Investment Planning

Before investing your money, it’s imperative to analyze your long-term financial goals and Investment Planning. Where do you see yourself in five, ten, twenty, or thirty years? Do you want to own your home free and clear? Pay for your child’s college education out-of-pocket? Retire early through the fruits of your investments. Selecting your financial goals begins with envisioning the lifestyle you’d like to enjoy in the future.

With that said, your goals need to be in line with the earning potential of your investments. If you’re investing all of your money into an investment with a notoriously low rate of return, chances are that you won’t be able to earn $1,000,000 in twenty years. However, if you choose an investment that is known for its high returns and invest as much as you can reasonably afford, your chances of reaching your goal increase exponentially.

Refrain from setting loose goals. Stating that you’d like to improve your financial situation “in the future” leaves too much wiggle room. After all, when is “the future” anyway? This wiggle room will leave a gaping hole when trying to analyze the performance of your investments.

Set financial goals that are attainable, yet ambitious. Set both long-term and short-term goals for your finances. In doing so, you’ll have a solid figure to work towards and an honest method of evaluating the successes and vitality of your investment’s performance.


Clearly, the more money you’re able to put into your investment, the more likely you will receive a higher return. In the realm of investments, the old adage is true; it takes money to make money.

Many first-time investors save for months or even years to build the funds for investing. If you’re trying to save money for your investment, you may be able to build funds faster by shifting around a few numbers in your current budget.

However, this is not to say that you should force your family to subsist solely on Ramen Noodles and water for the next three months in order to fund your investment. If you must cut back that drastically to scrounge up your initial investment, you’re better off opting for an opportunity with a lower bar of entry.

Let’s say you currently have $5,000 set aside for your investment, but you’d like to wait until you have $10,000 in order to invest. An option to consider is to open a CD (Certificate of Deposit) with the $5,000 and choose a term that fits your goals best. Generally, choosing a longer CD term will allow you to earn more money in interest as your CD matures.

✦ A 6-month CD with a 2% interest rate can earn you an extra $50.
✦ A 12-month CD with a 2% interest rate can earn you $100.
✦ A 2-year CD can earn you $204 when it matures, equivalent to $102 per year.
✦ A 5-year CD can earn you $525 at maturity, or $105 per year.

CDs certainly aren’t the highest-yielding investment. Nevertheless, if you’re simply going to save your money in a bank account until you’re able to save enough to fund your investment fully, it’s certainly a better option. At the end of the day, you’re making money rather than having your account remain stagnant or worse, at a loss.


It’s important to consider the type of investment you want before you begin saving. Researching investments upfront will help you define the dollar amount to work towards before saving for your investment. Consulting with an investment advisor is a vital part of this stage of your investment planning.

Borrowing from your 401(k) or your child’s college fund is an option to consider. However, in doing so, you’re robbing Peter to pay Paul. If you lack sources to fund your investment immediately, the logical alternative is to save up for your investment funding by setting aside an established amount each month.

Depending on your financial situation, it may be simple to set aside savings for your investment. If possible, set aside 5% to 10% of your income for your investment each month. Assuming that your household has an average income of $5,000 per month, you’d set aside $250 to $500 of your total income to save for your investment.

If you feel as if living on 10%, or even 5%, less of your monthly income is simply impossible for your family’s current financial situation, don’t feel locked into this percentage bracket. You can save less and still realize your goals of investing. However, it will take longer to save. The more time it takes to save up the funds for your investment, the less time your money is earning interest.

If you’re working on a limited income, it may be necessary to make budget cuts in other areas of your life. It’s easy to find ways to save in your grocery budget, entertainment, and leisure shopping. If possible, make permanent changes (like using just one car or taking public transit) that will allow you to enjoy a greater expendable income.

Try implementing these ideas to help you trim back your monthly expenditures and save towards funding your investment:

1. Use coupons. The simplest way to save money without sacrificing your current lifestyle is to use coupons whenever possible.

✦ Before going to a store, search for printable coupons online. Searching for store coupons takes less than five minutes, and it can help you save 20% or more on a purchase you’d make anyways.
✦ Join a couponing website, such as or The websites match up the current printable and newspaper insert coupons with store sales in your area to help you get free or heavily discounted products.

2. Prepare meals yourself. The average fast food meal is between $5 and $7. For a family of four, a single trip to the drive-thru can cost $20 to $28 before taxes.

✦ If your family eats fast food once per week, you can save between $80 and $112 per month. If you frequent fast-food restaurants twice weekly, you can save a whopping $160 to $224 per month! Surely, this would help fuel your investment.
✦ Cut, shred, and slice all of your vegetables yourself. Purchase whole chickens or slabs of meat and prepare them into portions at home rather than paying a premium for butchered meat at the supermarket.
✦ Save on baby food by using a food processor to create healthier and less expensive alternatives to store-bought baby food.

3. Save on utilities. If you’re like the average American family, your monthly utilities account for a large portion of your monthly housing costs. Save on your utilities by maximizing the efficiency of your home.

✦ Switch out traditional incandescent light bulbs to CFL (Compact Fluorescent Lightbulbs) to reduce your energy bill instantly. CFL bulbs use up to 75% less energy than incandescent bulbs. Use them in areas where they’re not likely to get broken, as these bulbs contain a toxic substance – mercury – which could be released when broken.
✦ Place draft stoppers on windows and doors to keep outside weather from entering your home. Draft stoppers can cost as little as $10. However, they can also be made easily at home with basic sewing skills.

Always keep in mind that several minor changes over a long period can equal big savings. Consider asking a family member to watch your children; even if you pay them, the cost will be significantly less than after-school daycare or pricey summer camp programs. Alternatively, rather than splurging on a family vacation, use your imagination to enjoy a family “stay-cation.”

If you’re willing to forgo the expenses that you perceive as conveniences, you’ll likely uncover plenty of money to use towards funding your investment.

TIP: Living paycheck to paycheck can truly dampen any dreams of investing. In this particular situation, it may be necessary to take on a part-time job to create a positive cash flow.


There are many types of investments to choose from. As a general rule, you’ll be able to choose from low-risk, low-yield investments or high-risk, high-yield investments. Below, we’ll identify just how risky some of the most popular types of investments can be and what the investments themselves entail.

✦ Stocks: When you purchase a stock, you’re purchasing a small portion of the corporation by becoming a shareholder. Stocks are riskier investments because the market is very tumultuous and unpredictable.

✦ Bonds: Purchasing bonds makes you a creditor of a company, rather than a shareholder. As a creditor, you’re loaning your money for a specified amount of time. In exchange for your loan, the company will pay you the principal amount in addition to interest.

✦ CDs: When you invest in a certificate of deposit, you’re agreeing to loan the CD issuer (usually the bank) your money for a specific amount of time. You’re able to remove your funds at your discretion. Unfortunately, by removing the funds before the agreed-upon date (the maturity date), you’ll incur a fee. CDs are very low-risk investments. However, this low risk also leads to a low return.

✦ Mutual funds: Mutual funds are appealing to investors because they offer a diversified portfolio of stocks, bonds, and other types of investments all wrapped into one. Rather than investing privately, a mutual fund collects money from multiple private investors and uses the money to invest in several diversified investments. Investors then receive shares of the investments and are free to hold or sell them at their discretion.


The FTG Knowledge Bank