BOSTON (CBS) – Step 3 of your financial plan is saving and investing to reach your goals.
Review your goals. Knowing when you want to reach them is your time horizon and that should dictate what you invest in and how much risk you take.
The longer the time horizon the more risk you can take on for you have time on your side to ride out the ups and downs of the stock market. A wedding for your newly engaged daughter is one year away. This is a short time horizon requiring safe investments.
A college education for a two-year-old is 16 years away and you can take some risk with the investments.
Retirement for a 30-year-old is 37 years away, a very long time horizon. One can have 80% invested in the stock market. Different time horizons, different investment strategies needed.
Try to make saving and investing automatic. Use the retirement plan at work, use a 529 plan for college saving. Set up a simple savings plan with payroll deduction for your emergency fund or Christmas club.
You will need to educate yourself about investing:
- Listening to WBZ radio every day is a good beginning. We have market updates all day long as well the business reports and Money Matter segments every afternoon.
- CNBC: It’s all about money and investing.
- Bookstores: There is a section for personal finance books.
- The internet: there is so much good free information out there. Stay away from the chat rooms though. Market Watch is one of my favorite sites.
- Investment Clubs: Start an investment club with your friends. The NAIC (National Association of Investor Corporation) can help you start a club. 877-275-6242
- The American Association of Individual Investors has good conferences and a great monthly newsletter. $29 a year membership. 800-428-2244
- Magazines and Newspapers: Read the business section of our Boston papers as well as the Wall Street Journal. I like the online version; I never miss an issue. Good magazines; Kiplinger’s Personal Finance, Money, Fortune, Forbes, Bloomberg Business and Barron’s.
- Hire a Financial Planner, if doing it yourself is not working well for you.
One more thing: To find a financial planner to help you achieve your goals and dreams in your area contact the FPA, the Financial Planning Association’s local Boston chapter.
To find a planner to help contact:
National Association of Personal Financial Advisors (NAPFA)
3250 North Arlington Heights Road,
Arlington Heights, IL 60004
(NAPFA has a membership of fee-only planners. Membership: 1,100+
Garrett Planning Network
12700 Johnson Drive
Shawnee, KS 66216
A network of fee-only financial planners willing to work with consumers on an hourly, as needed basis. This is new organization with only a small number of planners.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
Subscribe to Dee’s Money Matters newsletter here.