One of the best investment planning strategies is a prioritized automatic investment plan in which you pay yourself first. Decide to set up automatic deposits from your savings or checking to your investment accounts.
An automatic investment plan has several benefits including simplicity, convenience, time savings, and keeping you disciplined. It’s too easy to find an excuse to skip an investment deposit when you have the option. Maybe you are busy or on a tight budget this month; or choose not to invest because of a market that is down or falling. Emotions, including fear and our desire for immediate gratification, can cause us to do exactly the opposite of what we should do.
Your first priority for investment is a 401(k) plan matched by your company. Always invest enough to get your company match. This is even better than free money, because this is free money that can grow and take advantage of compounding. It’s the equivalent of a 100% gain the first day. Once you have set up deposits sufficient to receive your “free money”, set up automatic investments to your Traditional IRA, Roth IRA, or Both. These investment vehicles offer substantial tax and growth advantages. After funding the maximum amount in your IRA your next priority would be your 401(k) over and above the company match.
Do you pay yourself first? Do you use automatic investing?
| AAAMP Blog by Ken Faulkenberry | |
|
Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record. |
 |
