Building an investment portfolio and saving for the future doesn’t happen overnight, but it’s not that difficult to get started — plus, you’ll thank yourself in the long run for investing in your financial growth as early as possible. If you’re just beginning, here are a few important steps to follow to maximize your money and grow your wealth.
Lay Out Your Financial Goals
It’s important to sit down and think about your financial goals both short- and long-term before making investment decisions. For example, maybe you want to buy a home, start a business, plan for a comfortable retirement, etc. Identifying these goals should be your first priority, but it’s also important to be realistic, not to overextend yourself, to establish clear and achievable time frames, and to leave room for flexibility. Once you’ve decided on your main goals, then you can take action.
Automate the Savings Process
When you rely on building savings manually, such as in an IRA, you leave room for the busy day-to-day life to get in the way. There are also going to be things that seem much more critical and time-sensitive in the immediate future that makes putting away money for the long-term more difficult. If you automate your savings, your wealth is going to be continuously growing in the background without needing a second thought from you (until you need to adjust based on your circumstances).
A 401(k) account makes this incredibly easy. When you set up a 401(k) through your employer, a certain percentage of your monthly paycheck is automatically being transferred into your retirement account.
Plus, most companies match your contributions up to a certain percentage, which means your growing even more wealth automatically.
You can also achieve automatic savings by setting up a traditional or Roth IRA. These accounts allow you to link your bank account and set up regularly scheduled transfers, so the money goes straight into the IRA.
Annually Reassess Your Investments
It’s perfectly fine to put savings away and let it simmer in your accounts for a while. However, roughly each year it’s also important to check back in and evaluate the performance of your investments and how the market is changing. If you invest some in stocks and some in bonds, a stock market that increases in value will raise the proportion of your stock investments which could be riskier considering that bonds are more conservative than stocks — they have less potential for growth but also less potential to plummet in value.
These are the types of things to consider when re-evaluating your investment portfolio. It can be helpful to speak to a financial advisor when you want to look at your accounts and ensure you’re still on the right path for you.
It’s also important to have faith in the market — while investing in the stock market can be scary, especially when stocks plunge, a diversified portfolio has you investing in thousands of companies that will go through periods of plunging and then re-gaining strength. It can be tempting to pull out when the market crashes, but you risk losing out on lots of gains when the market turns around.
Do you need help assessing your investment portfolio and creating a solid savings plan? Our expert team members have you covered. Reach out to us at 800-526-9127 and be sure to browse through our other great financial guides.