Investing for Life Stages

Investing is a long process, and the sooner you start, the better off you'll likely be in the long run. The first part of that process is developing consistent savings habits.

Regular contributions to savings or investment accounts are often the most productive; and if you can automate them, they are even easier.

Time and Risk Tolerance All investing involves a certain amount of risk. In determining the amount of risk your investments should carry, weigh your ability to tolerate price fluctuations against your need to earn a certain rate of return. Keep in mind that time plays an important role in this decision.
 
Investing for Life Stages
The following are some major life events that most of us share, along with some investment decisions that you may want to consider:

When you get your first "real" job: Start a savings account to build a cash reserve. Start a retirement fund and make regular monthly contributions, no matter how small.

When you get a raise: Increase your contribution to your company-sponsored retirement plan. Increase your cash reserves.

When you get married: Determine your new investment contributions and allocations, taking into account your combined income and expenses.

When you want to buy your first house: Invest some of your non-retirement savings in a short-term investment specifically for funding your down payment, closing, and moving costs.

When you have a baby: Increase your cash reserves. Increase your life insurance. Start a college fund.

When you change jobs: Review your investment strategy and asset allocation to accommodate a new salary and a different benefits package. Consider your distribution options for your company's retirement savings or pension plan. You may want to roll over money into a new plan or an IRA.

When all your children have moved out of the house: Boost your retirement savings contributions.

When you reach 55: Review your retirement accounts' asset allocations to accommodate the shorter time frame for your investments. Continue saving for retirement.

When you retire: Carefully study the options you may have for taking money from your company retirement plan. Discuss your alternatives with your financial advisor. Review your potential combined retirement income and reallocate your investments to provide the income you need while still providing for some growth in capital to help beat inflation and fund your later years.

Discipline and a Financial Advisor Can Help
One of the hardest things about investing is disciplining yourself to save an appropriate portion of your income regularly so that you can meet your investment goals.
Also, if you're not fascinated with investing, it's probably difficult to force yourself to review your financial situation and investment strategy on a regular basis.

Establishing a relationship with a trusted financial advisor can go a long way toward helping you practice smart financial management over your entire lifetime.