A well-thought-out investment plan is an important part of any financial
plan. It should be pointed out that any significant investment effort should
only be undertaken after you give attention to four other important items:
the amount of debt you have, the development of an emergency
fund (three to six months of income), the decision regarding home ownership
(e.g., rent
vs. buy), and making sure any needed insurance is in place. When these things
are in place, you’re ready to begin.
The investments you make depend very much on your goal for that investment.
For example, if your goal is to save for a down payment on a home, the
investment would be different than if your goal is to invest for future
retirement income. One of the primary elements to take into consideration is the
time frame. Generally, the longer the time before you need the funds, the more
risk you are willing to take to achieve the goal.
This brings us to the subject of risk, a closely related subject. There are
various types of risk, the discussion of which is beyond the scope of this
discussion. What is important is to understand that all investments have
risk. There is no perfect investment. The question that you need to determine is
how much risk you are willing to take in an effort to reach your goal. That is
an individual question and everyone may have a different answer depending on
their own comfort levels. Generally speaking, the more risk you are willing to
take the more return you should expect, but because there is more risk, you take
the chance of losing a portion or all of your investment as well. As you are willing to take more risk over the long term, you can expect to receive
more return on your investment.
A representative from Estate and Financial Planning Ministries is available
to work with you to identify investments to help meet your unique goals.
Everything is confidential. There is no obligation and nothing to buy. Contact
us at efp@CofChrist.org,
or call 1-800-884-7526 (1-877-526-7526 in Canada).
Return to the Estate and Financial Planning Ministries Reading
Room.
