No matter your age or life stage, that first foray into investing can be daunting. There are new terms to learn, risks to understand, methods to study. After all, it’s your hard-earned money on the line — so you’re not taking this lightly. These six starting steps can help you invest confidently.
1. Make sure you’re ready. Before you dive into mutual funds and IRAs and 529 plans, assess your complete financial picture. Do you have a healthy emergency fund? Have you paid off credit card or college debt? Are you signed up for your employer’s retirement plan (if offered)? If you answered yes to all three, then this may be a great time to funnel additional savings into an investment portfolio.
2. Know your purpose. Investment goals can motivate you and help set your course toward success. Decide what you want to spend the money on and when. Is it a new home in five years? Your children’s education in 15 years? Or a comfortable retirement in 30? Your objective and timeline will help determine the best investment vehicle for you.
3. Educate yourself. Confidence often comes from understanding, and that is certainly true of investing. Improve your confidence by taking a class or an online tutorial about the aspects of investing that perplex you — how the markets move, long-term trends, what to expect, etc. Talking to a professional financial advisor or even a trusted friend well-versed in investing can help you feel better about your decisions.
4. Accept your risk tolerance. The inevitable dips in stock market performance can make the peaks that much sweeter — if you have the stomach for it. Your investment portfolio should provide reassurance about your future rather than add stress to your day-to-day life. Find a mix of investments that you’re comfortable with and that is appropriate for your goals, timeline and risk tolerance.
5. Check in … but only occasionally. Keeping close tabs on your portfolio can lead you to make rash, emotional decisions — like selling when an investment falters. But periodic check-ins — say, every six months or annually — allow you to rebalance your investments and make changes as your goals and life stage shift.
6. Get help. A financial advisor at Horizon Bank can help answer your questions and provide guidance on investment decisions. Then, once you have a portfolio in place, sitting down together once a year can help you stay on track toward your goals. To learn more or make an appointment, call 888-873-2640 and get started today.