One of the most important financial planning advices that are given to people is to start investing early when people are still in their twenties. In order to achieve and realize your financial goals in life, developing spending and saving habits early in life and learning to budget as well as investing while one is in his or her twenties will help one prevent needless debt in the future and later in life. In fact, those who start to invest early will find that they will do this with little effort and investing regularly will be a relatively smooth road.
A good example of good financial planning advice given is that of a 25-year old who starts investing $2,000 a year and does this for 8 years. After age 33, he never invests a single additional dollar. This young man will earn more by the time he is 65 years than a 35-year old who starts his or her investment and does this for 32 years. Even though this 35-year old invests four times as much as the 25-year old, the young man will still earn way more than him.
Whenever you sit down to take any financial planning advice, you must have identified your short, medium and long-term goals. Short term goals include such things as a wedding, buying furniture, your honeymoon and buying a new car. Next, is to consider your medium-term goals. These may include things like financing a mortgage and paying for your kid’s college education. Long-term goals include planning for retirement and travel. When you sit down to calculate all of these expenses, consider what you are going to save to reach each and every one of your goals within the set timeframe. When making a budget, set aside some time for each of these and do not try to sacrifice one for the other.
Another financial planning advice would be to invest in Certificates of Deposit or Money Market Funds for short-term goals and investing in the stock market for long-term goals. Throughout, it has been shown that the stock market has out-performed just about any other type of investment. However, this form of investment is not for the faint of heart. This is a very volatile field and therefore makes it less ideal for short-term goals; unless of course you can tolerate high risks.
A financial advice will also offer another financial planning advice which is finding out if your employer has a tax-deferred retirement plan or a 401(k) plan. If there is one in place, take advantage of it. This is a good investment plan since your contributions to the plan will be made tax-free and any taxes on whatever is earned will be deferred until you withdraw them in your retirement. In addition, and probably even better, many of the employers will match a part or all of your contributions resulting in hug gains. The internet has a wealth of financial planning advice and it has never been easier to learn how to be a smart investor. Just take time to look up the thousands of pages on financial advice available and start your early investment now.