Holland Column

Retirement & Financial Planning

Holland Financial

Preparing to Invest? Consider This First . . .

As of this writing, the stock market has been doing great. There are minor ups and downs, but, overall, the U.S. stock market has been doing well. If you’ve never been in the market and you have been considering buying stock, or, if you’ve been in the market, but may be interested in investing more heavily, here are a few things to keep in mind:

How you invest in the stock market is dependent on two factors.

1. How long before you need the money. Let’s get more specific. If you may need the money you’re investing in the near future, for a home repair or a new car, for example, don’t put it in the stock market! Here’s a good “rule of thumb” list to follow. If you will need the money:

• Inside of a year - Keep your money in cash.

• Within 5 years - Consider conservative investments.

• Within 10 years - Consider a more balanced portfolio.

• Longer than 10 years - Focus on more growth-oriented investments.

Of course, each person’s tolerance for risk is different, so you might not subscribe to the above. This brings us to number 2.

2. How well you can stomach swings in the market. Even if you have 15 years for your investment time horizon, higher-risk funds are probably not for you if you can’t handle the inevitable gyrations and, as a result, can’t sleep!

Keep these things in mind, too. When it comes to investing in the stock market, you can’t “set it and forget it.” You must continue to monitor your monthly statements, even if you have an adviser. Also, it is likely that you will need to meet with him/her to reallocate your investments before, at, and after, retirement.

The stock market can produce solid gains and help you hedge against inflation. The Dow has tripled since March of 2009, but bull markets don’t last forever. Corrections of 10% or more are common. A major event could trigger a sell-off or even a bear market. If you decide to invest, or remain invested, keep the two things I mentioned in mind. If you want guidance, an experienced and knowledgeable adviser can also help you make choices that are geared specifically for you!


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