Tinvestment pyramid (see figure 1, this page) provides a conceptual famework for envisioning the savings and wealth-building process. The base, or foundation, of the pyramid consists of the essential elements upon which the rest of the structure rests. As one progresses up the pyramid, risk increases, as do potential rates of return. The pyramid forms a model for the progression of investing; the top levels should only be attempted after establishing a strong supporting structure under neath. While the majority of Americans have checking and savings accounts, asset allocation among investments on the pyramid usually depends upon age, income, family situation, overall financial goals and risk tolerance. It's true that no two individuals should invest alike, but even very aggressive investors need to put some percentage of their assets in the more conservative categories. Also, it is important to periodically review the portfolio asset mix -- in order to avoid redundancy, maintain diversification, meet anticipated liquidity needs, etc.

So, where do we start? As indicated by the diagram, we need to consider the basics first. Certainly, insurance is essential for most of us, to provide protection for our assets and income. Examples include life, disability, health, auto and home insurance. Some insurance even offers savings features, and can be considered an asset in its own right.