While we gear up with what we want to save during the year, it’s smart to stop and ask yourself – “is my investment goal big enough?” While we think we’re already doing ourselves a favor by putting aside a little something for a rainy day (and watch it grow interest!), you may want to add a little more to that amount to secure your future.
First Thing’s First: Emergency Savings
One of the most important savings you should have tucked away is your emergency savings. The best-case scenario for the amount you should have in your emergency savings is about three to six months’ worth of your salary in your account. This is in case of an emergency – be it (knock on wood) getting fired from your job, falling ill, or having a property of yours destroyed/burned down. You want to invest this money in liquidized cash, and not something you still have to sell. If your emergency savings haven’t touched this three to six month rule, then you know it’s time to start going double time saving what you can from your paychecks.
Your Retirement Fund is Vital
Once you’ve got your basics down to pat, it’s best to join a program that could help you gear up for your future. You do not want to be working well into your seventies just because you’d forgotten to secure you future when you were younger. If you don’t think this is a vital part of having an investment goal, think again! Old age comes with a whole bunch of issues that take a financial toll on you. Investing for retirement comes in second to importance next to emergency savings. The best part about this, though, is that you don’t have to invest a whole chunk of money right away. You can start slowly, and pay monthly. You’ll thank yourself for it!
Ask Yourself The Right Questions
So let’s say your emergency and retirement funds are set and good to go – now you can ask the questions that will determine the rest of how big your investment goals should be. Ask yourself these three questions: what exactly are you saving for? Is this realistically achievable with the amount that you’re earning? How important is achieving what you’re saving for, and what kind of quality are you willing to compromise for?
Do The Best You Can
If you’re still worried that your investment goal isn’t big enough, at least you can rest easy in knowing that you did the best you could. This means that you have to act now, and waste no time. Be diligent and perseverant in stashing away what you can from what you earn, and research as much as possible to make sure that you are making smart investments, whether those investments are in mutual funds, stocks, or cash investments. Spread your investments well (don’t focus on a single kind of asset) and monitor them frequently. You cannot fail in knowing that you had a vision in mind, and worked with what you had to make that vision come true.