Finding Your Savings Destination

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Educators know that helping students understand concepts requires patience, perseverance and a curriculum with particular outcomes in mind. Saving for the future requires a similar approach. An “any way the wind blows” attitude isn’t typically recommended when handling and investing money. Rather, it takes determination and consistency to create a successful investment plan. Mapping out goals and sticking with them through thick and thin can give you confidence and a sense of financial security.

Take the Helm

Making investment decisions and investing regularly isn’t always smooth sailing, especially if specific goals aren’t laid out beforehand. The following are strategies for putting an investment plan in place:

Compile your financial goals into a written list. Large or small, each goal is important. Examples include saving for retirement, paying off school loans or purchasing a new dishwasher.

Determine whether your goals are short-term (three years or less) or long-term (five years or more). Which are more important – needs or wants? Perhaps the Caribbean cruise can take a backseat to a mortgage payment, at least for a little while. In addition, short-term goals may be better served by saving in a savings account or certificate of deposit, while long-term goals may be better served by investing – whether in your 403(b) plan, an individual retirement account (IRA) or a personal investment account.

“A penny saved is a penny earned.” Benjamin Franklin knew what he was talking about. In fact, with the value of compounding returns, a penny invested now can be of higher value than a penny earned. The earlier you begin putting money aside, the more time it has to grow. For example, saving $100 a month may not seem like much, but if you earn an average annual return of 6%, in 40 years you could accumulate a nest egg of $199,147. If you wait 20 years, you would need to save $400 a month to accumulate about the same amount at the same rate of return.*

Give yourself a checkup. Reviewing your savings and investment plans regularly can help you see what’s working and what’s not. If you’re struggling to meet a particular goal, try a new approach. Reward yourself when goals are achieved.

Calculate your savings. Savings calculators are useful for determining the amount you’ll need to put aside to meet a particular goal.

* Rate of return is for illustration only and does not represent the return of any particular investment. Your results will vary. Amounts in this example are gross of fees and taxes.