Building on Your Foundation
Setting Investment Goals. Before you invest your money, spend some time considering and setting your personal goals. For example, do you want to retire early? Do you need to pay for a child’s college education? Would you like to buy or build a new house? In addition to these, there are several other considerations that can help you and your financial professional develop an appropriate plan.
Think about your time horizon. One of the first questions you should ask yourself in setting your investment goals is “When will I need the money?” Will it be in 3 years or 30? Your time horizon for each of your financial goals will have a significant impact on your investment strategy. The general rule is: The longer your time horizon, the riskier (and potentially more lucrative) investments you may be able to make. Many financial professionals believe that with a longer time horizon, you can ride out fluctuations in your investments for the potential of greater long-term returns. On the other hand, if your time horizon is very short, you may want to concentrate your investments in less risky vehicles because you may not have enough time to recoup losses should they occur.
Understand your risk tolerance. How do you feel about the potential of losing your hard-earned money? Many investors would forgo the possibility of a large gain if they knew there was also the possibility of a large loss. Other investors are more willing to take on greater risk to try to achieve a higher return. You can’t completely avoid risk when it comes to investing, but it’s possible to manage it. Almost universally, when financial professionals or the media talk about investment risk, their focus is on price volatility. Advisors label as aggressive or risky an investment whose price has been prone to dramatic ups and downs in the past, or that involves substantial uncertainty and unpredictability. Assets whose prices historically have experienced a narrower range of peaks and valleys are considered more conservative.
Remember your liquidity needs. Liquidity refers to how quickly you can convert investments into cash. Your need for liquidity will affect the types of investments you might choose to meet your goals. For example, if you have an emergency fund, you’re in good health, and your job is secure, you may be willing to hold some less liquid investments that may have higher potential for gain. However, if you have two children going to college soon, you probably don’t want all of their tuition money invested in less liquid assets. Also, having some relatively liquid investments may help protect you from having to sell others when their prices are down.
-S. Joey Elmore
Vision Financial Group, Inc.
4505 Pine Tree Circle, Birmingham, 35243
Investment Advisory Services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor. Securities offered through ProEquities, Inc., a registered broker-dealer and member of FINRA & SIPC. Vision Financial Group, Inc. is independent of ProEquities, Inc.
Please be advised that presently S. Joey Elmore holds a series 6, 7 & 65 licenses and is registered in the states of AL, AR, FL, GA, KY, IN, MD, MO, MS, NC, NM, NE, OH, & SC.