There are many articles out there talking about the best place to start investing, but how can anyone make a 100% certain statement about that without knowing who the individual person is? The right place to start for a 24 year old making over $1 million a year and a 50 year old suddenly realizing he/she needs to do something are very different spots.
What Is Your Risk Tolerance?
How easily you deal with risk is a major factor when it comes to deciding where to start your investment journey. Individuals who have very little tolerance for risk will want to look at indexes for stocks, but a large mix mutual fund or even having a high percentage of their savings in bonds or similar low risk investments. The returns aren’t nearly as good, but if it keeps you from worrying then that can definitely be worth it.
How Old Are You?
Age is a major factor. The younger a worker, the more aggressive he or she should be in attempting to build up their retirement savings. If you’re in your twenties you have a very long time to ride the ups and downs of the markets, and over enough time the markets will almost certainly go up, allowing for the ability to amass quite a bit of wealth.
If you are older, it’s still important to make up for lost time but you also really need to make sure you don’t lose the money before you retire and need it. This means more bonds, more money markets, more investments that are considered safer and much more likely to get you a decent rate of return. There should still be some stocks in the mix, but even there you might go for more traditional dividend stocks of established companies versus taking a home run swing.
What Is Your Lifestyle Goal?
Things are only going to get more expensive. You want to think about the type and level of lifestyle you are going to want during your Golden Years and work towards making that happen. If you just want a small simple place in a cheap community and a little bit of supplement to a pension or Social Security, then what you are shooting for is going to be a lot different than if you want to travel frequently and live in luxury.
– Honestly assess your tolerance for risk
– Look at the professional options available
– Do research to see what options are out there
– Make a long term plan
– Check up on your plan and/or retirement allotment a few times a year
When it comes to the best place to start investing, it all depends on these factors we’ve gone over.
The honest truth is that the best place to start investing is going to vary wildly from one person to another based on an array of different influences. Once you take the time to dive into each of these, you will have all the information you need to dive in!