Investing Through Life Stages
Investing is a lifelong process, and the sooner you start, the better off you may be in the long run. The first part of that process is developing consistent savings habits. Regardless of whether you are saving for retirement, a new house or that once-in-a-lifetime vacation, you will need a dedicated focus on saving. Regular contributions to savings or investment accounts may help with this process; and if you can automate them, they are even easier.
Factors That Affect Your Investment Decisions
Once you begin saving on a regular basis, you'll need to start making important decisions about how to invest your money. Regardless of the financial stage of life you are in, you will need to consider what your investment objectives are, how long you have to pursue each objective and how comfortable you are with risk.
Time and Risk Tolerance
All investing involves a certain amount of risk. In determining the amount of risk your investments should carry, consider weighing your ability to tolerate price fluctuations against your need to earn a certain rate of return. Keep in mind that time plays an important role in this decision. For a retirement that is 30 years away, you can probably tolerate more risk because you have the time to make up any losses you may experience early on. For a shorter-term investment, such as saving to buy a house, you probably want to take on less risk and have more liquidity in your investments.
A Disciplined Strategy and Your Financial Advisor Can Help
One of the hardest things about investing is to discipline yourself to save an appropriate portion of your income regularly so that you can meet your investment goals. Also, if you are not fascinated with investing, it is probably difficult to force yourself to review your financial situation and investment strategy on a regular basis. Establishing a relationship with a trusted financial advisor can go a long way toward helping you practice smart financial management over your entire lifetime.