Saving and investing requires discipline, and as with most goals worth achieving, setting a few specific milestones will help you get started and stay committed. No matter where you are on your financial journey, defining the goals you want to achieve is a great first step toward making your dreams a tangible reality.
A sensible financial safety net
No matter how prepared you are, life occasionally throws you a curveball. A financial safety net can help you through tough times and make challenging circumstances a little bit easier. Experts recommend saving somewhere between three and six months 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 cash stashed away. Short-term investments generally implies a lower risk tolerance since you may need to access your money in the near future.
A down payment on a house
If you’re starting out on your savings journey, a big financial goal like purchasing a house can be both motivating and overwhelming. By putting a little money aside each month and responsibly investing, you could bring your dreams of homeownership 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, and sites like The Mortgage Professor offer calculators using that guideline to help you estimate how much you can afford. Once you’ve determined the total price of the home 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 you’ll need access to in a few years. This means a moderate risk investment combining higher return potential with moderate risk could be a good fit for this type of investment.
Growing your wealth
Many people turn to investing when they want to grow their wealth. Whether you’re keeping up with inflation or planning to save enough to 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. 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 returns. 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. If you need help getting started, Beanstox is there to lend a hand. With Beanstox, you can invest in a diversified ETF portfolio managed by professionals, based on your personal investment goals and risk tolerance.
Whether you’re saving for a vacation, a down payment on a house, a new car, or another expense, Beanstox is ready to help you reach your investment goals. You can set up automatic deposits to keep your investment goals on schedule and take advantage of our educational resources to learn more about investing and wealth management.