Financial Planning for Young Adults

You're young and you have a dazzling career ahead of you. You've worked a couple of years and saved a sum of money (assuming you haven't already blown it all on fancy restaurants and fast cars), but you're not sure what to do with it.

How do your make your money work for you? The only way to preserve and build your wealth is by investing your savings, not by avoiding risk, but by taking calculated risk. You have probably heard the wise adage - Buy Low, Sell High. Sounds simple, doesn't it? Why then are so many investors doing the complete opposite? The truth is, when it comes to investments, most of us are groping in the dark, and we're ruled more by emotion than objectivity. Here are some of the common (and costly) investing mistakes that you should avoid: -

 

THE DON'Ts OF INVESTING

~ Try to time the Market
~ Invest by responding to hearsay or that hot tip from your neighbour
~ Chase after "Hot" Funds-law of heat transfer applies even to investments
~ Put too Many Eggs in the Same Basket
~ Invest Without an Overall Plan

 

THE DOs OF INVESTING

What NOT to do was the easy bit, and although it might seem otherwise, the "dos" of investing are a lot easier than you think…. as long as you have a proper framework in place.

 
~ Asset Allocation
  A strategically planned investment portfolio will stand a much better chance of achieving your financial objective. All of us are different. To determine how much to invest in each asset class, you need to match your portfolio with your personal investment objective, current financial situation and future needs. The mix of asset classes should be designed to produce the highest return for the level of risk that you can take.
~ Have the Ingredients of a Successful Investment Portfolio
 

Once you have mapped out how much money to put into each asset class, you can construct a successful investment portfolio by ensuring that your investments meet not one or two, but ALL of these criteria:

~ Quality
~ Value
~ Diversity
~ Time
~ Review Your Investment Portfolio
  While you should not make short term adjustments to your investment portfolio in response to market fluctuations, you need to periodically monitor its progress and make adjustments to cater to changes around you.
~ Make well-informed investment decisions
  Your wealth can be eroded by mismanagement or bad investment decisions. It is therefore important that you carefully draw up an investment strategy before you decide on what and how much to invest. You should also keep up-to-date with market movements, legislative changes and all the paperwork.

Most of us don't have the time, interest or expertise to manage our own investments. A competent financial adviser can help you put in place an investment strategy that can preserve and grow your wealth. He/she will map out a strategy that is appropriate for your current circumstances and future lifestyle goals.

 
Maserati or BMW TF?

You may have a great pay package now, but without proper planning, your retirement may not be as comfortable as you would expect. Life, unfortunately, is about trade-offs. That sexy Maserati today may mean working more years in future, fewer holidays in your twilight years, or even a local tertiary education instead of an overseas one for your children.

You have worked hard to get where you are today. Don't let all that effort and hard-earned cash go down the drain because of a few poor decisions.

The sooner you begin the journey, the sooner you'll arrive.
 

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