In the midst of our rush to earn money, our scramble to save for retirement, our focus on frugality, it's easy to lose sight of why we're doing this. What is the goal? What is it we're trying to accomplish by getting rich slowly? For me — and for many others — the answer is Financial Independence.

Your Money or Your Life defines Financial Independence as "having an income sufficient for your basic needs and comforts from [sources] other than paid employment". Financial independence implies freedom. It's the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn't matter — you have enough saved and invested to follow your dreams.

But is Financial Independence just a pipe dream? Is it something only for the lucky and the strong? No, says James Stowers in his book, Yes, You Can...Achieve Financial Independence. It's a goal that anyone can fulfill as long as she's armed with some basic knowledge, as long as she makes smart choices.

This article was written by ABCs of Investing, a new site for novice investors. ABCs of Investing offers two short and simple investing posts each week.

Personal finance bloggers are vocal proponents of passive investing in index funds and exchange-traded funds. But not everyone knows much about these, and not a lot of bloggers do a good job of explaining the basics of passive investing. This post is intended to explain the basics — along with the basics of the basics!

I was inspired to write this article because of two separate but identical conversations I recently had with friends. They went something like this: Continue reading...

A GRS reader dropped a line last weekend. "I want to invite you to the Diehard Organizational Meeting on Wednesday," he said. "I'm new to the group but obviously we're all believers of value of index funds and John Bogle's investment philosophy."

"Hope to see you there," I replied.

I'm still new to investing, but my reading continues to point in the direction of index funds. (An index fund is a mutual fund designed to track a particular stock market index. FSMKX, for example, attempts to mimic the performance of the S&P 500 index.) Index funds were popularized by John Bogle, the founder and retired CEO of The Vanguard Group. Followers of Bogle's investment philosophy call themselves Bogleheads or Diehards.

On 09 October 2007, the Dow Jones Industrials hit a record high, closing at 14,279. What a difference a year makes: Last Friday, the Dow closed at 8451, and there's a good chance it will drop even further.

Unsurprisingly, my inbox is filled with e-mails from people who wonder what they should do. Here are some typical questions from readers like you:

• "Originally we had planned to open Roth IRAs this weekend, but with the stock market being so unreasonable, we have lost our confidence. Wouldn't it be wiser to leave the money in our savings accounts for several more months?"
• "I am 30 years old and since reading your blog, I realize how important it is to get a Roth IRA fired up. However, now that I'm financially ready, the market meltdown has confused me completely. Should I hold tight and just keep saving while I see how this rides out?"
• "I have two 401k plans. However, the last time I looked at my quarterly reports, I noticed I am losing money. I know that the US economy has been pretty bad lately, but is there anything that can be done or planned for?"

These are fantastic questions. Unfortunately, there are no fantastic answers. Nobody knows what the market will do. Nobody.

This article was written by Sara, who writes about reaching for a life of greater simplicity and deeper meaning at On Simplicity.

I'm a simple girl and I love simple solutions. That's why I've fallen in love with DRIP investing — it's about as simple as investing gets. If you're an investor who likes to set it and forget it, DRIPs are a great weapon to have in your financial arsenal.

What Is a DRIP?

The term DRIP refers to "Dividend Reinvestment Program." Don't let the term fool you, though, because DRIPs go way beyond dividends. Essentially, when you open a DRIP account with a company, they're letting you buy stock directly, cutting the brokerage firm out of the picture. This lets you buy additional stock with any dividends you earn, all without brokerage firms taking a bite of your profit. Continue reading...

For the past year, I've been looking for a book to recommend for novice investors, a book that would offer sensible advice without becoming too technical. I believe I've finally found that book -- The Four Pillars of Investing,

In the book, William Bernstein describes how to build a winning investment portfolio. He doesn't focus on the details — he tries to explain fundamental concepts so that readers will be able to make smart investment decisions on their own. Continue reading...

The Motley Fool is a website devoted to helping average people make better investment and financial decisions. Recently, GRS forum administrator (and resident economist) Stephen Popick got a chance to visit The Motley Fool headquarters.

When I was in high school, I participated in my state's stock market game. It was designed to introduce our economics class to the world of investing. That's where I first heard of The Motley Fool, an upstart website for financial investors that went against the grain of having advisors manage your money. Their newsletter analyzed the advantages of managing your investments yourself, and advocated indexed mutual funds over managed funds.

So, when I received an invitation recently to visit the Fool Headquarters in Alexandria, VA for a focus group, I jumped at the chance. The purpose of the focus group was two-fold.

This article was written by John Forman from The Essentials of Trading. Forman is the author of a book by the same name. He has been a trader of the stock and other markets for over 20 years, and is a professional stock market analyst for Thomson Reuters.

The wealth-building potential of the stock market is enormous. I think we all realize that. The long-running debate, though, is whether one is better off investing in individual stocks (or funds that do just that), or whether it's best to just put your money in an index fund. Most funds fail to beat the market, so it would seem index funds are the better choice.

While it is certainly true that index investing has some advantages, and some mutual funds do perform better than the indices, no index or fund will ever offer the upside potential of investing in individual stocks. It's a matter of math.

When you leave your job, you have several choices regarding your 401(k). These options for a 401(k) rollover are pretty much universal, meaning they apply to every 401(k) and to every job change situation. Your options are:

Cash the 401(k) Plan and Receive a Full Pay-Out

I've listed this option first because it has the most serious ramifications.

"Saving is the key to wealth," I wrote last week while trumpeting the extraordinary power of compound interest. "If you do not spend less than you earn, and if you do not save the difference, you cannot build the wealth you desire." The younger you are when you begin saving, the more time compounding has to work in your favor, and the wealthier you can become. "The next best thing to starting early," I wrote, "is starting now."

Other Options

A few readers noted that while the mathematics of compounding make sense, it's not motivational for those too old to take advantage of its full force. "This is pretty depressing for those of us who spent our 20s with practically no income thanks to universities," wrote one commenter. Her sentiments were echoed by several others.

It's important to note that saving is not the only smart thing you can do with your money. Your education is an investment, too. Yes, you should begin to save as soon as possible, but there are other good options, too.