I’ve found in my personal life that the truism “it’s never too late to . . .” is usually accurate. Professionally, I also believe this to be true, particularly with investing. Though your age and financial situation will determine the types of investments you make, you should certainly still explore your options. Often, individuals limit their ability to achieve financial independence because they are hesitant to invest. Some of my clients have told me they think investing is too risky, complicated, time consuming and only for the very wealthy.
For many, the hardest part of investing is getting started. If you do nothing else, you might want to consult with an advisor to familiarize yourself with your options and gauge how comfortable you are investing. Investments fluctuate in value and may or may not pay interest or dividends. Examples include stocks, bonds, mutual funds, , and real estate.
Though all investing involves the possibility of loss (including loss of principal) it’s an important way to prepare for your future. Making a list of financial goals and anticipated expenses will help you decide which course to take. Remember to account for college expenses and retirement costs, particularly with the decline of social security and pension plans.
Because everyone has different goals and expectations, there will be different reasons for investing. Understanding how to match these factors with your strategy is essential to managing your money. At Salem Five we stress open communication with your advisor. When we know what our clients are comfortable with, we’re best able to collaborate with clients, lay out a plan, reassess and tailor strategy as investments are made.
Here are some tips for beginning to invest:
- Set aside a portion of your monthly income for investing. This will help clarifying where your money is going and how to manage your accounts.
- Don't put all your eggs in one basket. Though diversification doesn’t ensure success, having multiple types of investments reduces the impact of a loss on any single investment.
- Focus on long-term potential rather than short-term price fluctuations.
- Invest with your head, not with your heart. Avoid the urge to invest or pull out quickly.
Regardless of your experience and comfort-level, speaking with a financial professional can be a good idea. Advisors can help you define your goals and objectives, create a net worth statement and a spending plan. For many, working with a professional is the single most important investment that they make. Financial management is an ongoing process. Review your progress by keeping good records and checking in with your advisor. Once you get started, you will be better able to manage your money to pay for today's needs and pursue tomorrow's goals.
Sean Tesoro, President
Salem Five Investment Services