Do you know why you do investment and why you do savings? You
should save for short terms goals and you have to Invest for long term goals. Saving
is basically you just reduce your expenditure and save your money. Passbook accounts,
short term certificates of deposits (CDs) are the good place to save for
short-term needs such as family vacations, a new car or emergencies.
For long-term goals such as marriage, college education and
retirement, you have to consider investing in that historically have earned higher
rates of return, such as stocks and bonds. However, there is no guarantee that
these higher risk investments will perform well in the future as they have in
the past. That’s why Financial Planning recommends diversifying your investment
money in different types of investments in order to reduce the risk.
IS INVESTING AND FINANCIAL PLANNING THE SAME THING?
Absolutely not. Investing is only one interlinked component
of financial planning, but an important one. The financial planning process
first involves gathering and objectively analyzing data on your overall
financial situation. A financial planner will examine your estate plan, tax situation,
insurance needs, and income and expenses in the context of your short and
long-term needs and goals, such as saving for a home, college or retirement. The
planner will help you improve your cash flow (and make sure that cash flow is
protected) so you will have extra money to save and invest. You’ll need to
establish an emergency fund if you don’t already have one.
WHAT’S AN INVESTMENT PORTFOLIO?
It is the combination of more than one investment asset,
such as stocks, bonds, cash, real estate, precious metals and international
investments. How you and your financial planner construct a portfolio is important
because different types of investments do better in different economic conditions.
By diversifying your investments in a portfolio, you are more likely to reduce risk
and enhance potential return. Elite Wealth Advisors will make you investment
portfolio for you and build your wealth.
