I'm 26. How Do I Invest for Income and Growth?

3. Make a Distinction between Tomorrow's Retirement and Today's 'Good Life'

If you're a young professional with a real job, you should have a real retirement account that's separate from your personal portfolio. Why? Because your personal investing goals (see TheStreet.com's The Good Life Section or Small Business Stories) shouldn't necessarily be the same as your retirement goals. Also, retirement accounts like IRAs subject you to regulations that limit your flexibility.

Yes, it's a great idea to take full advantage of the tax benefits that a specialized retirement account, such as an IRA and a 401(k) offer you, but don't feel the need to relegate your investing activities to your scheduled contribution.

4. Figure Out What You Want in an Asset

Remember, you're allowed to pick objectives for your personal portfolio that are different from those of your retirement account. Maybe you're after growth. Maybe income's what you want. Maybe it's a combination of both.

Defining what kind of assets you're looking for before you go on your search will definitely help narrow the large number of offerings in front of you.

For example, with stocks, there's usually some tradeoff between growth, value and income plays. It's pretty rare to find a stock that returns double digits every year, pays out a king's ransom in dividends, and shows no signs of slowing down. If you're realistic in your goals, you'll have at least some guidance when it comes to deciding between things like "blue chip" stocks or emerging market investments.

5. Get Fluent in Investing (If You're Not Already)

Being fluent in investing goes beyond simply knowing the lingo -- it's about understanding the cause-and-effect relationships between the movements you make in your portfolio and the changes those moves have on your portfolio's value.

Fluency in the investing world also involves investing like a professional -- really understanding the facts about companies and investment vehicles that you put your money into. In other words, know what you own.