22 Sep 2017

Open Opportunities to do Collaborative Research

Open Opportunities to do Collaborative Research

Psychologists can find rewarding opportunities to work with other disciplines within NIH's major research initiatives

The National Institutes of Health is the world's biggest public funder of biomedical research, investing more than $32 billion each year—and a sizable amount of that money can be tapped by mental health and behavioral science researchers, especially those who are interested in collaborating with other disciplines.

Several major initiatives welcome a transdisciplinary perspective, even if on the surface they don't sound terribly psychological. Among them are the All of Us/Precision Medicine Initiative, the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, Environmental influences on Child Health Outcomes (ECHO) and the Big Data to Knowledge (BD2K) program.

"There are lots of opportunities, if the medical side becomes aware of the skills and content knowledge we psychologists have," says psychologist Leonard Bickman, PhD, a research professor of psychology at Vanderbilt University.

His research, focusing on how to encourage people to participate in clinical trials, receives funding from the NIH Clinical Translational Science Awards Program through Vanderbilt University Medical Center's Recruitment Innovation Center.

"If you're interested in applying theory, it's a wonderful world to work in," he says.

High-impact science

Among the initiatives where psychologists are finding opportunities is the All of Us program, which offered $55 million in awards in fiscal year 2016 to build the partnerships and infrastructure to get the program off the ground. All of Us is recruiting its million-plus participants and plans to release funding announcements once the project is launched. Those participants, representing a diversity of ages, races and backgrounds, will share biological samples, genetic data, lifestyle information and health records. Ultimately, those data will help researchers advance a more personalized approach to medicine by identifying biological markers for disease, identifying why people respond differently to medications, developing new ways to measure disease risk and creating a platform to test new targeted therapies.

The project will also collect large amounts of data on factors relevant to psychology, including stress, mood states, health risk behaviors and family and social network dynamics, says William Riley, PhD, director of the Office of Behavioral and Social Sciences Research at NIH.

"As this builds up to over a million participants, there will be a lot of opportunities for behavioral and social scientists to access those data. They'll also be able to apply to add other variables of interest to them," he says. "The longitudinal nature and sheer size of the sample will make a big difference for behavioral research."

Another important initiative for psychology research will be the BRAIN initiative, Riley says. BRAIN began funding researchers in 2014 and continues to accept new applications, awarding more than $70 million to research teams at 60 institutions in fiscal year 2016. The first stages of the project have mostly been focused on building tools that enable scientists to map the connectivity and circuitry of the brain.

"But all of that work is ultimately to understand behavior," Riley says. "As we move into the next five years, the goal will be to take some of those tools and map that circuitry onto specific behaviors. I expect we'll be seeing even more things coming out of BRAIN that have increasing relevance to psychology."

Sterling Johnson, PhD, a clinical neuropsychologist at the University of Wisconsin–Madison, has funding from BRAIN for a project that aims to develop better methods to detect small but meaningful structural changes in the brains of healthy adults that could predict the onset of Alzheimer's disease. He's also funded through the large BD2K initiative for another project that applies computational neuroscience to Alzheimer's disease. Launched in 2012, BD2K aims to develop tools to integrate data science and vast data sets (often called "Big Data") with biomedical research.

Those projects are succeeding thanks to the close collaboration between the Wisconsin Alzheimer's Disease Research Center and the University of Wisconsin's Department of Computer Science, he says. "This kind of research is much more powerful when you can do it in a multidisciplinary way," he says. "It's not a new concept to do team science, but initiatives like BRAIN really incentivize thinking about a problem from multiple angles, and really allow for high-impact science."

Speak a common language

Leslie Leve, PhD, who trained as a developmental psychologist and is now a professor in the College of Education at the University of Oregon, is also beginning to reap the benefits of transdisciplinary research, thanks to her work with Environmental influences on Child Health Outcomes (ECHO). Launched in 2016 with $157 million in awards, the seven-year initiative will study the effects of a broad range of early environmental influences on child health and development. 

The program was a perfect fit for Leve, who for more than a decade has followed birth and adoptive families in an effort to separate the effects of genes and parenting on child development. Under a new grant from ECHO, Leve and her colleagues will enroll new children to build upon their existing data.

In the process, she's collaborating with psychologists, physicians, psychiatrists, social workers, geneticists and environmental scientists. "Everyone is coming from different philosophical backgrounds. In the end, that produces really novel, innovative science," she says.

Yet it can be challenging, too. Openness to ideas and willingness to learn from others is key to succeeding, Leve says. "We're learning to speak a common language and find the best way forward. You have to be willing to hear other perspectives, other paradigms and consider them in your research methodology."

It's not the right path for everyone. In addition to good communication and willingness to learn, thriving in this space requires patience, Bickman says. "It's so much easier to run a study with college students, hand out a questionnaire and be done in a semester. These large-scale projects often don't bear any fruit for years," he says. "It's a very different career path, and it has to be considered carefully." But for the right personality, the rewards can be significant, he adds.

Interested in diving in? Riley, Johnson and Leve all recommend starting by learning the basics of other fields relevant to your research interests. Read up on basic genetics. Learn to use electronic health records. Talk to computer scientists and learn their lingo. "Do some initial work to set yourself up to be competitive for a project like this," Riley says.

You probably don't have to go far to make those connections, Leve adds. "It's a tight-knit science world. Most likely, I know somebody who knows somebody who's an expert in a particular discipline, whether at my own institution or elsewhere."

She recommends building those connections in natural ways, by collaborating on a paper or sharing a draft of a grant you're working on to get the perspective of someone from a different field. "Those things can provide a really good training ground for this kind of experience," she says.

Ultimately, if you want to be a part of a major research initiative, you have to be willing to look beyond the traditional boundaries of psychology to collaborate and innovate in bold new ways, says Johnson. "It's hard to get funded by NIH these days doing individual lab research. NIH is looking for high-impact science that's really going to move the needle," he says. "They're looking for things with clear translational relevance that are going to make the world a better place."

Resources

All of Us Research Program
www.nih.gov/research-training/allofus-research-program

The BRAIN Initiative
www.braininitiative.nih.gov/index.htm

Environmental influences on Child Health Outcomes Program
www.nih.gov/echo

Big Data to Knowledge
https://datascience.nih.gov/bd2k

By Kirsten Weir


This article was originally published in the June 2017 Monitor on Psychology

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22 Sep 2017

Women Outnumber Men in Psychology, but Not in the Field’s Top Echelons

Women Outnumber Men in Psychology, but Not in the Field’s Top Echelons

A new APA report recommends ways to boost women's status and pay

Even as women have come to dominate psychology in terms of numbers within the educational pipeline, workforce and APA, they continue to lack equity with their male colleagues when it comes to money, power and status, according to a new report from APA's Committee on Women in Psychology (CWP).

"The Changing Gender Composition of Psychology: Update and Expansion of the 1995 Task Force Report" reviews the data and offers recommendations in such areas as education and training, employment and professional activities.

What's most surprising about the findings is how little has changed in the more than two decades since the first report, says lead author Ruth Fassinger, PhD.

While female psychologists have made gains in some areas, they have seen increasing disparities in other areas, such as salaries (see chart), which the report suggests could be partly due to the influx of young women joining the workforce for the first time.

"Women [in psychology] are still experiencing inequity," says Fassinger, a professor emerita at the University of Maryland's College of Education. "You see it everywhere: in training, in the jobs that women have and the patterns of workforce participation, and in APA itself."

Pervasive inequities

Drawing on data from APA's Center for Workforce Studies (CWS) and a literature review and analysis Fassinger conducted as a visiting scholar at APA, the report notes the dramatic growth of women's representation within psychology that began in the 1970s and 1980s. Take psychology education. Of the 70,311 students enrolled in psychology graduate programs in 2014, according to CWS data, 75 percent were women. And up to 80 percent of students in training programs focused on health service provision are women. But by the time they finish their training, the report notes, female doctoral students are already at a disadvantage, with significantly higher debt levels than their male peers, according to a CWS analysis of pooled data from 1997 to 2009.

Unequal Pay Continues

As women psychologists enter the workforce, they encounter lower salaries than men regardless of subfield. The average wage gap in starting salaries for recent doctoral grads is almost $20,000, the report points out, citing National Science Foundation (NSF) data from 2010.

One bright spot is jobs at government agencies, where women psychologists predominate and the wage gap is much smaller than in other settings. According to the NSF data, women with psychology PhDs who were working in government in 2010 made almost 92 percent of what their male counterparts made. But even that sector has seen a drop in equity along with other sectors; in 1993, women's government salaries were 94 percent of men's.

"The fact that women are accruing greater debt yet are being paid less is alarming," says Alette Coble-Temple, PsyD, chair of APA's CWP and a professor of clinical psychology at John F. Kennedy University in Pleasant Hill, California. Women who are ethnic and racial minorities and women with disabilities can face even greater disparities, she adds. Minority students finish their doctoral training with significantly more debt than white students, for example. The difference is especially pronounced among PsyD students, the report notes, citing data from 1997 to 2009 that show an average $95,000 debt for minority PsyD recipients versus $84,000 for white PsyD recipients.

Women in academia face particular challenges, the report emphasizes. It typically takes women a year longer to achieve tenure than men, for example. And even though women are flooding into the discipline, they are still underrepresented as associate professors, full professors and institutional leaders.

According to CWS data, 46 percent of all male psychology faculty in the academic year 2013–14 were full professors compared with 28 percent of female faculty, for instance. Just 16 percent of male academics were assistant professors compared with almost 28 percent of female academics. Women were also overrepresented among adjunct, nontenure-track lecturer and other temporary positions, with almost 17 percent of female faculty in these roles compared with 11 percent of male faculty. These patterns have held steady over the last two decades despite the influx of women into psychology departments.

The inequities play out within APA itself. Women now make up 58 percent of APA's membership and hold more than half of governance positions. Yet women are underrepresented when it comes to the association's top honors, participation in divisions and editorial roles. While 40 percent of those involved in the review process of APA journals are women, for instance, most are ad hoc reviewers. Just 18 percent of editors of APA journals are women.

The report acknowledges that women's choices account for some of the disparities. Women are more likely to seek PsyDs, for instance, and graduates of these programs accumulate almost twice as much debt as those of PhD programs. In addition, women practitioners are more likely to work part time, limiting their income. But, says Fassinger, these choices must be viewed within a sociocultural context that constrains women's options. "It's almost impossible to talk about things as free choice when you have all this socialization that propels people into certain directions," she says, noting that women may choose part-time work because of child-rearing obligations.

To address the disparity, the Committee on Women in Psychology recommends in the report that APA work to raise awareness and advocate for equity, pushing policies that encourage salary transparency and monitoring progress.

The report also calls for researching students' decision-making processes and interventions that could influence their decisions, such as making students at all levels aware of the wide range of meaningful careers beyond health service provision so that they can take advantage of other employment sectors where there are opportunities. Other recommendations include continuing to advocate for federal funding for trainees and early career psychologists, creating a task force to identify barriers to advancement within academia, and facilitating more mentorship for women.

The report should spur research exploring the factors that make psychology careers less attractive to men, says Paola Michelle Contreras, PsyD, of APA's CWP and an assistant professor of counseling at William James College in Newton, Massachusetts. "This is a good take-off point to get more data and learn more about the nuances," she says.

To read the full report, visit www.apa.org/women/programs/gender-composition/index.aspx.

By Rebecca A. Clay


This article was originally published in the July/August 2017 Monitor on Psychology

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13 Sep 2017

Dorothy Carter Explores a Mission to Mars

Dorothy Carter Explores a Mission to Mars
APA member Dorothy Carter snagged a $1 million NASA grant to research team dynamics during long-duration space exploration missions.

It is human nature to turn to people in our inner circle when we are in trouble.

But what if that trouble occurs 128 million miles from Earth while you are hurtling toward Mars in a spacecraft? And what if the person you most need is the one you least trust?

These questions are at the center of new research by APA member Dorothy Carter, an assistant professor of industrial/organizational psychology at the University of Georgia (UGA). Just one year after completing her Ph.D., Carter snagged a $1 million NASA grant to research team dynamics during long-duration space exploration missions.

The three-year, collaborative study, called Project FUSION (Facilitating Unified Systems of Interdependent Organizational Networks), aims to help NASA successfully complete a mission to Mars by the year 2030 by accelerating knowledge of multiteam systems (MTSs).

“Astronauts on a mission to Mars are very likely to run into challenging and unexpected situations,” explains Carter. “The people involved—on Earth and in outer space—may have the natural human inclination to turn to similar others, such as teammates. However, in order to save lives of the people on the mission, NASA personnel may need to be prepared to seek help from dissimilar others.”

MTS research is a growing area of psychology that deals with intergroup dynamics in complex organizational settings. These networks of interdependent teams work on proximal goals in service of a common, overarching goal—like disaster-response efforts, global healthcare initiatives, and even pharmaceutical launches.

The human pitfalls of such tentacled organizations are obvious: potential competition among teams, inadequate communication and collaboration, hierarchical obstacles, and leadership challenges, to name a few.

NASA’s task in putting together an MTS for the Mars mission will be complicated. Not only will astronauts operate at the intersection of multiple teams doing highly specialized tasks, membership in those teams will rotate over time.

Additionally, “communication with family and coworkers on Earth will be severely limited and conducted entirely via technologies that have inherent communication delays,” Carter says.

To pinpoint what Carter’s research proposal terms the “hard truths and inherent complexities about teamwork,” Project FUSION is building a sophisticated agents-based mapping system that predicts the social networks that are likely form among MTS members across a variety of situations during space missions.

This computer-modeling approach allows Project FUSION to program a set of behavioral rules for stand-in human “agents” to see how their relationships play out in different circumstances. Who will interact with whom? Who will be trusted? Who will accept influence from whom? What are the basic human tendencies that will lead them to behave in a particular way?

“We call these explorations ‘virtual experiments’ . . . and it’s how we are speeding up the science,” says Carter. “We want to be able to identify the different factors that are going to have the most impact on the formation of affective, behavioral and cognitive relationships. And we don’t have the luxury of being able to study this for the next 100 years.”

The project has processes to ensure they are accurately feeding NASA-specific information into the models. They use qualitative interviews with NASA personnel, such as managers, mission control members and former astronauts from the International Space Station, to get a better handle on common disconnects that occur, as well as instinctive responses to unexpected events.

Project FUSION also is conducting laboratory studies at UGA and Northwestern University that include role-playing sessions between student subjects and professionals at HERA , NASA’s analog-simulation habitat for studying and training humans for extreme space environments.

“The students act as mission control,” says Carter. “Hopefully the professionals who are in HERA for several months will play our game three or four times with ‘mission control.’”

Ultimately, the project is expected to identify likely patterns of group dynamics and behavior and help NASA develop best practices for optimal team functioning during many situations that can go right—and very wrong—during long-distance space exploration.

Carter’s launch into teams and leadership research—and into academia at all—followed a unique trajectory.

Originally from Houston, Carter desired to be a ballerina. She left high school to be part of a professional dance training program, completing her degree through correspondence. After pursuing dance professionally for several years, she decided to go to college at age 21.

“My initial plans did not involve college,” she says. “I ended up at Wright State University (WSU) in Ohio where they had an open-door policy. I walked in a week before classes started and signed up. . . . However, this was one of the best decisions of my life. As an undergrad, I received fantastic one-on-one mentoring in research from the faculty at WSU.”

Excited by the psychology classes she took, Carter was encouraged by her mentors to pursue research. She says was drawn to study leadership and MTSs to some degree because of her background in dance.

“Large groups of people, made up of different teams, having to coordinate their behaviors to achieve a common goal. Hmmm . . . sounds like a ballet company!” she exclaims.

Once she got to graduate school at Georgia Institute of Technology, Carter was able to work with Leslie DeChurch a leader in MTS research, with whom she copublished several articles on the topic. Her award-winning dissertation research, advised by DeChurch, leveraged social network approaches to understand leadership in MTSs. 

Her work on the FOCUS grant builds on this prior research, as well as other NASA projects led by members of the Project FUSION research team.

“We’re expanding on these previous projects that I had the pleasure of working on in grad school,” Carter says. “It’s not like, ‘Oh Dorothy Carter independently developed all these ideas by herself and got a million dollar grant just out of grad school!’ Project FUSION is a collaboration across a big team of incredible researchers who are at both senior as well as more junior stages in their careers.”

“I think my personal experiences reflect the way that science is actually conducted these days,” she reflects. “It’s a group effort across multiple laboratories. Understanding multiteam functioning doesn’t just apply to the organizations we’re studying, it applies to the researchers ourselves. A lot of scientists work in MTSs, so science itself can be advanced by this research.”

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23 Aug 2017

How Did You Get That Job? A Q&A with Chief Clinical Officer Dr. Dennis Morrison

The knowledge, skills and experience gained through your psychology training can successfully transfer to a variety of jobs. Dr. Dennis Morrison is the Chief Clinical Officer at Netsmart Technologies, the largest provider of electronic health records and related technologies and services to behavioral healthcare and other human services organizations. In his role, he helps make sure customers are using tools that meet their needs and are clinically appropriate and psychometrically sound. Learn how you can apply your psychology education to a similar career path.

Dennis MorrisonSpeaker:
Dr. Dennis Morrison has worked in the behavioral health field since 1969. Academically, he holds two Masters degrees in Psychology and Exercise Physiology from Ball State University. His doctorate is in Counseling Psychology also from Ball State University. He is a prolific author, frequent presenter (including a TEDx talk), and is co-inventor on a patent for a behavioral healthcare outcomes software product.

 

Garth Fowler, PhDHost:
Garth A. Fowler, PhD, is an Associate Executive Director for Education, and the Director of the Office for Graduate and Postgraduate Education and Training at APA. He leads the Directorate’s efforts to develop resources, guidelines, and policies that promote and enhance disciplinary education and training in psychology at the graduate and postdoctoral level.

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14 Aug 2017

The Art (and Science) of Excellent Mentoring

The Art (and Science) of Excellent Mentoring

This series provides evidence-based rules of engagement for developing high-impact mentoring relationships and addresses some of the most salient and consistent ethical challenges and tensions for mentors in any organization or context. *This series is eligible for CE credit. Earn 1 CE credit for each session.

The two-part series includes the following topics:

Becoming a Master Mentor

Learn the interpersonal habits and behavior strategies of Master Mentors, including techniques for forming and managing effective mentorships.

Ethical Issues in Mentoring Relationship

Utilizing a mentoring Code of Ethics and ethics vignettes, this workshop emphasizes the values, attitudes, and behaviors of ethically conscientious mentors.

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14 Aug 2017

Ethical Issues in Mentoring Relationships

Decades of research indicates that mentorships lead to significant positive career and personal outcomes for mentees.  But mentoring relationships are also interpersonally complex, fluid, ever evolving, and sometimes dysfunctional.  This workshop addresses some of the most salient and consistent ethical challenges and tensions for mentors in any organization or context.  Mentoring relationships are framed as fiduciary relationships in which mentors own a fundamental obligation to avoid harm to the mentee and to promote the mentee’s best interests whenever possible.  Utilizing a mentoring Code of Ethics and ethics vignettes, this workshop emphasizes the values, attitudes, and behaviors of ethically conscientious mentors.

Learning Objective
Describe at least 5 of the principles bearing on ethical mentorship.

W. Brad Johnson, PhDPresenter
W. Brad Johnson is Professor of psychology in the Department of Leadership, Ethics and Law at the United States Naval Academy, and a Faculty Associate in the Graduate School of Education at Johns Hopkins University. A clinical psychologist Dr. Johnson is a fellow of the American Psychological Association and recipient of the Johns Hopkins University Teaching Excellence Award. Dr. Johnson is the author of numerous publications including 13 books, in the areas of mentoring, professional ethics, and counseling. His most recent book is: Athena Rising: How and Why Men Should Mentor Women (2016, with David Smith).

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25 Jul 2017

How Did You Get That Job? A Q&A with Consultant Dr. Melanie Kinser

The knowledge, skills and experience gained through your psychology training can successfully transfer to a variety of jobs. As a consultant, Melanie Kinser, PhD, leverages her understanding of psychology and business to help leaders and safety professionals strengthen organizational culture and in turn, strengthen their bottom line. Learn how you can apply your psychology education to a similar career path.

Melanie Kinser, PhDSpeaker:
Melanie Kinser, PhD, focuses on translating complex topics into practical strategies that are realistic for her client's demanding work environments. Her clients include Fortune 500's, startups, and non-profits. She has partnered with organizations in the US, Canada and Australia in industries such as Technology, Healthcare, Energy, Pipeline Construction, Manufacturing, Higher Education and Nuclear. She has a Master’s and Doctorate in School Psychology from the University of Missouri. Dr. Kinser has published articles on organizational change and leadership development as well as presenting at several national conferences.

Garth Fowler, PhDHost:

Garth A. Fowler, PhD, is an Associate Executive Director for Education, and the Director of the Office for Graduate and Postgraduate Education and Training at APA. He leads the Directorate’s efforts to develop resources, guidelines, and policies that promote and enhance disciplinary education and training in psychology at the graduate and postdoctoral level.

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21 Jul 2017

Leadership: A Three-Part Series

Leadership: A Three-Part Series

In this 3-part web series, you'll learn the fundamentals of servant leadership, a leader or an organization that seeks first to serve others. The presentations cover effective communication, managing people and processes and positively transforming people and organizations. *This series is eligible for CE credit. Earn 1 CE credit for each session.

Each program runs about 1 hour:

Leadership and Communication

No communication skill is more important than listening. Knowing the basic barriers and shortfalls of communication and doing something about them is a big step in improving our ability to communicate effectively.

Leading and Managing People and Processes

In order to accomplish a mission, establishing a process is important. However, people complete the processes and ensure the mission is accomplished. Learn the importance of maintaining a dual focus on people and processes.

Leaders Implementing Positive Change

It takes strong leadership to help people and an organization transition in order to make a change. Change is the event, transition is the means of getting there. Learn what it takes to implement positive change by focusing on the transition process.

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12 Jul 2017

A Beginner’s Guide to Investment Vehicles

A Beginner’s Guide to Investment Vehicles

Of all the questions in the personal finance world, "What should I invest in?" easily comes to mind as the most common. Truth be told, there's really not a 100% correct answer or blueprint for people that are just starting out in their careers.

However, if you arm yourself with as much information as possible, it's so much easier to jump in and create your own investment strategy.

Even before we jump into potential strategies and goals, it's important to have a baseline understanding of what's out there to actually invest in! In this two-part investing series, we are going to take a look at the most common investment vehicles that will be available to a beginner investor.

For the purposes of this article, we are going to avoid real estate investments (for now). The following list will give a baseline definition of the investment vehicle, as well as important characteristics like what level of fees are typically involved and how much risk is associated.

Here are a few of the main investment vehicles that you need to know about early in your career:

1. Stocks

Diversification: Low

Risk: High to Moderate

Fees: Low

Stocks Definition: “Security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.”

What you need to know:

Almost everyone has heard of stocks (commonly called shares or equities) in some form or fashion. When you buy stock, you are essentially buying a small part of a specific company.

To purchase stock in a company, you have to use a broker like Schwab, E-Trade, Fidelity, etc., to manage the transaction. The broker will charge a fee per transaction that you make through their purchasing platform. Because there are so many brokerages available online, fees in recent years have become extremely low and can range anywhere from $4 to $7 per trade.

In terms of risk, stocks aren't all created equal. The quality of a company that you are buying is a major factor in how risky a stock can be. Blue chip stocks like Coca Cola, Exxon, and the other large companies that you can think of tend to be seen as less speculative, whereas smaller, unproven companies can be more risky to buy.

You do not need a fund manager to invest in stocks, unlike some of the other vehicles on this list.

2. ETFs

Diversification: High

Risk: High to Low

Fees: Low to Moderate

ETF Definition: “An exchange-traded fund is a ‘marketable’ security that tracks an index, a commodity, bonds or a basket of assets like an index fund.”

What you need to know:

ETFs have become extremely popular in recent years, because they combine a variety of investing options with a large amount of diversification while having low fees.

An ETF essentially tracks a sector like energy, or an entire market like the DOW or NASDAQ. So, if you were to buy an energy ETF, you would actually be buying shares of several companies that are contained in that particular sector.

The range of investment options with different ETFs allows investors to choose their particular level of risk.

3. Mutual Funds

Diversification: High

Risk: High to Low

Fees: Moderate

Mutual Funds Definition: “An investment vehicle that is made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.”

What you need to know:

Mutual funds are an extremely popular investment vehicle because they specialize in diversification. Like an ETF, when you invest in a mutual fund you are actually buying a variety of stocks.

There are many different types of mutual funds, but for the purpose of this article we are going to focus on "actively managed" funds.

Actively managed means that there is a fund manager that oversees the investments made within a specific mutual fund. Their goal over time is to guide the fund in a way that hopefully outperforms the market.

This active management does lead to extra fees associated with the mutual fund, which will have an effect on your overall return on investment. In addition, mutual funds can have a higher tax burden than other diversified investment vehicles (like ETFs) because more transactions are made by the fund manager that are subject to capital gains tax.

There is a large range of investment options associated with mutual funds, and even mutual funds that invest in a range of other mutual funds!

4. Bond Funds

Diversification: Moderate

Risk: Moderate to Low

Fees: Moderate to Low

Bond Fund Definition: “A fund that invests in bonds or other debt securities.”

What you need to know:

A bond is a debt investment in which the investor loans money to a borrower, and then after a certain period of time is repaid with interest. Bonds are typically thought of as much more stable than stocks, but have lower returns on an investment.

Bond funds operate in a similar way to mutual funds, and are often actively managed by a fund manager. Rather than buying stocks, a bond fund will invest in a variety of bonds.

Interest rates can have a major effect on bonds and bond funds, so it's important to keep track of how the Fed is currently setting rates (at the time of this writing, the Fed is slowly raising interest rates).

5. Money Market Accounts

Diversification: Low

Risk: Low

Fees: Low

Money Market Account Definition: “An interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability.”

What you need to know:

Money market accounts operate in a similar way to a regular savings account and are seen as one of the safest investment vehicles.

The investor places money in the account, and is given a return by the bank at a set rate over time. These accounts can be a good option for investors that may not be ready to jump in fully to investing, but don’t want inflation to diminish the value of their available cash.

Usually, banks will take money that is invested in a money market account and buy low-risk vehicles like certificates of deposit or debt securities with a short maturity rate. The idea is to create a return on investment without risking too much to market volatility.

This is just the beginning...

There are obviously many more investment vehicles out there (we didn't even mention real estate!), but the key to early investing is to keep everything as simple as possible. If you stick with understanding the basic options and grow your strategy from there, you'll have a long and successful stint with investing over the course of your career and life.

In part two of this series, we'll discuss how to define your investing goals and ultimately develop the right strategy to meet them.

-- Bobby Hoyt is a former high school teacher who paid off $40,000 of student loan debt in a year and a half. He now runs the personal finance site MillennialMoneyMan.com full-time, and has been seen on CNBC, Forbes, Business Insider, Reuters, Marketwatch, and many other major publications.

The opinions and advice expressed in this article are those of the author and do not necessarily reflect those held by the American Psychology Association (APA).

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12 Jul 2017

How to Create an Investment Strategy Early in Your Career

How to Create an Investment Strategy Early in Your Career

One of the most intimidating aspects of personal finance when you are just starting out in your career or beginning to get ahead is choosing an investment strategy that works. Unfortunately, we are all bombarded with "get rich quick" investment products and messages on almost a daily basis. It muddies the water and distracts from the reality that building wealth is a process that just doesn't come easily.

No matter what path you choose in investing or what anyone else tells you, the ultimate factor is time. You want your money to be subjected to the incredible force of compounding interest for as many years as possible.

What you choose as the vehicle to build your wealth is up to you, and honestly there are a lot of ways to do it. In our last investing article, we detailed some of the most basic investment terms and vehicles to create a foundation to build on.

This article is going to dive into the actual process of picking a strategy that works the best for your career and life.

Here are four important factors to consider while choosing an investment strategy:

1) What are your goals?

Just a few decades ago, the biggest reason for the average person to invest was pretty simple. You worked for a set amount of years while putting money into investment accounts, with the hope that you would be able to retire at the end of your career and live off of your various investments.

Today, things have changed drastically. Millennials in particular are rewriting the definition of what retirement actually means. Young people are wanting to retire earlier, work less and enjoy their families more, and also are willing to cut back on lifestyle costs to put more money away.

So, before you decide anything, you need to look at your life and career and decide what you want it to look like.

Do you want to retire early? Then you'll need to grow your retirement accounts as aggressively as possible and make sure your money isn't locked up in IRAs until you are 59 1/2.

If you want to take the traditional route, there are a range of investment options available to you. Your biggest goal would be to make sure you maximize your returns over time and make educated guesses on when you think you'll realistically want to retire.

2) See what options are readily available first

Of course, before you jump into any type of plan to build wealth through investing, you need to fully understand what options are available to you through your career path.

Does your company have an attractive 401(k) match? If so — that's essentially free money that you'll want to max out first before applying investment funds elsewhere. Also, how limited are the investment options within that 401(k)?

You might be working with a company that has an annuity-based retirement system, where you have no control over the funds that you contribute to retirement every month. If that's the case — there's a good chance that you'll want to supplement your retirement plan with an IRA that allows you to buy ETFs (exchange-traded funds), mutual funds, or individual stocks and bonds as you please.

If you're self-employed, you really have a wide range of options depending on your business income. The best strategy here would be to hire a great accountant that can guide you on what type of account(s) will work best to keep your taxable income low.

How much debt do you have? It's no secret that getting a degree in the mental health profession isn't cheap. Many mental health professionals have high student loan debt loads. When you are deciding what to do with money that you've set aside for investing, how do you know that you shouldn't apply it to your debt instead?

The answer is fairly simple: What's the interest rate on your loans?

If you have a higher interest rate at 6% or more, you might want to consider putting your money there first. Any time you pay off higher interest debt, you are keeping a lot of money that would have gone to interest in your pocket. So, paying off your debt is almost a guaranteed return.

If you look at stock market average returns over history, they have averaged anywhere from 7–12% (depending on the source you're reading). If you feel confident that you will outperform your student loan interest rate in the market, you might want to put your money there.

Just understand — investing is never guaranteed and there is a risk of losing your money, so make sure you take that into consideration when dealing with the debt vs. investing question.

3) Taxes have a huge impact!

Taxes are rarely on people's minds at the beginning of their careers, but if you ignore them, they can eat a hole into your investment returns.

That's why it's typically a good idea to use a "tax advantaged" investing strategy. Most commonly, that means putting money into designated retirement accounts like a Roth or Traditional IRA.

Very quickly, here's the difference between those two popular IRA choices:

Roth IRA: Money is taxed at your current income tax rate when you contribute money to the account, and then grows tax free until you take the money out at retirement.

Traditional IRA: Money is not taxed when you contribute to the account, but when you take it out at retirement it will be taxed at whatever tax bracket you fall into later down the road.

Why is this important? It has a ton to do with your investment strategy! When you are young, you generally are in a lower tax bracket, so the investment funds may be better served in a Roth IRA. That means that those funds will be taxed at a lower rate and then grow over the course of your career tax free.

If you opt for a traditional IRA, you are essentially betting that your tax bracket will be lower in the future than it is now.

It's always important to consult with a tax professional when making these choices, but know that even the best accountant can't predict future tax rates. You'll have to make the best informed decision you can and hope for the best.

4) Are you paying too much in fees?

You need to be aware that fees can eat away at your returns over time in a drastic way.

Every time you make a trade in your investment account, you'll have to pay a commission. Those $4 to $7 dollar fees might seem small, but they can slowly pile up to a huge amount over 30-plus years of investing. Buying and selling too often and based on impulse within your accounts is a good way to lose a large sum of money over time.

There are also management fees to consider. Mutual funds in particular are often packed with fees that you may not even know about, and your investments will suffer over the long term.

The popular personal finance site NerdWallet recently conducted a study that showed even a 1% fee could cost a young investor up to $590,000 over a 40-year investment period.

Bottom line—pay attention to the fees.

5) Do you want income, or growth?

This is a huge debate in the personal finance world right now. Buying dividend-producing stocks is a popular investment strategy because particular equities with a high-dividend yield (or amount paid to you quarterly in the form of cash) can essentially produce a passive income. That sounds great, right?

The rub is that historically, dividend stocks don't produce quite as much growth as other equities that don't pay a dividend.  Some argue that while dividend income is nice, they would much rather own companies that reinvest those potential dividends back into the company so it can grow larger and more valuable (and in turn make your stock more valuable).

Like everything in investing, there isn't necessarily a "right" answer. Everything is based on your financial goals and what you are most comfortable investing in and understand the most.

Finally and above all else—never invest in a vehicle that you don't fully understand. You can create all of the goals and strategies that you'd like, but if you don't know what you're actually buying with your investment funds, you're probably going to lose money.

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