1. A sensible financial safety net
No matter how prepared you are, life can occasionally throw you a curveball. A sensible financial safety net can help you through tough times and can make challenging circumstances just a little bit easier. Experts recommend saving somewhere between three and six months’ worth of living expenses before investing in other projects.
Building up a financial safety net should be your first saving and investing goal, especially if you don’t already have a good chunk of cash stashed away. Short-term investments generally implies a lower risk tolerance, since you may need to access the money in the near future.
2. A down payment on a house
Especially if you’re just starting out on your savings journey, a big financial goal like purchasing a house can be motivating, but also overwhelming. By putting a little aside each month and responsibly investing, you could bring your dreams of home ownership closer to reality. For many people, buying a house is one of the most significant purchases they’ll make in life, so it pays to be prepared.
A good rule of thumb states that you shouldn’t spend more than 25%-30% of your income on a home. Sites like The Mortgage Professor offer calculators to help you estimate how much home you can afford, based on that guideline. Once you’ve determined the total price of the home you think you can afford, take 20% of that number and you have a rough estimate of the down payment you need. This is your savings target.
A down payment is usually a medium-term investment that you’ll need to access in a few years. This means that a moderate risk investment that combines higher return potential with moderate risk could be a good fit for this type of investment.
3. Growing your wealth
Many people turn to investing when they want to grow their wealth. Whether you’re just looking to keep up with inflation or plan to save enough so that you can become financially independent and retire early, investing is a key component of most long-term savings strategies. As with any savings goal, starting early and saving consistently can have a big impact over time. You should make sure to take advantage of any tax-advantaged investing and savings accounts first and invest the rest in non-tax-advantaged accounts.
If you’re interested in growing your wealth over time and have high-risk tolerance, you may pursue an aggressive investing strategy designed to maximize your profits. On the other hand, if you prefer to play it safe, you can invest in lower-risk, diversified, long-term investments.
Investing with Beanstox
Investing doesn’t have to be complicated. But if you need a little help getting started, Beanstox is there to lend a hand. With Beanstox, you can invest in a diversified portfolio managed by professionals, based on your own personal investment goals and risk tolerance.
Beanstox also lets you create multiple investment goals, whether you’re saving for a vacation, a down payment on a house, a new car, or another expense. You can set up automatic deposits in order to keep your investing goals on schedule and take advantage of Beanstox’s educational resources to learn more about investing and wealth management.
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