Your investments should reflect who you are and where you are in life. They should be compatible with your risk tolerance, future goals and current needs. That means they also need to be somewhat fluid, so that your finances can grow and change as your life does.
Are you on track for your current life phase? Here are some common life stage investment markers and what they mean for your portfolio:
Entering the Workforce
Build an emergency fund – Having money stashed for a rainy day will give you the peace of mind of a buffer when you’re just starting out. This is also important for investing because it gives you a place to set aside what you need. That way, you can feel more comfortable investing some of the excess.
Look into retirement options – Does your company offer a 401(k)? If it does, become familiar with the company’s rules and matching guidelines. If it doesn’t, or if you are self-employed, consider other options for retirement savings. Those might include a simple IRA, Roth IRA or health savings account.
Accumulating Wealth
This phase usually includes some major life expenses, like getting married, buying a house or expanding your family. Make sure you balance those expenses with putting money aside for retirement.
Focusing on Growth
Typically, the last couple decades you spend in the workforce are your highest-earning years. You turn your attention more fully to preparing for retirement. Make sure you’re maxing out your 401(k) or IRA account and carefully managing your portfolio.
Entering Retirement
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.