10 Tips For Properly Planning Your Future Investments

By admin / February 18, 2019

Think investing is only for real estate tycoons and CEOs? Think again.

Everyone ought to be investing a percentage of their income, no matter how much, or how little, they make.

Only about half of all Americans currently invest in stocks (this includes retirement accounts like IRAs and 401(k)s). If you aren’t investing any of your money right now, you’re missing out on potential gains later on. 

Are you unsure of where to begin when it comes to investing? 

Read on for ten tips that will help you plan your future investments.

Benefits of Investing

Why is investing so important? There are lots of reasons to make investing a priority, regardless of your age.

Some of the greatest benefits of having investment accounts include:

  • Stay on top of inflation and increase the value of your money
  • Build wealth and make your money work for you
  • Make sure you have enough for retirement
  • Possibly retire early
  • Reduce your tax bill

Investing can also help you to reach other financial goals (such as college funds for your children) faster.

Tips for Planning Investments

There are lots of reasons to make investing a priority, whether you’re getting close to planning your retirement or are just getting your career off the ground.

No matter where you’re at in your life, these tips will help you be smart of about planning out your future investment: 

1. Consider Your Goals

When you start planning your investments, one of the first things you need to do is sit down and think about your goals.

Why are you investing? Do want to make sure you have money saved for retirement? Do you want to build up a rainy day fund or a college fund for your child?

Once you understand why you’re investing, you can tailor your investments to make sure they meet your needs.

2. Consider Your Risk Tolerance

Some investments are riskier than others. Before you make a particular investment, be sure to consider how volatile it is. Consider, too, whether or not you can handle that volatility.

A lot of people let their emotions get the better of them when they start investing. They watch the stocks obsessively and panic every time the value of a stock drops.

If this sounds like you, avoid stocks that are known to be volatile and stick with less risky options instead.

3. Diversify

Never put all your eggs in one basket. When it comes to investments, it’s a good idea to have a diverse portfolio.

Choose several different stocks, some that are safer and some that are riskier. That way, if the value of one drops, you won’t have to worry about losing all your money.

4. Set Up an Emergency Fund

Make sure you’re not tying all of your money up in long-term investments.

You also need to have an emergency fund available that will help you cover your expenses should something like a sudden job loss occur. It’s a good idea to have at least six months of your income set aside in savings.

Have that money readily available for a rainy day. That way, you won’t have to worry about scrambling to sell stocks or cashing out your 401(k) to make ends meet.

5. Take Advantage of Free Money

If you have a retirement plan set up by your employer, check to see if they will match some, if not all, of your contributions.

Make sure you’re contributing enough to take advantage of your employer’s maximum match. If you don’t do this, you’re essentially turning down free money — definitely not a good idea if you’re trying to save for retirement.

6. Rebalance Your Portfolio Occasionally

Rebalancing your portfolio gives you a chance to adjust your asset allocation and make sure you’re not overemphasizing one or more asset categories. This also helps to return your portfolio to a more comfortable risk level.

Schedule regular time intervals for rebalancing your portfolio. Most experts recommend doing this once every six or twelve months.

7. Research New Stocks

Before you consider investing in a new stock, be sure to do plenty of research and find out more about it.

Find out what people are saying about that stock and how it’s performed recently. Find out, too, whether or not there have been any complaints against a particular company to the SEC (Securities and Exchange Commission).

If you have a financial advisor, talk to them before you decide to invest in a particular stock, too.

8. Create a Timeline

Before you start investing, think about how soon you’re going to need that money back. For example, if you’re saving up for a house, you might want to stick to something short-term like a cash savings account.

If you’re saving for retirement, though, you’re obviously not going to need that money in the near future. Focus on long-term investments that will help you reach your pension goal and beat out inflation.

9. Take Emotion Out of it

Do your best to leave your emotions out of the equation when you’re planning investments. Focus on the long-term outcomes and don’t let small fluctuations cause you to panic. To be a successful investor, you need to patient and willing to play the long game.

10. Plan Ahead

Finally, be sure to create an investment plan for yourself.

Think about what it is about a stock that makes you want to buy it. Why are certain companies attractive to you? Have a set of criteria in place for choosing certain stocks and stick to those guidelines no matter what.

Think, too, about what would cause you to sell certain stocks.

Will you sell if a company loses a big customer? If a new competitor emerges? If a stock reaches a certain low valuation?

Get More Help Planning Future Investments

As you can see, there are a lot of things to keep in mind when you’re planning out future investments.

Keep these tips in mind and the process will be a lot easier, whether you’re investing in stocks, real estate, or anything else.

Do you want to learn more about smart investing?

If so, we’ve got lots of articles on our site to help you. Start by checking out this article for tips on how to find a great financial advisor. 

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