6 Step Plan for Investing in Your Future

canstockphoto4931516You have probably heard that it is never too early to begin investing in your future and as an example your parents probably told you (at least a hundred times) about how they set up a savings account for your college fund the moment they knew you were on the way into this world. That is all well and good, but did they ever tell you how to invest in your future? It is likely that they invested at a time when the markets were not as volatile as they’ve been over the past decade or so, and any advice they can offer may be a little outdated.

However, they did teach you the value of investing in your future so take some advice from people who have seen a lot of changes in the economy throughout the course of their lives. Start investing in your future is sound advice and here is a 6 step plan to help you grow wealth for your latter years.

1. Learn All You Can About Investing & Personal Finance

Before taking anyone’s advice whatsoever, learn all you can about personal finance and investing strategies. There is a ton of information online and you can look up financial and investment terms on the Investopedia website but you can’t trust everything you read. Perhaps your local business or community colleges have courses in finance that you could take to get a foundation in the various types of investments and which would best suit your personal needs. Never underestimate the power of knowledge.

2. Plan for Unexpected Eventualities

Once you have begun learning the ins and outs of personal finance and investing in your future, it’s time to face reality. As the financial crisis of 2008 (and into 2009) showed us, things can go sour virtually overnight. Many financial advisors suggest that you set up a separate savings account never to be touched until there is a dire need. This account should be equal to or greater than the total of what you would need to pay all your bills for a period of three months. What would happen if you suddenly lost your job? How would you sustain until you found a new position? This ‘nest egg’ is your key to survival during these types of emergencies. This account is never to be touched unless you have lost your source of income.

3. Compare Mutual Fund IRAs

Many people see mutual fund IRAs (Individual Retirement Account) as being one of the safest investments in your future. This may or may not be true depending on the underlying fund and the way in which the fund manager handles investments. Never think that all mutual fund IRAs are created equal so take as much time as you need comparing them to find the one that suits your personal investment preferences before signing on the dotted line.

4. Research Investment Plans Available at Your Job

Most employers have some form of investment plans available to employees, such as a 401k. Others offer shares in the company but in any case, you should discuss your options with your boss or the HR department. Get all the information you can on what investments are available to employees and also look at what percentage your employer will match when you invest a certain amount from your pay each pay period. Sometimes this is a good option for your investment portfolio because your employer actually contributes as part of your benefits package.

5. Set up Automatic Monthly Withdrawals

Once you have decided on which types of investments ‘feel’ right for you, make absolutely sure that you set up an automatic withdrawal from your bank account and/or pay check. In this way that money will come directly out, mitigating the possibility that you will forget to pay on any given month or that you will choose to spend the money elsewhere. It would be a shame to lose your entire investment because you were not making contributions as you should.

6. Continue Learning and Reassessing

Finally, just as it was important to begin learning the personal finance and investment ropes back in the very beginning of your journey towards a financially secure future, so too do you need to continually reassess your investment strategies. Nothing is ever static in the world of investing which means that tomorrow you just might learn about a new form of personal investments that will offer you a higher yield. Talk to a reputable and trustworthy investment advisor to help you look at new investment products and to offer advice on whether to hold with your current strategies or bravely step out into the unknown.

Your parents taught you well if you are taking the time to think about investing in your future. Although they may not have told you how and what to invest, at the very least they instilled the need to invest in your future within your mind. Follow these six simple steps and you can look forward to a bright and financially secure future.