Investor Guide to Financial Health

Step 1 : Spend less than you earn
Perhaps the simplest financial concept is the toughest for us to conquer - to spend to less than you deserve. After paying your living expenses ( bills , loan and mortgage payments , cost of food , donations, taxes, etc ) , you can begin to save and invest toward your future . If you spend more than you earn, you have to find a way to change this. You may even need to your lifestyle - to change a drive efficient cars , eat less, live in a smaller house , you break your phone, etc. Make a commitment to your financial success to spend less than you earn . This can be a lot of discipline , but it is an important first step towards your financial well being. If you spend less than you earn , you'll be on your way to achieving all your goals .

Step 2: Prepare for emergencies
Before any actual investing, you need an emergency fund (cash held in an account for emergencies ) to establish . This fund can be used for various emergencies , but its main purpose is to pay your living expenses in the event of a sudden loss of income. That is, if you lose your job , you will still be able to pay your bills without hard money from your investment accounts. A relatively conservative amount in your emergency fund is to keep that same 6 months living expenses.

Step 3 : Determine Your Goals
Would you take a ride without a final destination ? How long does it take? What to bring ? In which direction would you go ? These questions are easy to answer , if you know where you're going . The same holds true for investing . Before any investments are actually purchased, you have to know that your ultimate goal - you need a list of your goals .
Determine your goals and they will write serve as a basis for a proper investment plan , allowing you to customize your investment on any specific target . Some examples of " goals " are : retirement , college, buying a home , buying a vacation and a car.
In writing down your goals , there are a few pieces of information you need to identify yourself. You need to know the following for each target : stored name (NAME ), the time to completion (TIME) , costs in current prices (COST ) , scheduled posts (Payment ) and current money for this goal (PV). Below is an example of a list of goals :
NAME - TIME - COST - PAYMENT - PV - PRICES
Retirement - 30 years - $ 2.5 million - $ 1,000 mo - . $ 350,000 - ? ?
College Kid 1 - 12 years - $ 100,000 $ - $ 500 mo - . $ 20,000 - ? ?
College Kid 2 - 10 years - $ 100,000 $ - $ 500 mo - . $ 22,000 - ? ?
The purchase of a yacht - 6 years - 30.000 € - $ 150 mo - . $ 0 - ? ?
Step 4 : Invest
After determining your goals, you can begin to invest to achieve them . This means that the calculation of the annual return (RATE ) needed to achieve each goal . For example, you can achieve a 7 ​​% return on your retirement goal, while only 5% return on your college to achieve goals. Thus, your actual investment is significantly different individually for each target , but to everyone. ( There are online resources and computers , provide the support you calculate the required rate of return. )
Buyer of investments, you have to those who earn annual returns together necessary to buy in order to reach your goals. You can invest on your own , use an investment advisor , or search for a broker / dealer to assist you with your investments . No matter how or where you invest , there are a few things to remember :
o Put it in writing : Write down your goals and how you invest to achieve them is very important and will serve as a framework for decision making in uncertain times in the future.
o Use Index Funds: There are thousands of different plants to choose (for example, mutual funds, stocks , bonds and pensions). Index Funds provide the greatest benefits for reasons of cost, performance , simplicity, transparency and diversification.
o Seek advice : pay a little for the advice of an investment professional can be very clever. There are even investment advisor companies online that tailor your investments directly on your goals for you.
o Be emotionless : The financial markets fluctuate up and down - so will your investment. If you have any goals that are less than 5 years , you might want to (such as a money market or certificate of deposit ) invest these funds to something very conservative.
o index adjustment periodically : Accounts should be rebalanced annually to keep in line with your goals .
final Thoughts
When investing toward your goals , you need to ensure that no unforeseen circumstance prevents them from you . Insurance is a very useful tool to make sure your goals no matter what situation may arise , be realized. Through the analysis , you can determine which goals are not reached at risk for , you should become ill , are disabled or pass away. With enough money to pay for your goals regardless of death , disability , health problems or other unforeseen circumstances is an essential part of a sound financial plan.
In addition, estate planning is an important part in planning your finances. A will , trust, or power of attorney can allow you to keep your plan in motion to reach far beyond your life. ( Please consult an attorney to discuss your estate plan . )
With a solid , well thought out plan for your finances is something that you can achieve. With a little time and effort, you can be on your way to spending less than you are , establishing an emergency fund , and tailor your investments at any of your specific goals . Plan your finances wisely , and you agree to your plan.