None of us can hop in a time-traveling DeLorean and undo our past failure to save for retirement, but we can start to right those past wrongs by saving now. Saving starts with creating a plan. It doesn’t need to be the most complex or sophisticated plan, but you need to address a few key things while building out your investment strategy:
- Pay yourself first. A key step to building your retirement and investment plans is to pay yourself continuously. Dedicate a portion of your monthly budget (yes, I used the dreaded B-word) to your future. Systematic investing1, -, can take some of the difficulty and guesswork out of saving for the future. Treat your systematic investment plan like a monthly bill (yes, I used another dreaded B-word), and remember that, like your other bills, you are paying for something of value. Your financially secure future is worth it, so back away slowly from the high-priced coffee line and pay yourself instead.
- Enable yourself to invest.That means spending less than you earn so you can free up the money you plan to invest. It also means having an emergency fund in place so you don’t dip into your investment money should life throw a curveball. We recommend having at least $1,000 — but, ideally, 3-6 months’ worth of fixed living expenses — set aside.
- Know your time horizon.Identify how long you can be invested before you plan to use the money for your goal. Longer time horizons generally allow you to take some risk, while shorter time horizons demand a more conservative approach.
- Determine your attitude toward risk.This is a crucial step. It can be devastating to take too much risk at the wrong time, but by taking too little, you can fall short of your goals. You may need to speak with an advisor or use an online risk-tolerance assessment to help you decide the right balance.
- Stick to your game plan.Have realistic expectations and review your investment plan at least annually. Avoid emotional investing or being overly reliant on big market returns so you’re not tempted to abandon your plan.
More resources: Visit USAA’s Understanding Investments page to learn more about automatic investing.
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Investments/ Insurance: Not FDIC Insured ∙ Not Bank Issued, Guaranteed or Underwritten ∙ May Lose Value
This material is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing.
1Systematic investment plans do not assure a profit or protect against loss in declining markets.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
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