Saving for whatever…
Written by R. A. Stewart
Establish your savings goal. Are you saving for your retirement, a new car, a deposit for a home or whatever. This will be the determining factor when choosing where to invest your money. It is important to note that you can have several different savings/financial goals at the same time with a different type of investment with each goal.
For example, you may have a short term goal to pay off your TV set, a medium term goal to save for your car, and a long term goal to put away money for your retirement.
Your financial goals should be split up into three categorys; short term, medium term, and long term.
The category will determine where it is best to place your money.
1. SHORT TERM
Oncall-6 months
This is money on standby and used for general household bills such as power, car running expenses rent, and so forth.
Where to keep this money; Ordinary savings account or bonus bonds
2. MEDIUM TERM
6 months-3 years
This is money being saved for a car, appliance, overseas trip.
Where to keep your money; Bonus Bonds is a good option but mutual funds is an option but invest conservatively.
There are a number of managed funds which are cropping up and you do not have to have much to get started with them. A good one for the beginner is sharesies (in NZ). If you are from another country there will be companies similar to Sharesies you are able to invest with.
3. LONG TERM
3 years+
Saving for a house deposit and building a nestegg for your retirement are examples of long term goals.
Where to keep your money; kiwisaver is an ideal investment to drive you to your savings destination because the incentives will help your savings grow.
Some tips.
Pay off debt first because if you are able to pay off a debt where your are paying say 10% interest on the debt then the interest saved from the paid off debt is just as if you had been paid the 10%; as the saying goes, “A dollar saved is a dollar made.”
Stuff happens in life where circumstances change therefore you need to be prepared to be flexible.
Take a long term view of your investments. It is time and not timing which is the key to investing. As you gain more experience with investing, your risk profile will improve.
Read all you can about finance and the sharemarket. Knowledge will help you overcome your fears when investing.
PLEASE NOTE; The information in this article is the writer’s opinion basnk.ed on his experience. If you requiire financial advice see your bank.
www.robertastewart.com
#retirement income