By Novi Wealth Partners
We all need to invest for the future, but making the right choices can be overwhelming unless you’re a financial expert. Whether you choose to purchase stocks and bonds, contribute to a retirement account such as a 401(k), or even invest in real estate, there are rules to investing wisely. Avoid the media prognostications and follow these 7 rules of investing that will help put you on a path toward reaching your goals.
Prepare Your Finances
Before you begin investing, you want to ensure that your financial foundation is solid. This includes paying off high-interest debt and having a small emergency fund of easily accessible liquid money available.
If you begin investing before you’re prepared, it can backfire down the road.
2. Know Your Purpose
Once you’re financially prepared to invest, it’s time to set a purpose. Your reason for investing could be to save for retirement, put aside money for college tuition, or save for a down payment on a home. Knowing your purpose makes the journey more meaningful.
Along with identifying your objective, you want to determine when you’ll need your money back. This will guide you in deciding which type of investment to make since some are better for the long term while others are better for shorter periods.
3. Determine Your Investment Amount
Now it’s time to determine how much you will invest. You don’t need to make substantial investments, but get in the habit of making contributions regularly. It can be as little as $100 a month going up to thousands of dollars per month depending on what you can afford.
4. Automate Investing
If you have a 401(k) through your employer, you’re investing! Your employer likely enrolled you in the plan when you started your job, which is good news, because when you don’t have to make those contributions manually, you are more likely to be consistent. But, don’t put yourself on autopilot just because you’ve automated your contributions. To maximize your savings, cut back on expenses, channel a healthy percentage of any raises and bonuses directly to your 401(k), and automate savings increases of 1% of your paycheck as often as you can. It may not seem like you are making much of an impact, but every dollar helps.
5. Educate Yourself
Investing isn’t a sprint, it’s a marathon. Most people don’t get rich overnight, so you don’t have to make spur-of-the-moment decisions about your investments. Instead, take the time to educate yourself about the choices you’re making. Even if you’re working with an objective and knowledgeable financial professional, it’s important to have a general idea of how investing works. Ask your advisor to explain investment concepts and do some research on your own so you can feel confident about what you’re doing with your money.
6. Start Early
Since investing is a marathon, time is on your side. The longer you allow your money to sit in an investment account, the more money you’ll usually make. Don’t delay investing once you’re financially prepared. Each year you wait costs you hundreds and thousands of dollars. The interest you’re losing out on is essentially free money! Once you educate yourself on investing, get started. Your future self will thank you.
7. Diversify Your Investments
Have you ever heard the phrase “Don’t put all your eggs in one basket”? Well, that’s especially true when it comes to investing. Since investing is never a guarantee, you want to invest in various formats and companies to reduce your risk of loss. That way, if a company goes down or an industry tanks, you don’t lose all your money at once.
Investing is a game of strategy, and as long as you’re prepared to make calculated decisions over a long period, you can significantly increase the return on your investment. While you must educate yourself, you also want to consult with a financial advisor about investing. A knowledgeable advisor can help you create the best investment strategy for your unique financial situation.
If you are ready to take control of your money and stay informed about your investments, our team at Novi Wealth Partners would be happy to meet with you and discuss how we can help. To get started, call (609) 921-7002 or email info@noviwealth.com today!
About Novi Wealth Partners
Novi Wealth Partners is an independent, fee-only comprehensive financial planning firm dedicated to empowering clients to discover their definition of true wealth while providing the confidence to achieve it. With 20+ years of experience, we have found that most people don’t care about money, but instead, they care about what money can do for them and their loved ones. As a result, we focus on guiding our clients to find their unique vision for their life and developing a plan to help them live out their values. Our goal is to truly understand our clients on a personal level and help them navigate life’s many changes.
We are located in Princeton, New Jersey and we service clients both locally and nationally. There are four CERTIFIED FINANCIAL PLANNER® practitioners in the firm, all of whom are members of the prestigious National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA). We prioritize a team-based approach, which allows us to deliver comprehensive financial planning, investment management, tax planning advice, retirement planning, estate planning advice, risk management advice, and concierge level wealth management. We are committed to providing each of our clients a level of service as unique as they are and we are proud, as Fee-Only™ financial advisors, to offer unbiased financial expertise. To learn more about Novi Wealth Partners or to get started on your financial journey, visit our website or connect with us on LinkedIn.