We want to start investing – where do we start?

May 31st, 2011 Lee Curry

As you settle down and become more financially stable, chances are you will begin to increasingly think about investing your money for the future.

While this is an exciting time that is full of opportunities, it can also be confusing and overwhelming. Many couples start out with the best intentions, but then become paralyzed by fear and end up avoiding the issue altogether.

Investing doesn’t have to be scary. And it’s not just for people with large amounts of disposable income. In fact, the earlier you start investing, the more you can take advantage of the miracle of compound interest.

We’ve put together some simple pointers to help you begin investing without becoming overwhelmed:

Establish goals.

Before you begin investing your money, it’s a good idea to establish why you’re investing in the first place. Take some time to write down goals – both long term and short term. Also, make sure you monitor and track your progress on a regular basis.

Set a budget.

Determine how much money you’d like to set aside on a monthly or yearly basis towards investment opportunity. This simple step can have more impact than most any things when it comes to planning for your future.

Find a financial advisor.

This is a crucial first step in investing, especially if you are just starting out. An advisor will be able to give you guidance and counseling as you embark on your journey.

Learn the basics.

Although you don’t need to become an expert in all aspects of investing, we recommend you arm yourself with some basic knowledge about stocks, bonds, mutual funds and basic investment strategies. Your broker can help you with this, or you can seek out information from reliable online sources such as the Investor Protection Trust or the FINRA website, which features a Getting Started section for new investors.

Develop a strategy.

My financial planning mantra is “those who fail to plan, plan to fail.” This is especially true when it comes to investing. Develop a plan and a strategy for your investing activities, and stick to it.

Make sure you have a safety net.

Even if you’re investing your money in a relatively conservative manner it’s important that you establish a solid financial foundation that includes an emergency fund. Also, make sure you are discussing protection planning options with your advisors. Chances are children or a new home may be in your future.

Start small.

Don’t throw all of your life savings into your first investment. Start small – even $50 or $100 per month is enough to begin with.

Diversify your portfolio.

Your portfolio consists of all your investments, including stocks, bonds, mutual funds and other asset classes. Diversification can help you set realistic expectations for your investment portfolio and help you manage risk. Work with your advisor to ensure your holdings are diverse – that way if one asset class performs poorly, your other investments can offset some of this volatility*.

Where should you invest.

Working together with your financial advisor you should be able to determine where you should invest your money. Are you taking advantage of your employers match? Should you be investing in a Roth IRA? What are the benefits of a 529 plan? These are a few of the questions that your advisor will be able to answer.

Stick with the plan.

If you experience a loss in your investments, don’t try and amend the situation by altering your investment strategy. Stick with the plan you developed with your advisor and begin to think more in terms of long-term results.

Getting into investing can be challenging and stressful. But if you ease into it and keep our pointers in mind, you’ll start to feel more comfortable in no time.

*There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Securities offered through LPL Financial, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates.

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About the author

Lee Curry is a LPL Financial Advisor at MidWestOne Bank. He specializes in investments and retirement planning.

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