A major attribute of having a healthy financial picture in the long term is both saving for the future and investing in ways that work out well for you. You need to put away as many dollars as you can, but you also need to make sure that you put them in places where they work hard for you, earning and attracting even more dollars. The following paragraphs have a number of rules you should follow to maximize this part of your financial health.
You need to invest along the entire spectrum of the risk medium, but you might jump around on it instead of taking a linear approach. Some savings vehicles are so safe that they are insured and gauranteed by the government. This would include savings accounts at banks. You start here, because you need eight months of living expenses saved up before you do anything else. Then you want to keep five percent of your total investment portfolio in liquid assets you can tap quickly, like savings or a money market account.
Once you start investing for the future, however, your next move might not be into conservative but slightly more risky investments like bonds, dividend stocks and money market funds. If you are young and saving for retirement, you want to invest in high risk growth-oriented stocks and aggressive mutual funds.
Still, even if making the most amount of money is your objective, you want to think twice about anywhere that you put your money. Never trust anything that assures you it can beat the market. This promise is rarely kept when made. Some funds do beat the market, but not every year. In fact, index funds are proven to do the best year over year, because they have to keep up with the market.
Never make rash decisions when investing. As soon as you get emotional about money, you have lost. It is a numbers game, rational decisions over time. Sit down with your money manager once a quarter to re-balance your portfolio and review your objectives and progress toward them. Then, leave it all alone in the months in between. You are going to take hits in bear economies and downturns, but if you stay in there, you will make it back up and then some.
Keep investing with regularity. Never mind what is happening on the market news channels. Set a flat percentage of your income for savings and contribute every week, every month, every quarter of each year. This will mean that you put money into shrinking sectors during a crash, but unlike those that cash out and flee in terror, you will be in position to take advantage of the bull run that comes two years later.
Making the right financial choices is not all that complicated. Hire a professional money manager or financial adviser, detach yourself emotionally from the daily roller coaster, set long range intentions and keep saving. You will find ways to manifest retirement and all your other life dreams.