8/19/2019 | Broadridge Investor Communications Solutions, Inc. Copyright 2015
Why do so many people never obtain the financial independence that they desire? Often it’s because they don’t take the first step – getting started. Besides procrastination, people believe investing is too risky, too complicated, too time consuming, and only for the rich.
The fact is, there’s nothing complicated about common investing techniques, and it usually doesn’t take much time to understand the basics. One of the biggest risks you face is not educating yourself about which investments may be able to help you pursue your financial goals and how to approach the investing process.
Both saving and investing have a place in your finances, but don’t confuse the two. Saving is the process of setting aside money to be used for a financial goal, whether that is done as part of a workplace retirement savings plan, and individual retirement account, a bank savings account, or some other savings vehicle.
Investing is the process of deciding what to do with those savings. Some investments are designed to help protect your principal – the initial amount you’ve set aside – but may provide relatively little or no return. Other investments can go up or down in value and may or may not pay interest or dividends. Stocks, bonds, cash alternatives, precious metals and real estate all represent investments; mutual funds are a way to purchase such investments and are also considered an investment.
Note: Before investing in a mutual fund, carefully consider its investment objectives, risks, charges and fees, which can be found in the prospectus available from the fund. Read the prospectus carefully before investing.
You invest for the future, and the future can be expensive. For example, because people are living longer, retirement costs are often higher than many people expect. It is important to know that all investing involves the possibility of loss, including the loss of principal, and there can be no guarantee that any investment strategy will be successful.
You have to take responsibility for your own finances, even if you need expert help to do so. Government programs such as Social Security will probably play a less significant role for you than they did for previous generations. Corporations are switching from guaranteed pensions to plans that require you to make contributions and choose investments. The more you manage your dollars, the more likely it is that you’ll have the money to make the future what you want it to be.
Because everyone has different goals and expectations, there are a number of different reasons for investing. Understanding how to match those reasons with your investments is simply one aspect of managing your money to provide a comfortable life and financial security for you and your family.
If you have the time and energy to educate yourself about investing, you may not feel you need assistance. However, for many people – especially those with substantial assets and multiple investment accounts – it may be worth getting expert help in creating a financial plan that integrates long-term financial goals such as retirement with other, more short-term needs. However, be aware that all investments involve risk, including the potential loss of principal, and there can be no guarantee that any investment strategy will be successful.
Financial management is an ongoing process. Keep good records and recalculate your net worth annually. This will help you for tax purposes, and show you how your investments are doing over time. Once you take that first step of getting started, you will be better able to manage your money to pay for today’s needs and pursue tomorrow’s goals.
Source: Broadridge Investor Communications Solutions, Inc. Copyright 2015
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