Wake, do you have a 401K available through your workplace? If so, I suggest you try to put in the maximum the company will match - even while you're still paying off that 7K in debt.
The magic of compound interest is best seen through time. If you had 10K invested already, in another 40 years you'd have close to a million even if you never added another cent of contributions. I know that sounds impossible but check it out:
Compounding
That's the argument to do it now. Most of us earn more year by year, and so can afford to contribute more in later years - but then you're also likely to acquire more financial obligations with time. The longer you wait, the more per month you've got to shovel into savings to catch up.
We are currently shoveling in every last penny we're allowed to into our 401 K - but that's only 22.5 K a year. Oh, it sounds like a lot, but not if you're expecting to retire in only 3 more years. We probably have enough to retire on right now - but another $100K or so couldn't hurt!
We have been extremely lucky: husband got hired the last 2-3 months before each company stopped giving pensions! Otherwise we'd need a hell of a lot more in our nest egg: it takes roughly $300K in assets to produce $1K/month of income (at 4% which is about what a 'guaranteed' rate of return tends to be).
If I were starting now, I'd look for a 'no load' mutual fund from someone like Fidelity that was aimed for people retiring in about 35-40 years from now. That's one way to get a pretty diversified investment base when you've got a very tiny portfolio. You've got DECADES: you can afford to make a few mistakes and you'll have time to make up for them.
Oh, very important detail: FEED THE SAVINGS FIRST! Every raise, bonus, or windfall should increase your savings. It's like 'found' money when you get a raise: if you put half of that into savings of some form or another, you'll never have a chance to miss it. We used to do US savings bonds because you had to wait 6 months to cash 'em in and you could buy one for $12.50......
In a few years, re-evaluate your situation: How secure is your employment, are your savings on track for your goal, what major expenses will there be in the next year or so. OH, and that's AFTER you've stashed 3-6 months of living expenses somewhere fairly liquid..... Do NOT!!! buy life insurance unless someone else is depending on your income. And when you DO buy, buy term and invest the difference. (And the one area of car insurance to 'splurge' on is......medical payments.)
Now, if you've got some assets from raises, bonuses, windfalls - that's when you pick a stock and buy a block (100 shares) if you can. You buy it for the DRIPs and to hold.......forever. We're the third generation to enjoy ownership of a lot of Niagara-Mohawk and Proctor & Gamble - and we hope to pass that on to our son.
If you've met your regular investment goals, there's nothing wrong with getting a little wild 'n' crazy with a couple of penny stocks or whatever - just don't get too greedy or quit your day job : ))
There are a lot of 'automated' programs available to assess your risk tolerance and your goals and point you towards a good mix for your particular style and situation. We've used the 'Motley Fool' one and also 'Financial Engines'..... any of them can give you some general idea of what might be appropriate for you now : ))
