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5 Common Investment Goals (And How To Achieve Them)
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Many of us have expensive goals in our life that we’d like to save towards. Investing allows you to grow your savings more rapidly, making it easier to reach these goals. Below are some of the most common investment goals and some tips on how to reach them.
Buying a home
Property prices have skyrocketed in the last few decades. This has made it much harder for first-time buyers to get on the property ladder. Down payments are often very high. Many people save up this down payment slowly over a period of years using a regular savings account. If you don’t want to wait that long, it could be worth considering other options beyond regular savers.
High-yield savings accounts may be able to build your savings a little faster as long as you’re able to meet minimum requirements (such as a minimum monthly contribution). These accounts have much higher interest rates than standard accounts. Consider comparing different banks to see what rates are out there.
There’s also the option of opening an investment account and investing in stocks or forex, which can allow you to build your savings even faster. By looking into high growth investments, it’s possible to make a 10% or even 20% return per year. Of course, such investment strategies can be riskier than slow and steady options, so you need to do your research and keep an eye on your investments so that you can quickly sell if an investment starts to lose value. Diversifying your portfolio can minimize any risk of loss.
Some states have their own incentive schemes that can involve mortgages with smaller down payments or financial support towards your down payment. These are definitely worth looking into when buying a home. Having a good credit score and a relatively good income could also allow you to access mortgages with much lower down payments and interest rates. Spend time getting your finances in order so that you’re in the best position when you go to apply for a mortgage.
While you can get married on the cheap, most couples like to blow out on their special day. In fact, it’s common nowadays for US couples to spend $30,000 on a wedding. Saving up for your wedding can avoid you having to take out a loan. The fastest way to save is to invest your money.
As with saving up a down payment, it’s worth considering high yield savings accounts for generating a lot of interest or investment accounts where you can generate an even greater return. This could allow you to afford your wedding much more quickly than trying to save up for it in a regular account. It could be worth setting up a joint account so that you can both contribute to it.
When preparing for your wedding, consider whether some vendors may allow you to pay in advance. This could allow you to spread out the cost of things like photography or venue hire over a couple years so that you’re not having to pay a large sum at once.
Want to start setting some money aside for your children’s future? Such money could be useful for funding their college education or even for your child to put towards a first home or travel. By investing this money, you can grow it faster than if you were to just save it.
Most parents set up a kids savings account - this is money that is transferred directly to an account owned by your child but cannot usually be accessed until they reach a certain age. It’s worth looking into trust funds that have high interest rates.
Other long-term options could include stocks or bonds. With over a decade to invest, you have more freedom to consider safer slow and steady options instead of riskier high growth options. This includes options like index funds.
The earlier you start setting aside money for your kids, the more you can save up and the more of a return you can make by investing it. Many parents now set up accounts when their kids are still babies. Just by contributing $10 each week, you could save up over $9000 in 18 years - by investing these savings as you contribute them, you can grow them even further.
One of the most common investment goals is retiring. Living solely off of social security benefits is difficult - most of us can benefit from setting aside some extra money. Looking into investment options allows you to grow a greater amount of money to put towards your retirement than if you were just saving (the earlier you start investing, the more you’ll accumulate).
A 401(k) is a common investment option. This is a savings account set up by an employer - each payday, some of your wages are contributed to this account. The money in this account is then invested somewhere to help it grow.
IRAs (individual retirement accounts) are typically a more hands-on option. These are accounts set up by you into which you can contribute as much or little money as you want. A self-directed IRA allows you to choose exactly where you invest your savings, whether it be stocks or bonds. These self-directed IRA frequently asked questions explain more about this type of investment strategy.
It’s usually a good idea to invest your money into reliable stocks, bonds and assets that you know will stand the test of time. A lot of people use real estate to help build money for their retirement. This could include buying a property and renting it out to tenants or downsizing your home and using the leftover profits to put towards your retirement.
Leaving an inheritance
Many of us want to be able to leave money behind to loved ones - at the very least to help with aspects like funeral costs. There are many different ways to leave behind an inheritance. Some people simply pay into life insurance schemes, while others set aside some savings. Then there’s the option to invest.
Putting some money into stocks or bonds could give your loved ones some funds to inherit. These ideally should be reliable stocks or bonds that will keep growing without you having to closely check. Alternatively, you could invest in assets that your loved ones can inherit like property or rare collectibles.
Some people pay in advance for their own funeral using pre-payment schemes. If you’re worried about loved ones not being able to pay funeral costs, this could be a way of taking care of the expense yourself. Paying for it all yourself also allows you to secure all the features of your funeral that you want from the type of headstone to the flowers.
Be wary that funds or assets over a certain amount of money may be liable to inheritance tax. A way to get around this could be to transfer ownership of funds or assets to your loved ones while you are still alive by gifting it. Estate planning attorneys and advisors can help you to decide the best path when it comes to leaving behind funds so that your loved ones have to pay as little as possible.
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