The Road to Financial Well-being by Cindie K. Jones, CFP

As we enter a new year, it's a great time for each of us to take a look at our financial situation. The more satisfied we are that we're on a good financial path, the less stress we have, and the freer we feel to explore other ways in which to enhance our lives.

Buying a new home...reducing debt...paying for college...saving for retirement. Most investors find it challenging to manage multiple goals like these because the time frames for reaching those objectives often overlap.

To reach multiple goals, set priorities.
Once you identify and prioritize your short-term and long-term goals, you'll be in a better position to design a financial plan using appropriate investment choices. For example, consider designating money market funds or short-term income funds for more immediate goals, while allocating assets for long-term growth to equity funds. As your priorities change over time, adjust your portfolio accordingly.

In your early years, buying a new home may be at the top of your short-term priority list. In addition to saving for your home's down payment, consider using an IRA to invest for retirement. Retirement may seem a long way off, but it should be high on your list of long-term priorities. Time and compounding have the potential to make a big difference. For example, to reach $100,000 by age 65, you would need to invest $65.53 every month if you start at age 25. Waiting until age 45, you would have to invest $243.29 every month to reach the same goals.*

If your goals switch to investing for your kids' college costs as well as retirement, you may be tempted to put retirement savings on the back burner. But remember, your kids will probably be in college for just four years, while retirement can last 20 years or more. So continue to invest for both goals.

Get into autopilot mode
One of the easiest ways to manage multiple objectives is to set up an automatic investment program for each goal. By having a fixed amount directly deposited each week/month into investment accounts earmarked for different goals, you may reduce the risk of getting off track with your multi-tiered plan. A great new year's resolution could be to sit down with your financial advisor who can help you prioritize your goals and set up an appropriate plan for multiple objectives.

*Assumes a 5 percent interest compounding monthly and does not take taxes or transaction costs into consideration. Example is hypothetical and for illustrative purposes only. Figures do not represent any actual investment's performance. An automatic investment program does not ensure a profit and does not protect against loss in declining markets. Equity funds have historically been riskier than money market or short-term income funds.

Cindie K.Jones, CFP
Financial Advisor

Waddell & Reed
District Office
3251 Henry Street
Suite A
Muskegon, MI 49441
(231) 739-7127 ext 105

Division Office
4081 Cascade Road
Suite C
Grand Rapids, MI 49546
(616) 956-6051

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