You shouldn’t jump into the investment world right away. First, you need to establish a solid insurance portfolio of life, disability and critical illness insurance. Second, you should establish a liquidity fund. Third, you should get rid of debt. Once you’ve moved through these three steps, then you can start developing an investment plan.
The stock and bond markets offer hundreds of attractive investments every day. The tricky part about investing isn’t identifying an attractive investment; it’s identifying what you should own. The most important factor in determining what investment you should own is your long-term objectives.
Write it down
You can easily find investments that will help you pay for your child’s education or your retirement in 10 or 20 years. Many people will abandon quality investments if there is a temporary decline in the stock market. That’s why a written plan is so important.
Successful investing requires specific objectives and steps for achieving them. It also requires discipline and more than a little patience. A written investment strategy can help provide all of these.
Stay focused
This written plan should define your long-term goals, investing time frame and risk tolerance. Use your strategy to guide your investment decisions and your written plan will help you to stay focused. A written plan will also help you say no to potentially speculative investments that might become temporarily popular.
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