Start Your Investment As Early As Possible
Financial planning advices such as start investing when you are still in 20s is an essential financial advice. To reach your financial goal for life time, young people should focus on establishing a sound money habit, exercise to budget and control needless spending, more importantly save and invest to avoid debt situation in the future. In fact, those who start to invest early will find that they will do this with little effort and investing regularly will be a relatively smooth road.
To illustrate the point, let’s draw out a financial plan for a 25 years old fellow who kick start the saving of $2,000 annually and keep doing this for 8 years. After 8 years, he doesn’t invest any more money. The young man eventually has a bigger investment portfolio than a 35-year old who launches his investment and keep doing that for 32 years. Even though this 35-year old invests four times as much as the 25-year old, the young man will still earn way more than him.
Short, medium, of course long term goals are what you need start thinking of. Your short-term goal should be something like having a family, your wedding and other big ticket items. Then comes to your medium-term goal. Long-term goals should focus on having adequate money to retire on.
Financing a house mortgage, and having a big family might be your dream. Then you should mind your own comfort retirement. When you sit down to calculate all of these expenses, consider what you are going to save to reach each and every one of your goals within the set timeframe. A sound budget gives some time for each of items so they don’t push each other.
Once you have better financial education like the one provided by Robert Kiyosaki and Rich Dad Book, you will know it is not wise to invest in Certificates of Deposit or Money Market Funds for short-term goals and investing in the stock market for long-term goals. At the surface, stock market out-performed any other kind of investment without considering the marketing time requirements. Chicken Little has no way to survive the pressure of gain-lose mentality of stock market. If you have the gut to take on more risks for exchanging better return, or you have a average-out investment plan then the stock market works for your long term goal, otherwise, it is better suited for short-term.
In my site about Rich Dad Poor Dad Review, I talked about Robert thinks 401(k) plan is not an investment plan rather than a saving plan. Still, it is worthwhile to find if the company you work for offers any 401(k) plan as part of your own financial plan. Seize the opportunity and joining the plan as soon as possible. It is tax-free if you invest inside of 401(k) plan, all tax will be deferred until you start taking the money out of plan then it will be treated as your income. It could be a huge reward if your employers match part of all of your contribution. You should go out and seek more information on the subject for free on the internet. It takes time to filter out many many pages of information on the subject to find solid one to digest.
