Can you afford it?

December 31, 2014

Go out into your backyard and dig a big hole. Every month, throw $500.00 into the hole. Don’t take any money out until you are ready to buy a house, send your child to college, or retire. It sounds a little crazy, doesn’t it? But that’s what investing is without setting clear-cut goals. If you are lucky, you may end up with enough money to meet your needs, but you have no way to know for sure.

How to you set goals?
The first step in investing is defining your dreams for the future. If you are married or in a long-term relationship, spend some time with your partner discussing your joint and individual goals. It is best to be as specific as possible. You want to end up with a list of goals. You can then decide how much money you will need to accumulate and which investments can best help you meet your goals.

Looking forward to retirement
Retirement may seem a long way off, but it is never to early to start planning. The sooner you start, the more ability you have to let time do some of the work of making your money grow.

Three things to keep in mind as you are planning your retirement saving and investment strategy:
1. Plan for a long life.
2. Think about how much you have until retirement, then invest accordingly.
3. Consider how inflation will affect your retirement savings.

Facing the truth about college savings

Paying tuition costs definitely requires forethought – and the sooner the better. With college costs typically rising faster than the rate of inflation, getting an early start and understanding how to use tax advantages and investment strategies to make the most of your savings can make an enormous difference in reducing or eliminating any post-graduation debt burden. The goal is to have no debt coming out of college by using cash and savings in a 529 plan or Education IRA accounts. A plan put in place early can help put your children in the best light to maximize their future.

Consider these three tips:
1. Estimate how much it will cost to attend college and plan accordingly.
2. Research financial aid packages that help offset part of the cost of college.
3. Look into 529 plans that put your money into investments tailored to your financial needs and time frame.

Investing for something big

At some point, you will probably buy a home, a car, maybe even that yacht that you have always wanted. Although they are hardly impulse items, large purchases often have a shorter time frame than other financial goals; one to five years is common.

First, decide what your goals are and how much you need to save. Then, develop your plan so you can accomplish your goal and have that new home, car, boat or to send your kids off to the college of their dreams. Then share those goals with your Financial Advisor. To schedule a free no-obligation consultation with one our Wealth Advisors, please email Katherine@prosperwell.com or call us at 763-231-9510.

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