How Are You Investing For the Future?

A guide to maximizing your investments for the long-term.


No matter how much you are currently earning or how old you are, you have a future to think about. While we may not know exactly what tomorrow may bring, it still doesn’t absolve us from the task of investing for our long term future.

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So if you haven’t yet started saving for your goals, now is the time to try and do it. This is especially the case if you've finally managed to get your debt situation under control and are able to set aside some of your discretionary income.

Focus on short, mid and long term investments. Most people who are on top of their investments try and focus on different timelines to help them figure out their targets. For instance, if you are thirty years of age and you want to focus on opening an IRA account or getting a retirement fund together, you know you have over thirty years to grow that fund before you’ll need to start drawing from it.

But you might also want to save money towards mid-term goals. You might think about upgrading to a new home in ten years, for instance. Or save for your child's education. It sounds like a long way away but if you save money towards those goals today, you can work to build up a sum of money to put towards your eventual deposit and subsequently find investment opportunities to grow your savings further.

If you're looking to save for the short term -- perhaps you're wanting to beef up your emergency fund over the next year -- then this would require a different viewpoint and would require you to stash your money in more conservative accounts such as certificates of deposit with the best CD rates or money market funds.

Where are you putting your cash? Working out your savings goals helps you to match your cash to the right kind of investment. For instance, funds that you earmark for the long term would be more suitable to place in stocks and potentially riskier investments than in cash or more conservative assets. If you want a sum of money to use for a cruise or a long holiday in a year or two from now, you don’t want to put it in a high risk account or one that doesn’t allow easy access.

In a sense, knowing when you want the money can help you to figure out how to invest that money. Investing in shares of stock is a reasonable approach if you are investing cash that you'll need within the next one or two decades. Nothing is ever certain of course, but the volatility you encounter in the stock market generally smoothens out over time.

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Evaluate your progress against your savings goals. It's typically expected that we should be able to earn more money as we grow older. Over time, we should gain more experience, more knowledge and more capabilities to develop our careers, to climb the corporate ladder, to try out different jobs and to earn more in a variety of different ways.

But when the time comes to evaluate your goals and to do a status check on your financial progress, it's possible that your savings may not meet your expectations for a particular time. You'll need to be prepared to make compromises, if your ideas for the future don’t match up with the amount you can and have put away. This kind of realization brings home the point of why it's important to have financial goals and a clear direction.

There is no doubt that having a plan does give you a certain control and confidence over your future. You can adjust course along the way but if you don’t have a plan or any savings to begin with, you could be in for a shock if life deals you a bad hand.

The takeaway here is that when you've got savings set aside for long term goals, you'll be better prepared for any problems that could come your way.

Silicon Valley Blogger is a full time blogger and online entrepreneur who writes for The Digerati Life and The Smarter Wallet sites that cover general personal finance topics ranging from investing and saving to credit and debt management.