Investing In Your Future

06/28/2022 Written by: Jenny Boudreau

Everyone has their reasons for investing, which is why increasing your net worth – the value of your assets such as cash and real estate, less your debts or other financial obligations – is more important than ever.

Because most of us are responsible for our financial future, including retirement, we need to start building wealth now. Whether your goals are short-term, such as going back to school or buying a home, or long-term, such as setting money aside to pay for future health care expenses, keep your end objective in mind.

With the Social Security system under stress and changes in today’s workplace, future retirees will likely be responsible for their retirement income. Today’s healthier, more active lifestyles and advances in medicine are helping people live longer. This is great news, but it does mean planning and preparing for a longer, more expensive retirement.

There’s also inflation to consider. We don’t know what impact inflation will have on us 20-30 years from now, but we should prepare just the same.

Despite the challenges, there are ways to address rising costs and inflation – even if you don’t come from wealth or win the lottery. Before preparing your investment plan and strategy, define your goals. Start by asking:

  • Why are you investing?
  • When will you need the money?
  • How much will you need?
  • How much investment risk are you comfortable taking?

Your answers to the questions above will help determine what investments and strategies to choose. As an individual investor, you’re likely to choose stocks, bonds, and cash securities, such as money market funds. Within each category, there are investments with different risk and return characteristics.

If you’re just getting started with investing, mutual funds may be an option. The process of selecting a fund does require careful thought and weighing the risk versus potential return. Additional considerations include fees and how closely the fund’s objectives match your own.

Approved by Congress to help people build funds for retirement and education, the following investment accounts offer tax advantages:

  • 401(k)s and similar employer-sponsored retirement plans
  • Individual retirement accounts (IRAs)
  • Coverdale education savings accounts
  • 529 savings plan

In addition to choosing your investment, your plan should include strategies for controlling risk – such as diversification and asset allocation.

When you diversify, you spread your money among different investments within the three major asset classes — stocks, bonds, and cash — to potentially reduce the risk of loss. The idea is that if one investment declines in value, gains from another investment might potentially offset the loss.

Asset allocation is strategically dividing your money among the three asset classes to pursue a specific investment goal. This strategy can help you construct an investment portfolio with an appropriate combination of risk and return for your situation. It considers your time frame and the amount of investment risk you feel comfortable with.

Align your asset allocation and specific investments with your goals. If you’re investing to buy a house in five years, you probably shouldn’t be speculating on high-risk investments. When choosing investments, always balance risk against potential return. Be aware of the specific risk of different investments and consider them.

Whether you’re an experienced investor or a novice, you don’t have to do it alone. The experienced advisors at AssuredPartners Investment Advisors can help you determine whether your investment decisions make sense for your situation.

Charitable Donation square edit
Charitable Giving
Wealth Management04/24/2024

When developing your estate plan, you can do well by doing good. Leaving money to charity rewards you in many ways. It gives you a sense of personal satisfaction and can save you money in estate...

Financial Plan square
Don’t Let Emotions Get in the Way of Your Financial Plan
Wealth Management04/03/2024

Taylor Tepper, a financial journalist for Forbes, writes that when the vast majority of us try to trade stocks for short term gain, we do a horrible job. "We sell them when we should buy," he says,...

60 40 allocation square
Three Reasons Why the 60/40 Allocation can be a Good Starting Point
Wealth Management03/13/2024

Many people have the misconception that the primary goal of investing is to make as much money as you can as fast as you can. Unfortunately, you can't just order up outsized returns like a delivery...