Does Your Spending Plan Include Investing?

Don't forget to budget investments as you plan your finances.

As you create a budget or spending plan, it's important to remember to plan for the long term, including investing. It's easy to overlook setting money aside for investments when you are looking at more immediate concerns related to buying groceries, paying insurance premiums, getting braces for the kids and paying down debt. Investing can fall to the wayside.

Don't let it. Make sure that your spending plan includes some way to invest your money, putting it to work for you.

You Might Already Be Investing

Perhaps you are already investing. If you are contributing to a retirement account, you are putting money in an investment account that grows over time. Your money works for you, hopefully growing in a manner that is tax advantaged, by giving you a tax deduction now, or by growing tax free so that you don't have to pay taxes when withdraw it.

Perhaps you can increase your contributions to your retirement account, and put the power of compounding interest to work for you even more effectively.

Investing in Your Future

If you aren't already investing, now is a great time to start. Consider what investments you think will best help you accomplish your goals. If possible, start out with a tax-advantaged retirement account. You want to be able to get the most out of your money, and a tax benefit is one of the best ways to accomplish that goal, since it allows you to put more of your money to work for you.

You don't need to start with something complex, either. Mutual funds (especially index funds) and ETFs are low cost investments that are fairly easy to understand, and that are considered a little less risky than some of the other investment options out there. Funds are usually considered among the best options because they are cost-efficient, and take advantage of the fact that, over time, the stock market has yet to lose.

You can also consider investments like stocks and bonds. Others like to include commodities, currencies and real estate in their portfolios. However, before you invest in anything, you should do your investment research and make sure you understand how the investment works, and the risks involved.

Budgeting for Investments

As you create your spending plan or budget, make sure to remember to include money for investing. Whether you limit your efforts to a tax-advantaged retirement account, or whether you decide to branch out into other investment accounts after maxing out your retirement account contributions, you can make room in your budget to prepare for the future.

Decide how much money you can afford to lock away long-term in an investment account. Look for ways to cut frivolous spending that doesn't match your priorities so that you have more money to put toward your investing goals. You can also consider ways to make more money so that you have extra funds to invest. There are income investments, like dividend stocks or bonds, that can help you maximize your money (if you are careful).

Investing can be a good way to build your wealth — especially if you are planning to build your wealth for the future. The earlier you start, and the more you can put aside for investing, the better off you'll be. However, you need to make sure you can afford to lose the money, and realize that there are risks involved with any investment.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

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