Financial Planning for Beginners : Tips & Factors for Investing Money


Transcript

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So, how should you invest your money? Well, there’s a number of different factors that
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we need to consider. First of all, we need to know how old you are, because someone who
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has a longer time frame of investing is going to be more aggressively invested that someone
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who has a shorter time frame. Also, how comfortable are you with fluctuations in the market, that’s
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another big determination. What are your goals, and how aggressive are those, and are they
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realistic? And, what are your opportunity costs, meaning, if you have a twenty percent
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credit card balance it doesn’t make sense to invest money and possibly only earn ten
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percent. So, I would suggest before you even start to invest to make sure all of your high
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interest credit cards are paid down. Now, once you have a good handle on your debt I
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would start out small. There are many easy ways, through your bank and through an investment
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firm, to invest money every month. It just leaves your account and invests in a mutual
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fund. So, for example, if we take twelve months, and every month you invest, so for example
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if we take ten months, so for example we take twelve months, every month you invest $100.00
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and that $100.00 automatically goes into an investment mix of your choice, you’ll be able
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to capture the highs and lows and invest in an average rate, and at the end of the year
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you should have more than $1,200.00, if the markets are going up. This is called dollar
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cost averaging and it’s a good way to minimize your risk when you’re investing. Now, once
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we determine how much you can invest each month, make it a consistent plan, make it
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something that’s achievable, that you’re able to do without worrying about being over extended.
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A good reference point in savings is 10% of your earnings, if you can do this, this is
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a good start. Now, in terms of where to invest your money, stay turned for the next segment
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and we can discuss that.
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