Most folks realize that they need to invest for the future. But, beyond that, their reasons for investing may be a bit foggy. Given that it is such a potentially important component for future financial health, it pays to clarify your reasons. Sometimes this is best done by partnering with a professional in investment management Pittsburgh PA
Know Your Investing Horizon
First, it is important to identify your investment goals. Common ones are a secure retirement, college education expenses, or a down payment on a house. Each of these will have a specific time frame attached to it depending upon the individual. Investing for retirement many years in the future is completely different than putting aside for a down payment for a house in a year or two from today. Here are some typical investments for different time horizons:
- Long-term goals, 10 years or more away. Long term goals are usually met by investing in higher-risk, higher reward vehicles such as growth stocks, and stock mutual funds.
- Medium-term goals, 2-7 years out. Given the vagaries of the stock market, a portfolio invested for mid-term goals should have much less invested in volatile stocks and more in safer investments such as short-term bonds and bond funds.
- Needs less than 2 years away. Typically, short-term goals are met with savings instead of investments. It is necessary to keep risk low because the time frame is short. Bank accounts and certificates of deposit are typically used for these kinds of goals.
Partner With a Professional Money Manager
Successful investing is a life-long proposition. Furthermore, there are many styles and methods of investing. Very few can do it themselves successfully for the long term. Often, it pays to partner with competent money managers if you lack the knowledge or desire to do it yourself.