Like all investment strategies, this really depends on several factors such as: start up capital; risk tolerance; and how comfortable you are letting someone else (or you) invest your hard earned money, to name just a few.
With that being said, any opportunity to sit and talk with a financial planner should be welcomed with open arms. Even if you don’t enlist their services, Financial Planners are a wealth of knowledge and always have a few nuggets to dole out. Grab at that knowledge with greedy hands.
Educating oneself on financial matters is of great importance, as letting someone else blindly invest your capital is seldom a good idea. Just ask Nicolas Cage. Millions of dollars squandered, simply for not watching over his own money.
Whether or not you employ a financial professional in you investment strategy, don’t expect to make your fortune over night. While it’s always entertaining to hear about the grandmother that bought Apple at $7 a share, and her $5,000 investment is now worth nearly $300,000, keep in mind, it took 20 years to get there. A good retirement plan is built upon consistent capital being added, not the quick lightning strike of good fortune and wealth.
Financial Planners help you plan for your future. What type of retirement do you see for yourself? Are you planning on owning your home? How about sending the kids to college? Ivy league or community college? Vacations, 2nd homes, hobbies, they all need to be taken into consideration, to properly gauge a retirement number. All work you can do yourself, and at at your leisure.
Consider your lifestyle today. Are you comfortable and happy? Are your bills paid at the end of the month with some left over? With this basic information, you can begin to set up your own financial plan. As a general rule of thumb, you can use this number to determine how much you will need each year in retirement.
For Instance, say you make $50,000 a year, and own your own home. You plan on retiring at age 55, and living until your 80, or 25 years worth of retirement. Now take those 25 years, and multiple by your standard of living, in this case, $50,000 per year. This person would need 1.25 million dollars on their 55th Birthday to achieve that goal.
Factor in how many years you have until retirement, and this is how much you need to save or accumulate every year. A 20 year old, then, would need to save 35K a year while the 40 year old would need 83K. Their are numerous online calculators you can use, to factor in things like Return Rate, that will adjust that number down considerably. (By realizing a 10% yield of return, you may only need to invest a few hundred dollars each month).
When it comes to actually investing your capital, is where you are most likely to consider that Financial Planner. With literally thousands of investment vehicles to choose from, IRA’s, T-Bills, Bonds, Stocks, Futures, Mutual Funds, etc, it might seem a bit daunting. If you are the do-it-yourself type, however, a little homework should quickly lead you to several potential investments.
And that is really the bottom line here. If you are good at balancing your check book, and have a hunger to learn, and don’t mind a bit of searching, then the vast amounts of resources available on the internet are more than adequate to research and form your own investment plan.
If, on the other hand, this does not sound like you, or if you have a substantial amount to invest, then by all means, consult a professional planner. Often times, your insurance agent, for your home and auto, will provide you with some basic information that will get you started on the road to a secure retirement.