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RESEARCH
Getting Started
It's never too late to start planning for your life's financial goals. Although the idea of a "Financial Plan" can feel daunting at first, it isn't as difficult as you may think, and developing a plan can have a significant financial benefit in the long run.
If you're new to planning, it's important to make sure you're building your new financial house on a solid foundation. This means making sure you have the ability to weather the financial storms of life that inevitably come our way.
With a financial plan, you can turn the tables in your financial life, and instead of money controlling you, you take charge - of your money and your future. There are few things you need to do first.
Obtain Insurance
The best way to begin is to provide adequate insurance protection for yourself and your family, including medical, life, and disability coverage.
Establish an Emergency Fund
An emergency fund will become your first stop when the unexpected happens, such as needing a new roof, or a sudden expensive car repair. You'll have the money for the emergency, and you won't have to sidetrack your overall investment plan to pay for it.
Evaluate Risk
Carefully consider the level of risk with you are comfortable with and the amount of time you have to reach your goals. Generally speaking, the more time you have, the greater the level of risk you can take to reach your goals. When considering your risk tolerance, remember that there are several types of risk for you to consider. These include:
- Credit risk. The risk that a particular investment company may fail.
- Interest rate risk. The risk that a change in interest rates, either up or down, may negatively effect your situation.
- Inflation risk. The risk that your money may not keep pace with the cost-of-living.
- Market risk. The risk that markets as a whole may lose value.
Diversify
The number of risks facing investors points up the importance of proper diversification - not putting all of your eggs in one basket. By spreading investments across a variety investment classes the overall level of risk declines.
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