What are you investing for?

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Before you start investing your hard-earned money, create a game plan to make sure your investments match your needs, your goals and even your values. Here are some tips for investing your money based on things that matter most to you.

Define your investment goals

Let’s say you want to have money available to supplement your income at retirement. Before you start saving and investing toward this goal, ask yourself exactly what you want. How much money will you need? When will you retire? What’s the best investment account to fund?

Be specific with your answers: “I want to have $75,000 available in an individual retirement account when I retire in 15 years.” This way, you’ll know how much to invest, in what and for how long.

Create a roadmap

You probably have more than one goal so map them out like you would a road trip. Each goal requires its own plan. Determine where you are today, what all of your goals are and how much time you need to reach each goal. Look at each goal as a destination you’ll reach at different points on your roadmap.

Know how to get to your goals

Once you determine how much you need for each goal and when you’ll need it, you can decide where to put the money.

For short-term goals, like a down payment on a car in 12 months, you can invest in a Money Market Share Account or Share Term Certificate, which is commonly known as a certificate of deposit or CD. While these have lower returns, they are safe and you won’t risk losing your money. These accounts are smart options for funding any goal you want to achieve in five years or less.

Your intermediate goals are the ones 5 to 10 years out on your roadmap. For example, if you want to send your child to college in eight years, strike a balance between safe investments like share certificates along with a few stocks, which carry some risk, but will add growth.

Long-term goals are 15 to more than 30 years down the road, such as retirement. A mix of stocks along with less risky bonds or cash is a good choice for these goals as long as you can handle market upswings and downswings.

For consistent savings to help you reach your short-, intermediate- and long-term goals, set up automatic transfers into accounts earmarked for each goal.

Review your plan

Review your progress periodically and make adjustments as needed. As you get closer to your goals, you may need to change your long-term investments to safer, shorter-term ones such as money markets and share certificates.

By identifying your goals, creating a roadmap and choosing the right vehicles to reach your goals, you should have a good trip.

The information provided is for informational purposes only. Please contact a financial advisor for additional guidance. 

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