I recently met with a friend who told me she got a performance bonus at work, and was wondering how she should invest it. I got the feeling she was expecting me to tell her which stocks to buy, and I think she was initially disappointed that I didn’t suggest a red hot IPO of a Silicon Valley tech company.
My friend isn’t the only one who has asked us this question. In fact, it’s quite common. So here's what I told her. It may have been a longer answer than what she expected, but she bought me a coffee and we had some time to chat. By the end of our conversation, she had a better understanding of how to invest smart, instead of how to simply pick popular stocks.