Investing Basics: What Are Your Investment Goals? Part 2
GET RICH QUICK-OR POORER QUICKER?
Too often, people invest money with dreams of becoming rich overnight. This is possible with some types of investments–but it is also rare. As we said above, the greater the reward, the greater the risk.
Also, most of the time, as in the examples above, we are really looking at much more long term goals, which require a different set of strategies. For instance, Sure, we all know we want to retire some day. And that we want to have a good lifestyle, and not be concerned about the cost of health care, and even our basic daily needs.
The question is, at what age do we plan to retire, and at what level of income and lifestyle. What sort of financial cushion will we have under us for emergencies? Most people in this day and age do not even have a 6 month ’emergency fund’ in case they lose their job, let alone money on which to live for the next 20, 30, 40 years.
It is safer to invest your money in such a way that it will grow slowly over time, and be used for retirement or a child’s education. The dollar you save now will yield many more over a 20-year period.
The trouble for many of us is saving, let alone finding the money to invest. You will also have to ask yourself: What sacrifices are you (and your family) prepared to make in order to reach your investment goals?
For example, it seems ridiculous to be worrying about getting 5-10% in a 401k when you’re paying 18-30% on credit card and store card balances, isn’t it.
Investing is about more than trying to get rich quick, it is about getting out of debt and staying out of it, and having enough savings not only for emergencies, but long terms goals.
This may not be a fashionable notion in our get rich quick, want it now society, but with foreclosures at an all time high and America in the throes of a recession, fashion in all its forms be damned.
If you have not yet taken the time to sit down and worked out your budget, that should be your first step. The America’s Debt Diet website at
http://www.oprah.com/money/debtdiet/money_debtdiet_main.jhtml
has a lot of free tools and worksheets to help you first work out a realistic budget, and how to get out of debt, and stay out of debt.
For more hints and tips, go to Investing Basics: What Are Your Investment Goals? Part 3.
