Where Should You Invest Your Money? Answer These 8 Basic Questions

By |2020-04-12T23:51:36+00:00July 10th, 2017|Investing|

 When people think about saving and investing money the first question they ask: “What should I invest my money in?”


To answer that question the following questions should be answered:

  • What do I want the money to accomplish?

You may need extra income to cover your monthly current expenses. Or to pay for a child’s college education, fund a dream vacation, buy a boat or perhaps, you want money there to cover any emergencies that may arise. Designating financial goals becomes a necessity.

  • How liquid should the money be?

Liquid simply means how fast you can turn assets into cash. Retirement investments do not need the liquidity as other assets that, for example, you may need to cover emergency expenses.

  • What is your risk tolerance?

Do you have money you can afford to lose a portion of? All of it? How will the loss impact your life? Will you need to sell your home to survive the loss? Get a second job? Ask yourself these important questions before taking a significant risk. One important thing to consider with risk is your “time horizon”, at what future date might you need the funds?

Of course, as the adage goes: The bigger the risk, the bigger reward. And, the opposite, can be true: the lower the risk, the lower the return.

  • What is the impact of income taxes?

Income taxes are important to factor into investment strategies. Sometimes high income people will invest in municipal bonds because generally bond interest can be exempt from federal taxes.

Others will invest in real estate counting on the market rising to justify long-term capital gains.

Typically, most people investing for a comfortable retirement put money into qualified retirement plans: life insurance policies and annuities. These investments are tax-deferred meaning not taxes will be paid until money is withdrawn.

  • How is the economy?

The economy tends to ebb and flow. Who or who doesn’t win an election can change the economy’s direction. Energy price fluctuations., out of pocket medical expenses are a factor.

Inflation is one of the big things to watch for. In times of high inflation, tangible investments such as real estate, gold and silver and collectibles can make more sense. During declining or stable periods of inflation, stocks and bonds may be a better investment choice.

  • Do you have the time and/or know how to manage your investments?

Some are up for the task, but most people do not have the time learn about investing and manage investments made.

It’s best to get investment advice from a qualified professional. They will be able to provide numerous options in which to obtain your objectives. Doing it yourself might be a mistake. Â

  • How much money do you have to invest?

An investment in a Bank Certificate of Deposit doesn’t take much financial commitment. An investment in real estate will required a down payment, the amount, of course, dependent on the cost of the property. Investment in the stock market could require over time a larger financial commitment to make it worthwhile. A mutual fund might be an alternative, buying a few shares every month over a longer period helps balance the overall acquisition cost.  Most people find that investing on a regular monthly basis will allow for long term accumulation.

  • Health care.

This is the gorilla in the room for most of us.  Overall health care costs are expected to rise 8% annually over the next few years.  Plus, reimbursement for Medicare covered expenses is dropping which translates to more money that will need to be paid out of pocket. Careful planning is necessary in this area to make sure there is enough money for retirement income.

Most people look at their retirement accounts as a pile of money, when in fact looking at your money as an income stream will provide more reality.  Annuities are used by many people to do just that, provide an income that cannot ever be outlived, an income that will last as long as they do.  Plus, many annuities have survivorship benefits which means that the income can continue in the event of death to the surviving spouse.

Have a look at the benefits an annuity can provide.


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About the Author:

Lyle has actively taught advanced estate planning and asset preservation for more than twenty years in such places as the University of Utah and in over 200 Senior Retirement Consumer Education Workshops throughout Utah, Idaho and Wyoming. Websites: lyleboss.retirevillage.com | safemoneylyleboss.com

Office: (801) 475-9400 | Boss Financial & Insurance Services, LLC