A Beginner’s Guide to Saving and Investing

So, you’ve been thinking about jumping on the investment train. While investing can be a great way to make additional money, it’s important that you don’t jump in too soon. Solidifying your savings, doing research on your strategy and risk tolerance, and choosing reputable organizations will help guide you on your journey in reaching your financial goals.

Pay Yourself First

Having an ample emergency fund is essential to ensuring financial stability. Experts suggest that you have 3 – 6 months of essential living expenses saved away to manage financial emergencies without having to take on additional debt. To ensure you are building this consistently, set up an automatic transfer directly to your emergency fund so that each paycheck, this is the first thing that gets deducted. Continue the automatic transfer until your emergency savings is fully funded. Then, you can begin building additional savings that you may invest later.

Take Advantage of Laddering

Once you’ve built your emergency fund, you’re on your way to start dabbling in investment-rich accounts. Consider opening investment certificates, laddering funds by splitting your savings into 3, 6, 9, and 12 month increments. This strategy offers a couple key rewards; taking advantage of higher interest rates that investment certificates typically offer compared to regular savings accounts and giving you more flexibility with your money because as each investment certificates matures, you have the option to reinvest the funds into new ones or adjust your investment strategy based on your needs at the time. Laddering allows you to strike a balance between earning a better return and keeping some liquidity in your investments.

Do Your Research

You’ll want to know the investment strategy that fits your budget and money personality. Are you someone who doesn’t like elevated risk and prefers to see your money grow at a steady rate or are you someone who can stomach some fluctuation in your investment if the chances of earning more are greater? Especially when starting out, you’ll want to ensure that you invest the way that fits your goals. Working with a financial advisor is a great way to learn what those are and what options are available to you.

Know the Terms

There are many different investment vehicles from annuities and mutual funds to stocks and bonds. Within each of these categories, there are also different investment choices like gold, real estate, and municipalities. Knowing what you’re investing in is an important piece of the puzzle to get the returns you’re seeking.

All Aboard

Once you’ve set your emergency fund and grown your additional savings to a reasonable level, you may be ready to start investing. There are many fraudulent investing sites out there so be cautious and ensure that you’re investing with a legitimate company. Going through your financial institution’s investment group will help you choose reputable options with reputable organizations and lower your risk of being scammed.

Achieving financial security begins with taking the necessary steps to save and invest wisely. By prioritizing your emergency fund, you create a safety net that prevents you from relying on debt during unexpected challenges. Once that foundation is in place, consider laddering your savings into higher-yield investment certificates, and ensure you’re fully informed about your investment options. Align your strategy with your financial goals and risk tolerance, and don’t hesitate to seek professional guidance to make well-informed decisions. As you begin your investment journey, remain vigilant against fraudulent schemes and work with trusted financial institutions to safeguard your hard-earned money. By following these principles, you can build lasting wealth and achieve long-term financial stability.