Getting Smart About Investing

in Money

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Now that you’re on the road to retirement, you may be thinking about investing some of your earnings or savings to build a retirement nest egg or just supplement your income. It’s a great strategy—provided that you set realistic goals and create a plan for getting there. The following checklist will offer a basic overview of what it means to achieve investment success and how to avoid the pitfalls.

Create guidelines for making decisions about your money

Setting realistic goals for yourself can only mean you’ll be more likely to make sound decisions about your investments. Before getting started, ask yourself some key questions:

What are my financial objectives? Perhaps your primary goal is retirement security, or you want to finance the care of an elderly parent. Or there may just be something specific you want to purchase.

What should my strategy be? The path you choose should be based on your goals. Do you want to protect your money or earn income from it? Perhaps you want to do both. You’ll also need to decide on a time frame in which you want to achieve your goals.

What are the risks? Depending on the strategy you choose, assess the risks to ensure they can be managed, and to decide if they’re worth it for you.

Once you’ve answered these questions, you’ll be better prepared to speak to a financial professional and choose the investments that are best suited to your needs and risk comfort level. Doing the homework in advance will help you feel more in control of your money—and your future.

Think long-term

Investing means making decisions for the long term. In other words, try to ensure that whatever investment you choose (for example, mutual funds, stocks or bonds) is likely to become more valuable over time. Don’t expect too much too soon, or you may be disappointed. It’s important to remember that in investing, success can take many forms. You may not make as much money as you’d hoped for, but you might, for example, earn just enough interest to buy something you need and not lose any money at all. In other words, you achieved your goal.

Don’t get overwhelmed

Trying to decide which investments are right for you can be confusing, to say the least. The last thing you need is to lose sleep over whether you’ve made sound decisions with your money. So keep it simple. Choose a few uncomplicated investments that you understand, such as solid mutual funds or retirement funds that are targeted for your age group.

Get sound financial advice

You’ll want to find a financial professional with whom you feel comfortable and who understands your risk tolerance. You’re going to have a lot of questions to ask, and you’ll want to have confidence that the answers you get are credible. When interviewing potential financial advisors, be sure to inquire about the following:

  • services offered
  • educational background and experience (including any licenses required)
  • method of working with clients
  • compensation for services

Keep these basic guidelines in mind and you can confidently get started on making your retirement nest egg grow.

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