor’s degree.  If you did a liberal arts degree in college, you may wish to take a certification course.  There are numerous courses offered by traditional universities, colleges, and continuing education schools in every country and large city.
• Sit for and pass the CFP examination.  This exam lasts ten hours, costs close to $600, and is offered only three times a year.  It is an extensive examination, but there are scores of books and classes offered to help you through
• Experience in financial planning.  Once you pass the CFP examination, you are still not technically certified.  You are required to have three years of experience in financial planning before being given a proper certificate.  However, once you have passed the test it is not difficult to garner this experience.
• Pass a background check and pay all applicable certification fees.

Once you have done all of this, you are officially a certified financial planner.  Having this certification is extremely valuable, so much so that it can be the basis of an extremely lucrative business.

Related posts:

1. How to make money in the stock market