INVESTMENT PRIMER–WHERE ARE YOU HEADED?

Like any journey, investing takes some planning.  Where are you now, and what is your destination?  Also, consider the fact that the landscape might change along the way, or you may make modifications or change your destination.

Your starting point should include taking an inventory of your current financial “condition”.  What are your regular sources of income, what might be any projected changes in it–what are your current assets and might there be any future changes?

Generally, most people wish to set money aside for retirement, perhaps an education fund for one or more children–or grandchildren, and conceivably putting money aside to buy a house, maybe a vacation home, start a business, etc.  Once you identify such goals, prioritize them and consider what their respective time horizons might be.

Along with identifying your goals and current financial situation, start thinking from within yourself.  Do you currently understand the financial markets or will you honestly have the time, and the inclination, to educate yourself?  Will you seek professional advice?  Give some thought as to how conservative or aggressive you might be while on your investment journey.  For longer-term plans, you might consider being a little more aggressive, while being more protective of your assets regarding shorter-term goals.

I would recommend a slightly different approach, especially for grandparents, in creating an education fund–for college or vocational school.  Do not invest as you would for yourself (at your age), and that should especially be the case for younger (grand)children. If there is more than one child in your plan, design a more age-specific approach for the older versus younger ones.  Also, grandparents should consider having one of the parents be the custodian of funds for grandchildren.

As you prepare for this journey, consider your current income, how safe is it now, and–with regard to retirement–what might your regular income sources be when that occurs?  What if your anticipated retirement date is sooner than expected, or if you extend it?  Are you building a retirement fund (401)k) or IRAs) to supplement Social Security, Pension, if any==or will that be your primary sources of retirement income?  Be realistic now!

NEXT IBC POST: WHAT TO TAKE ON YOUR JOURNEY

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