Planning to Invest? Start with a Plan

Today’s investor has a wide variety of choices. Stocks, bonds, mutual funds, CDs, and annuities all have a mixture of requirements, rates and risk levels that must be carefully weighed against your personal goals and risk parameters. Making the right choice begins with a clear understanding of your investment objectives. Are you hoping to accumulate cash for immediate or near-term expenses? Are you trying to build your children’s college education fund? Are you looking for shelter from inflation and taxes? Are you setting aside money for retirement?
The answers to essential questions like these are at the heart of sound investment planning. It is also important to know where you currently stand in relation to those goals. What is your net worth today? What types of assets do you control, and what is their value?
Calculating net worth is as easy as it is important. Simply add up your assets -- the value of your home and other property, along with savings, investments, pension money, and cash on hand. From this total, subtract your mortgage liability and any other debts.
For many individuals, determining net worth provides an added feeling of security. It brings the realization that a firm financial foundation may already be in place -- one you can build on through wise investment strategies. It should also serve as a reminder to check your insurance protection to make sure everything you’ve worked for is adequately protected.
A realistic timeline for meeting your goals depends on how much of your present income can be allocated to investing. In other words, how much money remains after monthly expenses, and how much of that can you discipline yourself to save rather than spend before the beginning of the next month?
Now with a clearer picture of your goals, net worth and available income, you have a yardstick against which to measure various investment opportunities. For example, if you’re looking for additional immediate income, a money-market account or bond could be attractive. Or, if you’re investing for your children’s college education, you might opt for a long-term investment with growth potential to keep up with the rising cost of education.
Just as important as studying individual investments is researching financial advisors and companies. For the inexperienced investor, going it alone can be frustrating and risky. Take the time to interview different brokerage firms and a few individual financial advisors. Be sure to get referrals from friends and business associates whose opinions you respect.
There are financial planning professionals who can help you map out an investment game plan in detail. If this type of service is of interest, be sure to ask questions about cost and learn exactly what you can expect to receive for your money. Independent money managers or fee-based accounts may not be appropriate for all investors.
Whether you intend to manage your own portfolio or share that responsibility with a trained professional, the starting point is always the same. Begin by taking a good, hard look at yourself, your assets, and your financial goals. You must determine how patient you can be in pursuing those goals and what amount of investment risk you can live with comfortably.
Our firm does not render legal, accounting or tax advice. Please consult your CPA or attorney on such matters.  Securities offered through Prospera Financial Services, Inc.  Member FINRA/SIPC

The accuracy and completeness of this material are not guaranteed. The opinions expressed are those of the author and are not necessarily those of Prospera Financial or its affiliates. The material is distributed solely for information purposes and is not a solicitation of an offer to buy any security or instrument or to participate in any trading strategy. Provided by courtesy of Brian Fees, a Financial Advisor with Prospera Financial Services in Gonzales.