With the economic crisis being the way it is, many have reconsidered their investment strategies. Some have pulled all their money out of the stock market, some are buying. However, there are still a few basic principles that, if followed, will hopefully make investing easier and maybe even less stressful during the “down” times.
Valerie RumboughOver the next few weeks, I will be discussing some strategies that you may wish to consider, based on your general age. This week we’ll look at some basic principles that provide the base for all investment decisions.
One principle to follow is to know your time horizon. This simply means that you should determine how long it will be before you will need to spend the money you have invested. If you are investing mainly for retirement, then age 65-70 may be your time horizon. If you have at least 10 or more years before that happens, you can afford to take more risk than someone can whose retirement is right around the corner.
Secondly, know your risk tolerance. In other words, know how well you can handle market swings, both up and down. Some are willing to take more risk than others when it comes to investing their money. Those who can’t handle the risk should choose safer investments.
If you are not sure where to start, you may want to seek the advice of a financial professional, such as a CPA, a CFP, or a Registered Investment Advisor. They can help you make some good choices, or can at least point you in the right direction. Find an advisor you feel you can trust. Interview that person first before you make the decision to follow their advice. Find out if they are a Christian. One place to look is through an organization called Kingdom Advisors. You can search for an advisor on their Web site, www.kingdomadvisors.org.
Lastly, know Who is in charge of it all. Since it all belongs to the Lord, we should follow his advice. There are many passages in the Bible that teach us how to save and invest. His Word also instructs us to find counsel when we are not sure what to do. When you make a financial decision, you are truly making a spiritual one. Let’s all seek God’s help in making those decisions.
Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at (800) 723-7242. In accordance with IRS Circular 230, this article is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purposes. Please consult your own tax advisor.