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:

This step could come when you’re 18, 22 or even years down the line when you’re entering your chosen field and making enough money to put some aside. Right from the start, there are some things you can do to give your investments a boost:

 
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.

Your first decade or so of working, your life stage investment focus will be on earning and accumulating wealth. When it comes to investing, now is the time to be more open to risk. You have ample time before retirement, so you can afford to take more chances.
 
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.

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.

Try to increase your retirement savings every time your salary increases. And while you might be saving for your children’s education, make sure you prioritize your retirement fund. You might be bombarded with expenses during this life phase, so it’s especially important that you have a financial plan in place so you don’t get off track. You should also create a final plan for your money through estate planning.

Right before retirement, you might want to begin pulling your funds from the stock market so you have more in cash reserves. This gives you a cushion in case the market takes a nosedive right before you retire. But don’t abandon your investments; you will still need that growth to support yourself over time.

It’s also vital that you stick to a budget and a financial plan during this time. Once you have that squared away, it’ll be a lot easier to focus on your portfolio and investment options.

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.