Investing your money for the future might be one of the quickest ways to grow your wealth, whether saving for retirement or making a large purchase. While most people know investing is a potential way toward a more manageable financial future, some may find investing challenging and somewhat scary. Here are a few simple steps to help overcome your investing fears.
Step 1: Start Small
Don't get caught up thinking you must invest a lot of money to get started. Start with the amount of money you are comfortable risking, and once you feel more confident with the investing process, revise your investing plan to include more significant investments.1
Step 2: Get Educated
Once you decide you are ready to invest and how much to risk, take the time to educate yourself on the available investment options. You may feel less anxious if you understand how an investment works and what to expect. If you don't understand how an investment works, consider avoiding it.2
Step 3: Set Realistic Investing Goals
Make a list of goals that you want to accomplish with your investment. This may include where you want to be financially in the next five to 10 years and how much you need to save to accomplish those goals. During the research phase, you should determine how each investment works and should set target dates for specific goals. Just manage your goals to be realistic and attainable, or you may end up frustrated down the road.1
Step 4: Come Up With an Investment Strategy
Once you set your goals, you need to develop strategies to work toward obtaining them. Having an investment plan in place may make the process and decisions easier. Remember that your strategy is changeable. You may change your method and refine it over the length of the investment. When choosing a strategy, it is always a good idea to keep it simple, as more complicated strategies may lead to higher stress levels.1
Step 5: Pick Your Investments and Get Started
After researching and choosing the investments that may work with your financial desires and risk tolerance level, it is time to jump in and start. In the beginning, be sure to stick with your original investment strategy, as you may “tweak” it along the way if needed. If you are anxious about getting started, you may want to consider more conservative investments such as a 401(k) or individual retirement account (IRA) held in certificates of deposits (CDs) at an FDIC-insured bank.2
Step 6: Stay the Course
Once your investments are made, be prepared to stay the course, and avoid getting discouraged over setbacks. Avoid panicking in the short-term, and try not to change your investments too often. Understand that investing may have ups and downs. You may need to get through the downs to reap the financial rewards of the up-cycles.1
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
CD’s are FDIC Insured and offer a fixed rate of return if held to maturity.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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