You can start investing the right way or the wrong way. You can invest in mutual funds, which make investing easy; or start investing by the seat of your pants like so many people do. Here's a simple way to start investing and stop worrying about the stock market and the economy.

First, face up to the fact that you need to invest to reach your financial goals. This means investing in stocks and bonds. Second, you need to question your abilities and interest in the investing process. Do you see yourself actively managing a portfolio of individual stocks and bond issues year after year? If not, join the club and start investing in mutual funds. One more thought before we get specific. You don't invest in mutual funds to beat the market or get rich quick, but rather to earn higher returns over the long run with moderate risk.

If you are actively contributing to a 401k type of pension plan you are already set up and can hit the road running. If you have money in an IRA consider a direct rollover to a mutual fund company. Otherwise, just open a mutual fund account with a major no-load fund family. Just search the internet for "no-load funds". In the last two cases above, start your new account with all of your money going to the safest funds offered - a money market fund.

Now you are ready to start investing in mutual funds the right way with a simple yet balanced portfolio that won't keep you up at night. It's time to move some money around; it's time for asset allocation. If you are conservative split your money up three ways equally: money market fund, bond fund, equity (stock) fund. If you are willing to take a moderate risk split it four ways equally: money market, bond, equity (U.S.) and international & specialty. If you are adding money periodically like in a 401k, use the same proportion for your contributions in either case.

If you are conservative make your equity fund a large-cap equity fund and your bond fund an intermediate-term quality bond fund with an average maturity of 5 to 8 years (less than 10). This info will be in the fund literature you receive. If you are willing to be a bit proactive and take a moderate approach consider more than one equity fund, like a large-cap plus a mid-cap core (or blend) fund. Maybe add a shorter-term bond fund in addition to the intermediate fund. And for the international & specialty: half goes to a diversified international fund with the rest equally split between specialty funds in the real estate and gold sector.

For the money market fund just go with their oldest and/or largest general purpose taxable fund. Review your numbers once a year, and move money around if things get off track. For example, if you are conservative you want to keep equal money in all three areas. This is called rebalancing your portfolio, and it's a valuable investment tool that keeps your risk in line with your comfort level.

Now, you ask, if you start investing like this and continue to rebalance year after year... do I guarantee you'll make money and reach your financial goals? Sorry, no guarantees, but I'll put it this way: in good times you should be quite happy. In bad times when others are stressing out over their heavy losses, you'll merely be taking a modest step backward waiting for things to turn around.

Is there another shoe to drop - another financial crisis around the corner? If so, 99% of investors will be hurt. But with a balanced portfolio and a plan you have history on your side. In the past, diversification across the asset classes worked to offset major losses.