The back to school season is a reminder that knowledge is power. Understanding your options and what works best for you is required when making decisions on how you want to invest your money.
Let’s start with the back to school basics.
Why bother with investing?
Investments are a great way to combat inflation. When you leave money “Under Your Mattress” or in a savings account, you run the risk that the buying power of those funds is being eaten away by inflation. There may be other reasons for a savings account, but not necessarily for investing.
Investments are not just for the rich?
Starting small is a great way to test the waters, to see what you are comfortable with. It is a good habit to add investing to your monthly budget, even if this is a small amount. Including investing in your budget is a great way to “Pay Yourself” first. For some, this may start with 5 or 10% of your income, or whatever you can afford. Building up your retirement nest egg allows you to make better choices later on in life.
What are your goals?
Are you hoping to have extra cash for home renovations? Or is retirement the game plan for your investment income? Knowing what you are aiming for can better help your decision making when choosing what type of investments you want to participate in.
Risk and Diversification
Choosing between high and low risk is based on what you are comfortable with. With high risk investments and the potential of high gain can be exciting but not for the faint of heart, they aren’t called high risk for nothing. Then there are the low risk investments with smaller income returns, but with less risk. With a proper financial plan, you may have uses for both low and high risk investments to meet different needs and situations.
You don’t have to figure it out alone
Your financial advisor should ask questions so that they can understand what you are looking to accomplish and what is needed to achieve your goals. Make sure your financial advisor is someone you trust. The more information that you share with them, the better they will be able to provide you suitable advice that can benefit you.
Do you have a quick tip on investments? We’d love to hear your ideas! You can reach me at Dan.email@example.com or message me on my social media.