Investment can be a great way to grow your wealth and set yourself up for retirement—but when done badly, it can be disastrous to your finances. A sound investment plan tailored to your needs is an essential first step before you commit any money to an opportunity. To determine what investment strategies are right for you, make a plan using these five steps.
How to Create an Investment Plan
1. Determine Your Financial Goals
Take a look at your financial situation. What is your starting point? What financial goals do you have for your future? Lay out a roadmap of your financial needs and timeline, and let that be the basis for deciding which plans work for you.
2. Evaluate Your Comfort with Risk
Some investment opportunities may not produce high returns, but they're safe and stable. Other types of investment have the potential to increase your money by leaps and bounds, but also have a greater risk of failure. Decide how risky you can afford to be with your investments and how much money you can afford to lose.
3. Diversify Your Investments
One of the best ways to mitigate risk is to maintain a diverse investment portfolio. This means some stocks, some bonds, and some cash, each of which will perform differently in all market conditions and protect you from serious losses. Don't invest too heavily in any one company.
4. Take Advantage of Free Money
Your employer may offer contribution matching for retirement funds or other incentives for specific types of investment. This is free money, and you should maximize your contributions to get as much of it as you can.
5. Hire a Financial Advisor
Even if you have a firm grasp of the basics, your best investment strategy is to defer to an expert in the field. Talk to an advisor about your needs. Together, you'll be able to refine your savings plan and start putting your money to work.
The sooner you start investing, the greater your returns. Start thinking about your investment plan now so that you'll be ready for the future.
Evergreen Advisors in Covington, Kentucky, provides certified financial and investment advice to clients of all ages and lifestyles. They offer an affordable membership program which provides planning services, advice, and yearly reviews. To learn more, call them at (513) 784-9150, or contact them online.