Master the Basics

• If you do not know the difference between a stock and a bond, don't worry. Many free resources are available to you that will allow you to master the basics. Try websites such as Investopedia (www.investopedia.com) and The Motley Fool (www.motleyfool.com) or check out finance and economic textbooks from your local library.
  
  

Develop a Plan

• First, calculate your retirement expenses (see link under Resources below). Once you know how much you will need, you will be able to determine an ideal retirement income as well as your savings and investing targets. Read as much financial news as you can until the terminology becomes second nature and relevant trends become apparent and understandable to you. If you do not have the time to actively manage your retirement accounts, consider hiring a fee-only certified financial planner (CFP) through the Certified Financial Planner Board of Standards. (http://www.cfp.net/). If you decide to hire a CFP to help you develop a financial plan, make sure to conduct due diligence before you commit to hiring a specific planner. Review his background thoroughly; after all, you will provide your CFP with confidential financial information, so make sure he is above reproach.
  
  

Max Out Retirement Accounts

• Invest as much as you can in your retirement accounts, whether Roth or traditional 401k's or IRAs. If you cannot afford to max out your retirement account, consider saving all raises in those account until you can. Even if you cannot max out your accounts, at least invest enough to become eligible for your employer's matching contribution. Employers often contribute a certain amount of money to your 401k if you contribute a certain amount, to encourage you to save. The match is free money and can greatly enhance your overall return if properly invested.
  
  

Invest Aggressively When You're Young

• It may be hard for you to see the value of your investments decline. But when you are young, you can afford large declines. Your regular contributions will allow you to buy cheap securities during market downswings, and when the market recovers, your return will be substantial. If you have 30 or more years until retirement, you can afford to take risks.
  
  

Invest Conservatively As You Grow Older

• Unless you have missed your retirement goals, previous returns and/or a bull market are no reasons to have the vast majority of your retirement savings in equities when you are close to retirement age. If you have missed your retirement savings goals, it is a judgment call as to whether to have most of your money invested in securities, but remember, you have a shorter period of time to recover any losses you may suffer. Gradually shift your assets from aggressive investments to more conservative investments, such as corporate and government bonds, as well as money market funds, as you approach retirement. If you are within 10 years of retirement, make sure the amount of assets you have invested in equities and other aggressive investments is an amount you can afford to lose.
  
  

Diversify Holdings

• A common truism is "the greater the risk, the greater the reward." That may be the case, but unless you have years of stock-picking experience and the time to actively monitor your investments, you should have your retirement savings either in multiple mutual securities or in multiple mutual funds to mitigate risk. By diversifying your assets, losses in certain areas of your portfolio can be offset by gains in others.