The time has come. If you’ve made it to this post, then you are most likely at a point in your life where you are thinking about the future. Specifically, you might be sitting down and asking yourself what you can do to make your future more financially secure. Whether you are beginning right away or it has taken you a bit longer to get to this point, it is not too late to get started working on your financial portfolio.
Why It’s Important
Building a financial portfolio will help you understand which opportunities can provide you with the best returns later on; and it will also help you understand which lifestyle choices and bad habits are hindering you financially. It will also help you grow you in confidence, stay more organized, and diversify your finances. In these trying times of the COVID-19 pandemic, there has never been a better time to take back control over the unknown. Organizing your finances can be the perfect way to take charge.
What You Should You Do First
Before you begin, you will need to know more about your current finances. It is important to sit down and create a list of everything you own, your current investments, and their estimated value and rates of growth. If this process sounds too overwhelming to you, you can always get help from an expert right away. For example, take a look at this page to see how Bogart Wealth could provide you with assistance to help you get started.
1. Invest in a Roth IRA and Your 401K
Now that you’ve thought about your current finances, you can take the next steps to build your finances in the future. A great option at this point is to begin investing as much as you can into a Roth IRA. Roth IRAs can provide substantial and consistent returns, with no tax on the interest. There is a maximum annual amount you can contribute to a Roth IRA; however, if you are able, you should try to get as close to this maximum account as possible.
You should also contribute in your employer’s matching program for a 401K. If you aren’t taking advantage of a 401K, you are missing out at a great opportunity to build towards retirement.
2. Avoid and Pay off High-Interest Debts
You should always avoid taking on too many high-interest debts. Just because something seems appealing does not mean it’s a good idea in the long run. In fact, those loans and credit options that seem too good to be true are usually exactly that: too good to be true. If you have taken on high-interest debts, now is the time to try to pay them off as soon as you can. The longer you let them linger, the bigger of a hole you will fall into. Therefore, you should prioritize paying off high-interest debts over making another big purchase.
3. Add to Your Assets
As you sit down and think responsibly about your finances, you can also think about whether or not it is the right time for you to consider buying a house. Though it may not be feasible for everyone right away, a home is a great asset to your financial portfolio. You can also consider other diverse investment options such as stocks or bonds.
4. Save up money
Once you’ve paid off everything you owe, it is now time to start saving up money. When many people think of saving, they think of that big vacation or Christmas gift. While it is important to experience the enjoyments of life, it is also important to fine-tune your mindset about saving money. You should always do your best to put away emergency funds in case the unexpected occurs. Furthermore, you can start saving up for a college fund for your children to help encourage their own path to financial security in the future.
5. Grow professionally
Lastly, you should continue to grow professionally throughout this process. Even if your job feels secure, it still doesn’t hurt to sign up for that extra class, attend that training, or go to that networking event. There are a number of great and affordable options for adult learning, and online courses are growing increasingly popular as well. You can check out some of these different options at Lifewire.
Allowing yourself to become stagnant at a job will not only make you discouraged as the years go by, but it will also impact your ability to switch to a new job should the situation arise. No matter what you choose to pursue, you should go after it with energy. After all, there is no time like the present to plan for the future.