Diversify Your Investments To Match Your Stage of Life
for the future is a long-time commitment, and the sooner you begin, the better
off you will be at retirement. The way you approach investing should
continuously change to match whatever stage of life you are in to ensure that your
investments remain in line with your financial situation and life needs.
Investing Early In Your
people have expendable income at the start of their career, but that doesn’t
mean that you shouldn’t make saving a priority. After setting aside the portion
of your paycheck that is necessary for day-to-day living costs, set aside a
portion of each paycheck to save for the future –no matter how small the
Before making long-term
investments for retirement or other future goals, focus on creating a rainy day
fund that you can fall back on.
money market funds that provide better interest rates than standard savings
accounts, and quick access to your money.
Once you have a cash
reserve make sure to open a retirement fund –whether an IRA or a 401k and establish regular,
automated contributions. If the money never reaches your hands you are less
likely to spend it, and even the smallest savings contributions can become
significant amounts by the time you retire through the power of compounded
growth. At this point in your career you have the ability to be more aggressive
by making investments that pay higher returns.
If your company has a
401k plan that involves matching, make sure to at least contribute whatever
amount your company will match so that you aren’t unnecessarily leaving money
on the table.
If/when you get a raise,
make sure to increase your savings and retirement contributions.
Investing When You Get
Married or Buy a House:
a major change in your life usually means a change in your financial situation.
When buying a home, a
large down payment and mortgage payments are likely to impact how much free
cash you have for other things in your life –even retirement. If you don’t have
the money necessary for a down payment, it may make sense to temporarily scale
back the amount of money you invest for retirement until you have saved the
money you need to purchase your home. Just be sure to raise your retirement
contributions back up as soon as you are able to do so.
Getting married usually
means a second income, yet shared expenses. As a result, you will likely have
more money to invest for retirement and the long term. Before getting married,
you and your partner should sit down and determine your priorities for both the
short term and the long term and then figure out how much you should be
investing in both types of savings/investment accounts.
Investing Once You Have
a child means the need to prepare not only for your future, but for theirs.
Make sure you have an updated will and life insurance policy that take into account your child’s future should something happen to you.
Start a 529 fund with automated contributions when your child is born. As with your own retirement savings, because of the power of compounded growth the earlier you begin saving the more money you will have when your child is ready for college.
Investing in Mid-Career:
the time you are in the middle of your career the odds are good that you’ll
have a larger salary, but you’ll also have less time to save before retirement.
Make sure your
investment strategy still makes sense.
It is time to scale back
the risk levels within your portfolio and add less risky investments such as
If your children are out
of the house and expenses such as college are no longer an issue, make sure to increase
your savings for retirement.
Once retirement is about a decade away meet with a financial advisor to see if there are things you should be consolidating or steps to take to ensure a larger revenue stream when you retire.
*Products of our Wealth Management service are not FDIC insured, may lose value and are not bank guaranteed.