Life Lessons Learned Number 26: Planning Your Finances.
Once you have accumulated even a modest sum of money, you need to find the best way to invest it. As a young person, you may have taken some risks with finances, knowing that you would have time to recoup losses if the investments in the market or in a business did not pan out. However, as you grow older, the appetite to take risks should diminish, and more attention paid to capital preservation Therefore, it becomes critically important to know how to invest funds wisely.
The best way I know to safeguard money and still see growth is to invest regularly in equity and bond mutual funds in proportion to one’s tolerance for risk. You should not chase high returns available during good times, but instead should pursue a strategy of reasonable returns over a long period. Once the investment strategy is set, learn to stay the course, even in tough times, because significant market returns are realized early in a market recovery, and if you sell in down times, you will most likely miss the “bump” when the market recovers. Unless you have strong investment skills, in my opinion, it is best to retain a professional advisor who is reasonable, who provides consistent advice and is not swayed by the latest fads of the day. It is important to meet with the advisor regularly, stay abreast of one’s investment portfolio, and adjust as personal needs change.