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The Zen of Financial Investing


New to investing, but know you need to start considering doing so for the sake of your future financial well-being and peace of mind?

We’ll provide an overview on the top things you should consider as you engage in your investment planning, including savings goals you should strive for over time, and with whom you should be discussing your financial planning strategy.

Create a financial plan for yourself. First of all, what are your financial goals? Consider putting together a roadmap of your goals, as they will evolve as you age. Consider seriously vetting these goals with a financial planner, who can help you to anticipate what your goals and needs might be later in life as compared to now.

Get recommendations from friends/family for a financial planner with whom you can work long-term. Talk to parents or friends (or friends of parents) who clearly have hired someone who is doing a good job of managing their money.

Don’t be afraid to ask them questions about their strategy. People like to share advice if they are doing well, as they are generally proud of this fact (and will often be proactive in sharing this information so you don’t even have to ask).

Don’t be afraid to ask for the contact information of their financial manager. They will likely be willing to share this information as all information is held private from one client to the next.

At a minimum, try to save between 10-15% annually for your retirement. Fidelity provides a great table that shows how much you should have saved at different ages in your life, shown in multipliers of your salary starting at age 25.

For example, when you are 40 years old, you should have saved twice your salary at the age of 25, assuming your “income grows by 1.5 percent per year above inflation and a portfolio growth rate of 5.5 percent a year.”

Fidelity indicates that 10 to 15 percent is a common benchmark for annual savings and a fair rule of thumb to go by when considering your retirement savings plan. Do not touch this money if you can at all avoid it—trust us when we say that you will need it down the road, and will be so glad that you didn’t succumb earlier in life to spending it unnecessarily at the expense of your already frugal lifestyle later in life.

Get a Roth IRA. Kiplinger indicates that there are few smarter moves than to put your money into a Roth IRA because it is a tax-free opportunity. Annual contributions cannot exceed $5000, and you can only contribute if “your income falls below $110,000 if you’re single, and $173,000 if you’re married filing a joint tax return.” If you do meet these criteria and put your money in a Roth IRA, you also get to select which investments are made on the behalf of your money, so it’s entirely in your control.

Keep the equivalent of 9-12 months income in the bank in case you lose your job. While your savings account won’t earn you the same kind of interest that investments will, it’s still extremely important to keep a healthy one as part of your financial strategy.

“A lot of experts now recommend that everyone keep nine months to one year of income in an emergency account in case of job loss,” says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling in Washington, D.C. Gail also says that “people are often out of work now for as long as nine months, and if they don’t have savings, they live on credit. So when they replace their job, they are behind because now they have debt to repay.”

This should be incentive enough to start building up that savings account, especially because it is no-risk when compared with investing.

Do your research. Looking at a particular stock to invest in? Be sure to do your research on it before putting any meaningful amount of money into the stock. Listen to the analysts, and look at the stock’s track record. Ideally, over time, it has an on average upward trajectory and has a positive online reputation.

Monitor your investments. Just because you put money into a particular stock and that stock is performing well today doesn’t mean you made a good investment. You’ll want to carefully monitor your investments to ensure that your money is in good hands. Getting out of an investment at the right time can be the difference between making a lot of money (if you reinvest it elsewhere) and losing all of your money.

Don’t just gamble your money away—take calculated risks and monitor them. Don’t be afraid to get out of a bad investment, either.

Talk to savvy friends who invest and take a few calculated risks. Have friends who’ve done well in the stock market? Ask them for recommendations on consistently high performing stocks, or underdogs that look to be poised for growth. Don’t invest massive amounts in the underdogs—be conservative and diversify, as they say.

If you have a little extra money, don’t be afraid to take some risks, but be sure to take calculated and small risks to help learn and gain confidence in your investing instincts and capabilities.
The bottom line is that it is never too early to have an investment strategy, and to save for your future. Who knows—your future may be tomorrow if you wind up losing your job and are unable to find another one for a while.

Consider the aforementioned financial investing basics when moving into the domain, and never be afraid to ask questions and do research. The more you know, the more successful you will be when it comes to investing.


Cara Aley is a freelance writer who covers a wide variety of topics from financial management strategies to where to find great deals on office furniture.

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