Boston — Seeing an Olympic athlete skim the face of a mountain in winter or arch over parallel bars in summer is a reminder that, yes, there are people who can make the very difficult look very easy.
So it seems to people about to begin investing. They know there are people out there who have made a lot of money - or at least have added to their financial security - with investment programs, and have managed to learn about things like dividends, yields, price/earnings ratios, and betas in the process.
Looking at the economic changes of the past decade or so, even those who have never invested know they must begin, somehow, somewhere, to reduce the financial uncertainty in their lives.
''There's more of a consciousness of the necessity to plan for one's financial future,'' says Judith Johnson, senior vice-presdient at Advest, a Hartford, Conn., brokerage. Many Americans who are in their 50s, 60s, and older did not need to bother about investing, because they ''floated along on the postwar boom,'' she adds. ''They really didn't need to do that much investing. Now people are saying, 'I can't just rely on my job. That income may not always be there.' Now, they are turning toward ways to build assets, and the best way to do that is through investing.''
There are generally three categories of people who want to begin systematic investment programs: those who have never invested beyond perhaps putting their savings in a money market mutual fund; those who might have a few stocks a relative left them or have some shares of stock in the company where they work; and those who have tried investing but haven't done very well at it and want to start over.
For all of these people, the first step in starting an investment program is not an investment step. It is to build savings, followed closely, or simultaneously, by setting goals.
''When people come to me and want to start investing, I tell them the first thing they should do is provide food and shelter for their family,'' says Jack Pihl, executive vice-president of Thomson McKinnon Securities, a New York brokerage. ''Then they should have an emergency fund, then insurance, then a home. Then, if there's any left over, that's when you can start buying stocks.''
Two forms of savings should be built up before an investment program begins: immediately accessible savings and a retirement fund. Financial planners recommend the equivalent of three to six months' take-home pay in a highly liquid, or accessible, account, like a money market fund or money market deposit account at a bank. It should be money you can get at today, or tomorrow at the latest.
Whether you have three or six months' savings, or something in between, depends on how secure you feel about your job, your day-to-day financial needs, and the size of monthly bills like the mortgage. If you have very large mortgage payments relative to your salary, for instance, the savings should be closer to six months.
Building up this much savings will take time, perhaps two or three years, but you should have it whether you're investing or not, to cover emergencies or special purchases.
The other savings program is the individual retirement account (IRA) or an employer-sponsored retirement program like a 401(k) salary reduction plan. With the tax breaks built into these plans, including the fact that they earn tax-free interest until retirement, there is really no excuse for not putting at least a few dollars a month (how long will it have to be written that the $2,000 -a-year deposit ceiling on IRAs is a maximum, not a minimum?) into a retirement account.
The tax-free interest also makes the IRA a good place to get introduced to some of the places you will be putting investment dollars later. In addition to banks and savings-and-loans, IRAs can be opened at mutual funds, insurance companies, and brokerages. At the latter, you can have a ''self-directed'' IRA, in which you move the money among stocks, bonds, or money funds as you like.
While you are building a savings program, you can begin to outline and commit yourself to some financial and personal goals. If you know what you want to do with the money you make investing, you will have an easier time making financial commitments. What do you expect to accomplish with your money - a new home, retirement, college for the children, all of these? Or maybe you just want your money to do what you do every day - work hard and earn more money.
Whatever the goal, an overriding aim, from a financial point of view, should be to preserve and increase your real wealth. Accomplishing this requires both a defensive strategy - to hold on to your money - and an offensive strategy - to make sure that money earns more than inflation and taxes are taking away.
For example, says Vera Silverman, a partner with Silverman, Heller Associ-ates, a Los Angeles-based brokerage, if inflation is running at 4.5 percent and you can get 9 percent in a money fund, then you should aim for at least a 13.5 percent annual return on investments, including dividends and capital gains.
The learning period
The time it takes to build savings and outline goals can be put to good use to learn about investing and the different investment vehicles.
''Get a good book and start to understand the market,'' says William H. Pike, a portfolio manager at Fidelity Investments in Boston. His advice may be a bit selfserving, since he has written a book, ''Why Stocks Go Up (and Down)'' (Dow Jones-Irwin, $19.95), but it is still good advice. Libraries and bookstores are full of books on investments, some of which are more useful than others. The beginner is probably better off avoiding those that promise huge gains or that concentrate heavily on one area, like options, real estate, or tax shelters.
Instead, a general book on money management with a few chapters on investing might be more useful. Books like ''Sylvia Porter's New Money Book for the 80s'' (Doubleday), ''The Lifetime Book of Money Management,'' by Grace W. Weinstein (New American Library), or ''The Power of Money Dynamics,'' by Venita VanCaspel (Reston) contain much of this basic information. For more detail, ''Successful Investing,'' by the staff of United Business Service in Boston, does a good job of covering the details of almost all types of investments. It may not be generally available in bookstores, but you can get a copy by sending $10.95 to United Business Service, 210 Newbury Street, Boston, Mass. 02116.
While you're learning about the world of investing and saving, you can begin making some preliminary decisions about where you want to invest. To this end, Mr. Pike suggests picking a few industries - preferably those with which you already have some familiarity - and learning about them. People interested in or working with electronics, for example, would have a better chance of understanding what makes companies in that field tickthan those who just happen to notice that electronics stocks are doing well one day. To supplement their knowledge, Pike says, they might subscribe to a magazine specializing in the field, such as Electronics News.
Similarly, someone interested in the apparel industry might subscribe to Women's Wear Daily. These trade journals are often available in larger libraries , or the library should have addresses where you can write for subscriptions. A broker may also have some of them.
Probably the best place for a beginning investor to put some money is a mutual fund. There are literally hundreds of funds, with a wide range of investment goals and a variety of portfolios to reflect those goals.
Like any good investor, most of these funds are widely diversified, sometimes with several dozen stock issues. When you send away for a prospectus and application, you should also get a copy of the fund's most recent annual or quarterly report. Here, you can see what stocks the fund is holding. After you invest, you will continue to receive these reports, so you can see the kinds of companies these professional fund managers are buying.
For most investors, Mr. Pihl of Thomson McKinnon suggests a no-load mutual fund with a telephone switching service. ''You can move your investment based on market swings and economic changes without having to worry about individual stocks,'' he says. ''The client can manage his own portfolio.''
Some mutual funds have initial deposit requirements of $1,000 or more, but these limits are usually lower for IRA and Keogh accounts. Also the IRA, particularly for people with some time to go before retirement, is a good place to try out some of these switching techniques and still have time to recover from any mistakes.
Another advantage of mutual funds for the beginning investor is that they are more suited to a regular, disciplined program of deposits, by which you send in the same amount every month or so.Some funds will let you arrange an automatic withdrawal from your checking or savings acount, if you have trouble saving.
You can get information on funds from a stockbroker or scan the financial publications or business pages of newspapers for names, addresses, and phone numbers.
Venturing into stocks
Until now, the pre-investment and investment decisions have been pretty straightforward: Save, set goals, learn, and let someone else make the stock-buying decisions through mutual funds. But to choose among the thousands of stocks offered on the New York and American Stock Exchanges, as well as regional exchanges, requires more research than most people have. Also, even in a bull market, an investor can get hurt when the rampage slows down, as it did in January and February.
''You could have given everything back in this last market, and a lot of people have,'' notes Ms. Silverman of Silverman, Heller Associates.
Someone starting out in the stock market should not be trying to pick high-growth stocks, even though the rewards can be great. The risks are at least as bad, says Ms. Johnson of Advest.
''If you put in $2,000 with the intention of turning it into $10,000, you take enormous risks,'' she says. ''Beware of unrealistic expectations.'' She, too, feels that a return of ''around'' 13 to 15 percent in capital gains and dividends is a realistic goal.
Achieving this goal usually means sticking to stocks with little volatility in price, those that have a long record of paying increased dividends, and ones engaged in ''stable businesses,'' says Brenton Dickson, senior vice-president for investment research at State Street Bank in Boston. Many of these are the so-called ''blue chips,'' on which the prices may not go up very much, but which don't suffer big long-term drops, either.
Some of the industries that fit this description are beverages and other consumer products, some utilities, oil and health-care companies, and some technology concerns. In the latter category, Mr. Dickson prefers IBM and, for longer-term prospects, Hewlett-Packard.
In beverages, he mentions Coca-Cola and PepsiCo. Procter & Gamble and Kodak are also good consumer stocks, he says; although Kodak ''has some current problems, in the longer term it is interesting.''
He says utilities are often marked by slower growth but higher yields. In this group, he said, ''we like some of the Bell (American Telephone & Telegraph Company) spinoffs,'' including Bell Atlantic and NYNEX, which serves New York state and New England.
Other stocks mentioned by analysts to fit this conservative strategy include Exxon, Mobil, Middle South Utilities, San Diego Gas & Electric, Aetna insurance, American Express, Colgate-Palmolive, and Kellogg.
Although people should diversify among stocks and industries, investors - beginning or experienced - who do not trade stocks on a full-time basis should not try to hold too many securities. It is just not possible to follow very many at once with care. Most experts say around 10 is about the limit for the average investor.
''I only own eight different stocks, and I have all day to do this,'' Fidelity's Mr. Pike says.
''If you have $5,000, you could put $800 to $1,000 in five or six stocks,'' Mr. Dickson adds. ''But be careful they're in different businesses.''
Finally, Ms. Silverman says, once you've decided what stocks to buy and how many, ''don't just hand over your money and be passive. Keep up with your stocks and the industries. Even if your broker is good, you're much more interested in your own money than they are. Being a passive investor is a good way to get hurt.''
The process of making investment decisions includes evaluating several factors, including income, the amount available for investment and the level of risk the investor can comfortably accept. This table, prepared with the help of the College for Financial Planning in Denver, suggests some investment that might be considered under various circumstances. AmountLevels of Risk available for investmentLowMediumHigh Taxable income:$20,000-$30,000 Money fundsStamps, Coins, Rare Prints Municipal bond fundsGrowth stock fundsStock options Blue chip stocksNew equity issues 'turnaround' stocks Taxable income:$30,000-$45,000 Money fundsStamps, Coins, Rare Prints Municipal bond fundsGrowth stock fundsStock options Unit trustsBlue-chip stocksNew equity issues Treasury billsCorporate bonds real-estate partnershipsConvertable bonds Growth real estate partnerships Paintings Antique furniture Taxable income:$45,000 and over Money fundsStamps, Coins, RareStock options Prints Blue-chip stocks, Stock optionsGrowth stocks, GrowthNew equity issues Tax-exempt bonds, Unit trustsPersian rugs'Junk' bonds Treasury billsConvertable bondsPrecious metals interest-bearingZero-coupon bonds$Commodities funancial whole-life policyEquipment leasingfutures Tax-managed(income producing)gems, R&D shelters mutual fundsPaintingsAgressive real estate Deferred annuitiesAntique furniturepartnerships Income-producing realOil/gas drilling estate partnershipsprograms Movie partnerships Thorougbred horse partnerships