Growing up, my family didn’t have much money. I never really learned how to save and didn’t know what investing was until I got to college. I’ve since married into money (and also have a successful business on the side), and now I don’t know what to do with it. Is it smartest to leave it in my savings and never touch it? Invest? What should my next move be?
When making decisions like this, I think it’s most important to begin with your goals. What is it you want this money to do for you? Deciding the proper investment begins there. Any money you’re going to use in the short term should be left in a savings or money market account. You don’t want those dollars to fluctuate in value. You want them stable. Money you plan to use in the intermediate term, such as purchasing a new car, a down payment on a home, or a trip you want to take in a few years, could be placed in an investment that may fluctuate in value a little bit, but should right itself before you need it. Or, it could be placed into a bond-type investment.
There are many options to choose from, and your advisor can help you pick one that is right for your situation. Any money earmarked for retirement or long-term goals could be placed into investments involving stocks. Diversification and low cost are key to all your investments, and again, your advisor can help you choose the right ones for you. It’s also important to revisit your choices and your allocation regularly to ensure things are moving in the right direction, and that your investment allocations haven’t gotten out of hand. You can find yourself easily overweight or underweight in a certain area of the market if you don’t keep an eye on it.
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