December 9, 2024

Asset Control and Quality

Investment for the Future

6 steps to investing wisely

6 steps to investing wisely

Step 1: Determine financial priorities – Housing, living expenses, emergency savings, and paying off high-interest debt should take priority. Invest only with leftover funds after these obligations are met.

Step 2: Set investment goals – Long-term investment goals are as diverse as growing personal wealth, retirement planning, building and passing on generational wealth, creating additional income streams, or supporting a business or cause. Choose the wealth building products that best fit your investment goals:

  • Traditional and Employer-Sponsored IRAs – An Individual Retirement Account (IRA) is a pre-tax investment account designed to help individuals save for retirement. IRAs offer tax advantages that can help individuals grow their savings more effectively compared to regular savings accounts. Some types of employer-sponsored IRAs (401k, 403b, 457b) may include employer contributions or matched funds. If possible, try to contribute enough to obtain employer-offered benefits.
  • Roth IRAs – Roth IRAs are after-tax investment accounts that allow you to pay income taxes on your investments now and make tax-free withdrawals in the future. The earlier you start a Roth IRA, the better, but you can open one at any age.
  • Brokerage Accounts – A brokerage account allows an individual or entity to buy and sell financial assets, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, and other securities. Investors can place orders through their brokerage accounts to purchase or sell assets. These accounts often have transaction and account maintenance fees and commissions on trades. This type of investing is riskier and more hands-on, and for that reason, it should be a smaller percentage of your total investment portfolio.

Step 3: How much to invest? – Your investment strategy should fit reasonably into your current budget and financial priorities. Depending on your financial situation, it is recommended to invest 10-15 percent of your annual income per year.

Step 4: Do your research – Start your investment research with us. Our Investor Center website is a free resource designed to empower investors of all experience levels to learn more about investing, protect themselves from scams and fraud, and make informed financial decisions.

Step 5: Recognize red flags – Investment offers often come with promises of financial security or building wealth quickly. Beware of opportunities that seem too good to be true or are offered with high-pressure sales tactics. Use our Protect Yourself from Fraud and Investment Scams resources for tips on how to recognize the red flags.

Step 6: Get help

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