Putting Together Your Financial Plan
Many people have suffered large losses as a result of the last financial crisis
. These large losses have made people seek out alternative investments as a way of protecting themselves. These investments do themselves come with risks and we will be looking at some of these today.
Some people tend to under spend and save a lot of their income. Believing that saving more will have better financial position during retirement. However, this is might be half true. We need to save just sufficient money to meet our financial goals and not just for the sake of saving. You need to have financial plan to determine your optimal saving amount.
Each site that offers an online calculator for retirement will try to provide a free quote for retirement assets. This is to get people interested in the financial services a company offers if money does not add up. When this occurs, it may be important to start some other type of nest egg program like an IRA, real estate investments, or investing in the stock market to generate more money for retirement.
I just want to go over why it is so important to diversify through alternative investments. Traditional investments such as stocks, property, bonds and cash have performed badly on average. The stock market is less than its value 10 years ago. There have been housing bubbles popping as the credit dries up and interest rates are so low that the real value of cash is in decline.
Most people will determine whether they can afford their home by looking at their ability to pay the down payment and service the monthly mortgage installments. However, do you think about how the purchase will affect your ability to achieve future financial goals? With a proper financial plan, you will be able to identify the real price you affordable for that home or car purchase.
With a financial plan, you will have to think about diversifying your asset allocation; without a plan, you may end up investing only in properties. Property investment is not bad but overinvesting will expose you to too much risk in one asset class and badly affect your portfolio if the property sector takes a dip. it may also affect your cash flow if you take out too many mortgages.
People who ask the question, how much should I save for retirement, are worried about their futures and for good reason. Having a keen grasp of funds is an integral part of planning for the future. Don't be left out in the cold when retirement comes and lose the standard of living you're accustomed to. Save as much is possible, use the online calculator, and open up separate accounts if practical.
If you keep your head up and your optimistic, you can expect a small three to five percent return in a years time. This is a very reasonable way of looking at the market in terms of growing your money. There are people who make plenty more than that, I am just saying that being risky or irrational is not a winning game. Most people that manage money will agree with that statement.
Once a person sees how much they are going to get if they have saved for 20 years they then can decide whether they need additional funds.
by: Arthur McCain
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