People tying the know have a lot on their mind, and investing generally isn’t at the top of their list. But according to Ken Julian of Halsey Associates in Providence, RI, it should be.
“Investing is vital to the financial security of your marriage,” he says. “It’s not sexy or fun, but you should create a timeline for investing and stick to it,” Julian adds that it’s crucial to prioritize knowing where your money is going, especially because many newlyweds will find themselves in a new tax bracket.
Whether you are a newlywed or not, if you haven’t started investing yet, there is never a better time than the present to start building for your future and learn how to be smart with money. Julian offers these ten simple strategies anyone can follow:
1. Consider automatic savings plans:
The most significant hurdle people have when it comes to investing is saving consistently. Many people are living paycheck-to-paycheck and just can’t find the extra money to invest. Julian says this hurdle can be overcome by looking into an automatic savings plan with a bank or brokerage firm.
2. Consider your emergency fund:
Many things happen in life that you don’t expect, such as a trip to the hospital or an unexpected car repair. The last thing you want to worry about when something goes wrong is having to figure out how you’re going to pay for it. Julian suggests that everyone have an emergency fund of $1,000-plus in a high yield savings account. Of course, the number will vary depending on your family size and income, but the idea is to have enough money saved so that it doesn’t bankrupt you when life happens.
3. Consider how much you’re paying in fees:
Although investing can be very expensive, paying high fees often isn’t necessary if your investments are appropriately managed. “If someone has a self-directed IRAs with a big bank or brokerage firm, they are paying 5%, 6%, and 7% in fees,” says Julian. “This is money that should be working for you, not them.”
4. Consider your time horizon:
Very few people know how long their retirement will last; therefore, it’s vital to invest according to your time horizon. “If you’re young, have time to recoup market losses, and are comfortable with taking risks, then consider investing in the stock market,” says Julian. But if you need your money sooner rather than later—or tend to be risk-averse—consider keeping your investment dollars safe in high yield savings account or CDs.”
5. Consider getting professional investment advice:
If you’re new to investing or just don’t know where to start, Julian suggests seeking a financial advisor who has the time and experience to help you find suitable investments. “Consider looking for someone with ten years of experience,” he says. “These are people who can either manage your money or provide you with solid advice on where to start.”
6. Consider your risk tolerance:
One of the most common mistakes people make when investing is not clearly understanding their risk tolerance. What this means is that some people are more comfortable taking risks than others. For example, those who tend to be more conservative with their investments generally want to see their money grow a little more slowly but in a very safe manner. On the other hand, those who are more comfortable with risk may be looking at higher returns over the long term.
7. Consider the asset allocation of your portfolio:
Asset allocation is basically how you divide up your investment dollars among stocks and bonds. Julian says the best practice is to have 70% in stocks and 30% in bonds. “Find someone with a disciplined approach that you trust,” he adds.