nav-left cat-right

Investing Planning

Investing Planning

So you are ready to start making your investments.  But, where to start? How to start? What stocks? How about bonds?  Should I use mutual funds?

All great questions! And that is how you start making your investments by answering other questions, such as:

  • Why am I making this investment?
  • When will I take the money out of this investment?
  • How much do I need when I take the money out of this investment?
  • What are the risks associated with this investment? 

Answering these questions will provide the guidance to help you make the appropriate investments for your financial goal, given your time period and risk tolerance. 

What I am encouraging is a logical, methodical approach in your investment plan.  Many people flounder or lose significant amounts with their investments because they invest with their emotions rather than their intellect.   Use a business-like approach to analyze your investment opportunities, make and execute the decision, and then review the implementation on a regular basis.

If I were to pick one of those questions to answer first, it would be the when question.  If your goal is to use the money in the next few years, let’s say less than five, then you will be using lower risk, lower return investments such as short term high quality bonds, Certificates of Deposit, Money Market accounts.  Yes, the returns on these investments are not earth shaking, but you will be accessing the money in the next couple of years and you do not want it in aggressive investments that could suffer a loss and not have time to recover in the brief time window that you have established. Carefully considering the time period allows you to focus your search on the appropriate type of investment. 

In wrapping up this post, the bottom line for Investing 101 is to think logically, and have a plan for each investment.  When it comes to stock investing, I will add: think long term.  I am not a believer in market timing, more people make money investing in stocks because they spend time in the stock market and face those risks than those people who are timing the market.   When you time the market you need to be right precisely two times, which is very difficult for most investors.

Think logically, long term and have a plan.