It’s the number one question asked by first-time investors…

Where do I start?

It may seem simple, but unless you’re the one actually having to think strategically about your goals, doing the research and then deploying cash into a portfolio, it’s easy to forget just how paralyzing this situation can be.

There are many reasons this paralysis sets in. With literally thousands of mutual funds, ETFs, bonds, stocks, and other financial products to choose from, it could simply be the tyranny of too many choices, as it were. It could also be that the memories of losses experienced during the most recent financial crisis are still too raw. And now, especially with major market averages near all-time highs, it can be even more difficult to know what to do.

#-ad_banner-#Whatever the reason, simply not knowing where to start is the single biggest problem investors face. It’s also the one I’m personally asked about most often — and one I was personally confronted with just recently yet again.

My grandmother had asked me to help her invest a small sum of money for her. It’s certainly not a fortune — but it’s no small sum either, at least not to her (or me). Currently, it’s parked in certificates of deposit.

When I asked why she hadn’t come to me earlier — when I could have helped her put this money to work during this incredible bull market we’ve had over the last few years, her reasoning was simple. She said when my grandfather was still alive, they lost over $20,000 in a week during the financial crisis. And though they kept their retirement accounts active in the market, when it came to their personal cash account, they said “enough.”

Although she’s well into what should be her retirement years, my grandmother still works part-time to this day. It’s not necessarily for the money, though. As she puts it, it’s important for her to stay active — and being around smart, younger professionals for a few days a week helps keep her on her toes. The extra income is just a bonus.

Still, my grandmother knows there will come a day when she may not be able to work any longer. She’s prepared to make economies when that day comes, but she also knows that her retirement accounts and Social Security won’t be enough to live on. And though she’s made a lifetime of good choices and sound investment decisions, she’s now once again facing the conundrum of “where to start” with putting a small nest egg of cash to work.

I still regret not asking about my grandmother’s situation sooner. But as the saying goes, the best time to plant a tree was 20 years ago. The second best time is now.

Maybe you’re finding yourself in a similar situation right now. You’re doing OK, you know that the market is at all-time highs, but you’d still like to maybe grow your nest egg a bit or earn a little extra income. You’re not asking for much — you’d just like to know where to start.

The good news is my colleague Genia Turanova recently addressed this problem for readers of her premium income advisory, The Daily Paycheck.

She calls it the Daily Paycheck “starter” portfolio.

Beginning with the premise of having $20,000 to invest, Genia set out to address the question of what should a new investor do in order to meet their goals today. Of course, every investor’s goal is going to be a little bit different, so she came up with three different models depending on risk tolerance. (And keep in mind, $20,000 is just a starting point — this can be scaled up or down depending on what you’re working with.)

As Genia also points out, her Daily Paycheck income strategy works perfectly with dollar cost averaging — the strategy of buying a fixed dollar amount of a stock on a regular schedule. It’s a powerful tool for edging carefully into the market or for investing spare cash. (As an added bonus, by reinvesting dividends the way Genia and many of her readers do, you further increase your income potential down the road.)

But dollar-cost averaging doesn’t just mean picking up more shares of the same stock as its price goes down. While buying more of a stock as it declines is one way to go about it, she recommends you to think about dollar-cost averaging as a way to instill discipline into investing.

Genia says the easiest way to dollar-cost-average is to gradually move a fixed amount of cash into the markets at regular intervals. This way, unavoidable market fluctuations work in your favor: When the market is lower, you automatically buy more shares of the same stock or fund (as its price is lower). When the market moves higher, the size of your investment both in percentage terms and in terms of the number of the shares, will be lower.

Genia strongly urges her readers to consider investing in this manner. And when used in conjunction with a simplified “$20,000 or Less” portfolio, which contains a select core of funds and stocks from the Daily Paycheck portfolio, investors should be on the right track.

So without further delay, here’s what Genia had to say to her readers about the “starter” portfolio.

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In this issue of The Daily Paycheck, to accommodate as many investors (big and small) as possible, I present a new take on the “$20,000 or Less” portfolio.

I have come up with three different variations of the basic starter portfolio, in terms of the positions and their relative weight, to address a variety of investment goals.

Note that all these portfolios have a similar cash allocation. That’s done to stress that cash is essentially a risk-free investment (albeit one that in today’s environment does not generate any discernable income). By varying the amount dedicated to cash, you can accommodate your personal risk tolerance.

Some of you have written to me pointing out how you used recommended portfolios to start your grandchildren on the investing path. For my younger readers who’ve just begun investing, as well as for the parents and grandparents among us who think ahead for the future generation, I start with an Aggressive Portfolio. This portfolio assumes high risk tolerance, a long time horizon (30-plus years until retirement), and limited income needs.

Aggressive $20,000 Or Less Portfolio

Next up is a portfolio designed for those who are in the middle of their investing lives and have at least 20 years until retirement. Typically, these investors are at the peak of their earning power, so the income component of this portfolio is somewhat less important.

Moderate $20,000 Or Less Portfolio

And, finally, a conservative portfolio. It has been designed for retirees and those approaching retirement (10 years or fewer until retirement). This portfolio has the highest income generation potential — but note that even at this stage, lower-yielding but better-growing investments should also be included.”

Conservative $20,000 Or Less Portfolio

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One big final reminder: Don’t forget to reinvest dividends. As I mentioned earlier, it’s a great way to dollar-cost-average, and your income-earning potential will be even greater.

As Genia puts it, nobody can honestly tell you that they can predict the future when it comes to investing. But what we can and should do is to follow our own investment plan according to our personal goals and constraints. Make the best of the market conditions, but always think about long-term, not short-term success.

Hopefully these “starter” portfolios will be helpful in getting you started down the path toward those goals. But if you find yourself wanting a little more guidance and more investment ideas (and let’s face it, who doesn’t need that), then consider joining Genia and her subscribers at The Daily Paycheck.

To find out more about her newsletter, as well as how thousands of readers have been able to earn more each month thanks to her strategy, simply follow this link.