HOLA
Active member
Most people want to get to the end of their lives and be able to live comfortably, take care of themselves and leave something for their children. These are admirable goals and very achievable - especially if you have a good plan! While I am not giving specific financial advice, these are the principles I live by and believe can bring anyone to a fantastic financial finish! As always, check with a financial consultant before taking action.
Aggressive in the Beginning, Conservative in the End. The way finances work long-term is that you want to maximize your returns when you are young, while tolerating more risk because over the long-term you will recoup any losses you may incur because of the risk. This is why when you are young you can get more aggressive. You have more time to let your returns accumulate. However, the older you get, the more you want to be transitioning into more conservative, capital-protecting investments. This way short-term market fluctuations won't affect your day to day living situation. I personally, at 33 years of age, have my investments in very aggressive stocks and mutual funds. I may be down 10 percent one year but up 80 percent the next. Over time the investment make more gains than losses. I have 30 years before I need to be more conservative. As I get older I will shift into stocks and mutual funds that may only give me 7-20 percent a year but will assure me of less risk. This idea lets me get as much as I can while I am young and can afford risk, so that when I am old I can draw a lower percentage off of a bigger net dollar amount.
Use Insurance. I am not an insurance salesman, but I could be! When my dad died when I was 4 years old, he was making $89,000 a year (In 1970). That's pretty good! He had $30,000 of life insurance. That's pretty bad! For a very nominal fee, he could have protected his family and left them with a couple of million dollars to maintain their current lifestyle. For many, you will want insurance to protect your assets you will be passing on to your loved ones. Don't let the government get too much! Find a good insurance agent and they will help you out. Also, make sure you have all the right kinds of insurance: Life, health, disability etc. All of these tragedies can drain your long-term financial health.
Aggressive in the Beginning, Conservative in the End. The way finances work long-term is that you want to maximize your returns when you are young, while tolerating more risk because over the long-term you will recoup any losses you may incur because of the risk. This is why when you are young you can get more aggressive. You have more time to let your returns accumulate. However, the older you get, the more you want to be transitioning into more conservative, capital-protecting investments. This way short-term market fluctuations won't affect your day to day living situation. I personally, at 33 years of age, have my investments in very aggressive stocks and mutual funds. I may be down 10 percent one year but up 80 percent the next. Over time the investment make more gains than losses. I have 30 years before I need to be more conservative. As I get older I will shift into stocks and mutual funds that may only give me 7-20 percent a year but will assure me of less risk. This idea lets me get as much as I can while I am young and can afford risk, so that when I am old I can draw a lower percentage off of a bigger net dollar amount.
Use Insurance. I am not an insurance salesman, but I could be! When my dad died when I was 4 years old, he was making $89,000 a year (In 1970). That's pretty good! He had $30,000 of life insurance. That's pretty bad! For a very nominal fee, he could have protected his family and left them with a couple of million dollars to maintain their current lifestyle. For many, you will want insurance to protect your assets you will be passing on to your loved ones. Don't let the government get too much! Find a good insurance agent and they will help you out. Also, make sure you have all the right kinds of insurance: Life, health, disability etc. All of these tragedies can drain your long-term financial health.
