Beginner's Guide to Investing: Reaching Your Goals
The variety of saving and investment vehicles can be overwhelming. Determining your time frame can make it easier to decide what vehicle makes sense.
Short-Term Goals – These are items that you intend to purchase within the next year or two, such as a new computer or a vacation. For short-term savings, think safety. Some of the investments that are appropriate for short-term savings include a savings account, a certificate of deposit (CD), or a money market account. These accounts offer a lower rate of return, but are also low risk.
Intermediate-Term Goals – These are goals that you will need to meet within a five to ten year time frame. They can include things like a down payment on a home or college tuition. When you have a little more time to save, you have the option to use investments with a higher potential rate of return, such as a mutual fund. Of course, five to ten years is still not a long time when it comes to investing, so you may still want to choose investments with a moderate level of risk.
Long-Term Goals – These are goals that you need to reach in more than ten years such as college tuition and retirement. As your time horizon increases, you have the opportunity to use more growth-oriented investments with potential higher rates of return and risks, such as stocks, mutual funds and annuities.
Review your goals
You might also consider making one new goal each year. For example, if you spent your tax refund check last year, maybe you could make it a goal to put this year's refund toward your retirement savings.
Remember, every little bit helps. Start now and get ready for what the future might bring.
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