Getting Started is a Huge Accomplishment

The majority of our clients have been investing for years, if not decades. There are times, however, when we meet individuals or couples who come to the realization that they are now accumulating wealth but just haven’t done anything about investing, and they are concerned that they’ve “missed the boat”. Or we have clients who would like to advise their young adult children on how to set out on their investment journey. In either case, the most important step is to just get started.

Here are five steps to take to set the investment ball rolling:

1) Evaluate your current financial situation and determine how much you can or want to invest.

With your advisor, discuss your income, your typical spending patterns and how much you could comfortably remove from your spending budget. You would need to determine whether that includes ceasing or reducing spending - say fewer Starbucks coffees a month, or eating in more frequently. Or maybe you don’t need to change any current habits and you have income that can easily be diverted into an investment account. It doesn’t matter if you’re investing $50 or $5,000 a month - getting started in the routine of setting funds aside is the important aspect of this step.

2) Determine your financial goals.

Most people think about the future and say, “I want to be comfortable in retirement.” But what does that actually mean to you? “Comfortable” can mean different things to different people. Where do you want to live? What activities do you want to pursue? How much traveling do you want to do and where? What kind of home or car do you hope to have? Do you have funds set aside for education for your children? How much will that lifestyle cost? Advisors can adjust for inflation and help you understand how much you need to save and invest now. Most importantly, advisors can help you establish realistic goals so that as you invest, you can feel like your goals are attainable.

3) Develop an investment strategy.

Working off of the information you’ve outlined in steps 1 and 2, you will have a framework for outlining your personal investment strategy. You might have short-term as well as long-term goals, and therefore, different aspects of your portfolio will be geared towards meeting the various goals. IRAs, ETFs, mutual funds, bonds, securities, 401(k)... there are so many options available to investors of all financial levels. It is critical to not only develop a strategy that is in line with your goals, but that will include the appropriate level of risk.

4) Understand what you own and why you own it.

Investment vehicles perform differently, and it is important for investors to understand what role each vehicle plays within the context of your portfolio, your financial goals and the amount of money you are actively investing. The adage, “never put all of your eggs in one basket” rings true here. Working with an advisor to understand the rationale behind the structure and strategy of your portfolio will help you over time to be smart about future adjustments.

5) Commit to financial self-reflection and evaluation.

In other words, rinse and repeat Steps 1 & 2. Make a commitment to take an annual review of your situation. Has your income changed? Has your lifestyle changed? Do you now have children? Have your children “gone off the payroll”? Do you have more or less to invest and have your goals changed? The portfolio and strategy you established 3 years ago might not make sense for you now, and it’s extremely important to make adjustments when the time is right.

After reading this, one might think, “This sounds like hard work,” but the truth is it can be incredibly straight-forward and even more satisfying if you take the time to make a few notes for yourself, reach out to a prospective advisor and discuss whether they might be able to assist you with creating a financial strategy that allows you to get off the dock, and onto the investment journey you desire.