SHOULD YOU INVEST FOR YOUR FUTURE?
I would say Yes.
Hence, investing has become increasingly important over the years, as the future of social security benefits becomes unknown.
In these hard times, people want to insure their futures, and they know that if they are depending on Social Security Benefit, and in most cases retirement plans, they know that they may be in for a rude awakening, when they no longer have the ability to earn a steady income. Investing is the best answer to the unknowns of the future.
Over the years you may have been saving money in a low interest savings account. Now, you want to see that money grow at a much faster pace. Perhaps you’ve inherited money from a relative or you realized some other type of windfall, and you need a way to make that money grow. So, investing is the answer.
Investing is also a way of getting the things that you want, such as a new home, a college education for your children, or expensive ‘toys.’ Of course, your financial goals will determine what type of investing you do.
If need to make a lot of money fast, you would be more interested in higher risk investing, which will give you a larger return in a shorter amount of time. If you are saving for the far off future, such as retirement, you would want to make safer investments that grow over a longer period of time.
To create wealth and security are the overall purpose of investing, over a period of time. It is also important to remember that you will not always be able to earn an income … you will eventually want to retire.
You also cannot depend on the Social Security system to do what you expect it to do. As we have seen with Enron, you also cannot necessarily depend on your company’s retirement plan either. So, again, investing is the key to insuring your own financial future, but you must make smart investments!
In most cases, investing is not a sure thing — it is more or less like a game – you will never know the outcome of the game until it has been played and a winner has been declared. When you play almost any type of game, you should have a strategy. Investing isn’t any different – you need an investment strategy.
The strategy in investment is basically a plan for investing your money in various types of investments that will help you meet your financial goals in a certain amount of time. Each type of investment contains individual investments that you must choose from. A clothing store sells clothes – but those clothes consist of skirts, dresses, shirts, pants, undergarments, etc. The stock market is a type of investment, but it contains different types of stocks, which all contain different companies that you may invest in.
You must first research and research some more, otherwise, it can quickly become very confusing – as there are so many different types of investments; there are each individual investments to choose from. This is where your strategy, also combined with your risk of tolerance and investment style will all come into play.
If you are a beginner and just starting in investing, you should have a financial adviser, who will advise you before making any investments. Your financial adviser will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment budget, but will also help you achieve your financial goals.
You should invest money with money that you don’t use and never invest money without having a goal and a strategy for reaching that goal! This is absolutely essential. Nobody should ever hand their money over to anyone without knowing what that money is being used for, and when they will get it back! If you don’t have a goal, a plan, or a strategy, that is essentially what you are doing! Always start with a goal and a strategy for reaching that goal!
Your Present Situation Should Be Stabilized Before You Think Of Investing
Before you even think of investing in any type of market, you should really take a long hard look at your current financial situation. Investing in the future is a good thing, but clearing up bad – or potentially bad – financial situations in the present is extremely more important.
Check your credit report. You should do this once each year. It is important to have a clear report, and to clear up any debt as soon as possible. If you have set aside $25,000 to invest, but you have $25,000 worth of bad credit, you are better off cleaning up the credit first!
Firstly, look at what you are paying out each month, and you should get rid of expenses that are not necessary. For example, high interest credit cards are not necessary. Pay them off and get rid of them. If you have high interest outstanding loans, you should pay them off as well.
If nothing else, exchange the high interest credit card for one with lower interest and refinance high interest loans with loans that are lower interest. You may have to use some of your investment funds to take care of these matters, but in the long run, you will see that this is the wisest course of action.
Get yourself into good financial position – and then enhance your financial situation with sound investments.
It does not make sense to start investing funds if your bank balance is always running low or if you are struggling to pay your monthly bills. Your investment money will be better spent to rectify adverse financial issues that affect you each day.
While you are in the process of a clear-up in your present financial situation, make it a point to educate yourself about the various types of investments.
This way, when you are in a financially sound situation, you will be armed with the knowledge that you need to make equally sound investments in your future.
INVESTING FOR YOUR RETIREMENT
Retirement it might be right around the corner OR it may be a long way off for you – No matter how near or far it is, you have absolutely got to start saving for it now. However, in these days, saving for retirement isn’t what it cut out to be with the increase in cost of living and the instability of social security. You have to invest for your retirement, as opposed to saving for it!
Let’s us take a look at the retirement plan which is offered by your company. At one time, these plans were quite sound. However, after the Enron upset and all that followed, you are not secured in the company retirement plans anymore. If you choose not to invest in your company’s retirement plan, you do have other options.
First let’s see, you can invest in stocks, mutual funds, certificates of deposit, bonds, and money market accounts. You do not have to state to anybody that the returns on these investments are to be used for retirement. Just simply allow your money to grow overtime, and when certain investments reach their maturity, reinvest them and continue to let your money grow.
You can also open an Individual Retirement Account (IRA). IRA’s are quite popular because the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks. A ROTH IRA is a newer type of retirement account. With a Roth, you pay taxes on the money that you are investing in your account, but when you cash out, no federal taxes are owed. Roth IRA’s can also be opened at a financial institution.
Now here is another popular type, of retirement account is the 401(k). 401(k’s) are typically offered through employers, but you may be able to open a 401(k) on your own. You should speak with a financial adviser or accountant to help you with this. The Keogh plan is another type of IRA that is suitable for self employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that people typically find easier to administer than a regular Keogh plan.
Whichever retirement investment you choose, just make sure you choose one! Again, do not depend on social security, company retirement plans, or even an inheritance that may or may not come through! Take care of your financial future by investing in it today.
I hope this helps you in your future financial plans.