So, you have decided to take the plunge, open an investment account locally or online and do a little investing with a financial advisor/stock broker in Bermuda.

After all, your friends keep talking about the killings they are making on various stocks they have bought, particularly IPO's (Initial Public Offerings).

You think they don't know any more than you do, so why not? Plus all those ads on MSNBC show that it is really a piece of cake! Open the account, do the research, and hit the button, all in thirty seconds.

Well, almost...

All Eyes To The West! Please note that we will start our discussion by assuming that we are only investing in common stocks traded on the New York Stock Exchange, the NASDAQ, and the Bermuda Stock Exchange.

While the US is not the only market in the world; besides the BSX, it is the closest market and certainly, the most influential of all the global markets.

There are many other kinds of investments and markets. Over time, we will introduce most of them to you.

How do you choose a financial advisor? He/she may be recommended by a friend; you may know him/her through your church or membership association. You may have to do some plain legwork and interview a few advisors. Don't be put off during this process, this is your hard-earned money you are going to invest! Just as financial advisors differ, so each brokerage firm may have a different commission structure and philosophy. Asking questions such as the following will aid you in feeling comfortable about placing your money in good hands.

What are your qualifications to be a financial advisor? How long have you been in the investment business? What is your experience? What kinds of clients do you have? Would any of them be willing to give you a reference? Can I see some of your portfolio results? These are tough questions. Because of confidentiality issues, some financial advisors may decline to answer. It is doubtful that any client would give permission to have their investment results paraded in front of another prospective client. Of course, it is OK for the client himself to have bragging rights about his profits at a party! A savvy investment manager will have a mock portfolio to demonstrate his/her proficiency to you. But, be very wary of anyone who promises great returns, such as "I can get you a 20 percent return or better'', or "I have consistently beaten the market''. If all investment advisors had beaten the market all the time, why aren't we all rich? Ultimately, you must rely upon your intuition and common sense. If the answers you get don't seem possible, they most probably are not! A professional, ethical investment advisor will always preface investment discussions with words like, "we may be able to achieve this rate of return, or it is possible to see the value on X stock continue to climb, but nothing is guaranteed''. Having said that, only you can make the final choice! What should I expect at my first investment meeting? With your first decision to invest, working with an experienced financial advisor is a good idea. (We'll discuss investing online and day trading in a later column). The advisor will want to find out in talking to you, at a minimum; 1. What is your net worth, simply put, do you have other savings for emergencies, besides the money you are investing? 2. How much risk you are willing to accept? Just how brave are you? Most people seem willing to make a big profit, but what if your portfolio has a loss of 20 percent/30 percent//50 percent for months at a time, maybe years? Can you live with that? Are you willing to sell off, take your losses and invest elsewhere? 3. You have to do your part also, and be honest with your advisor. Do not tell him or her that you have "plenty more where that came from'' because the advisor may think then that you can afford riskier investments. All too often, advisors have had clients come to them after a particular investment has "deep-sixed'' crying that "their entire life savings was put into that stock and now what are they going to do?''.

How do I go about opening an account? In general, brokerage firm account opening procedures work as follows, note this is for trading in the United States stock markets. You will fill out and sign the following: (see box next page) A new account statement A form W-8BEN and a cash or margin contract and a risk tolerance questionnaire You will also have to meet a minimum payment to actually open the account (usually around $2,000.) If you cannot meet the minimum alone, consider a joint account with a trusted friend or relative.

Some stock picking basics How do I know what stocks to buy? This is where your experienced financial advisor can really help you construct a well-diversified balanced portfolio over time, based upon his/her knowledge of your financial situation. Can you tolerate the risk and the thrill of buying only high-flying Internet stocks, or are you a more conservative person, investing for the long-term? There is nothing wrong with starting cautiously and learning your way along. After all, if you had previously been content with a fixed rate deposit of six to seven percent, doesn't 12 percent to 15 percent a year sound pretty good? Success for most people investing over the long-term means finding a balance between extremes of optimism and caution.

On the other hand, no matter what path you choose, do not let your advisor put all of your money into one investment. There are many ways to spread your risk of loss, one of them by being diversified. The old saying do not put all your eggs in one basket is still true! (You will be hearing a lot over the next few months about diversification, laddering, and the see-saw effect).

If you have little extra cash to invest starting out, do not despair; wait until you have saved enough to buy a different investment each month or quarter.

Now is also the time for you to become an informed investor. Read, read everything you can find on investing. Go to the library and read the Wall Street Journal, Barrons; watch MSNBC, CBSMarketwatch; buy Money Magazine; use Internet Sites MSNMoneyCentral, Yahoo!Finance. Ask questions, use your intuition, become familiar with stock names, pick a couple and track their trading prices; do not invest blindly. I cannot emphasize enough how important it is to build your own knowledge base. Learn for yourself; draw your own conclusions. You can do it.

Start by researching and investing in what you know. Take a look around your home, yard, office etc. What do you use that has been consistently dependable, reliable and a good product? Hewlett-Packard printers? Compaq computers? Nokia cell phones? Nike shoes? The Gap clothing? And for the men in the house, what about Home Depot? Exxon Oil? Taking cholesterol medication? Warner-Lambert? My husband who is a pharmacist at Somerset Pharmacy has had a long career in pharmaceutical sales, so he knows the health science industry very well. Is this a little plug for him? Of course, it is, but then again, he is a great guy! And what about those Internet stocks, Cisco, Yahoo, JDS Uniphase, Puma Technology and of course, should we consider buying a small piece of an unknown company just going public (on the market)? So what is all this, but the start of our mock portfolio! Does this mean that these are all terrific stocks? Will we actually consider buying them? We shall find out in future columns as we discuss researching stocks, laying out some ground rules for buying them, building our fictitious portfolio and tracking the results over time. I encourage readers to send in their choices for consideration in the portfolio mix.

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