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How to make an investing plan

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Many new investors overlook the benefits of having a plan when it comes to their investing. However, studies have clearly shown that when investors take the time to make a plan they are much more successful then those that don't. Keep in mind that your investing plan doesn't need to be complicated. However, by taking the time to consider certain factors and writing down the answers you can begin to formulate an investing plan. Then once your investing plan is put together you can use it to help you make the decisions that will help you to accomplish your financial goals. Here is what you need to know about how to make an investing plan-

- What do you want to accomplish with your investing? The first step in making an investing plan is to determine what your financial goals are. You will need to have a clear idea of what you want to accomplish with your investing strategy. Keep in mind that not everyone's financial goals will be the same. Do you want to supplement your income or fund your retirement? These two end goals will require very different investing strategies. When you know what you want the end result to be from your investing you will be able to chart a much more effective course to reach your financial goals.
- What type of investment personality do you have?You may be surprised to learn that there are different types of investment "personalities". You will need to have a clear understanding of how much you want to be involved with your investments. Some people will prefer to lessen the volatility of their investments while others won't really care. In addition, some investors will want to read every single line of information about their investments while others will only want to know the general picture. Some people will want to research and find their own investments while others will seek out guidance and help.Knowing what your investment personality will be can help to guide you in the type of investments that you end up making.
- How much risk do you want to assume? The bottom line is that there is risk in every type of investing. The important thing about risk is understanding how much you will be able tolerate. This is different for every investor. Some investors will feel ok with risking it all while others will want to continually protect their investment. A general rule of investing is that younger investors can take on more risk since they have more time to make up potential losses while older investors may want to safeguard their money to a larger degree. However, no matter what your age is it is important to understand risk and how much you want to take on.
- Do you have the money you need to invest? Part of your investing plan should be a budget. You will need to have a clear understanding of the amount of money that you can invest. It is crucial to understand that you should never invest money that you will need in the next 5 years or use money that is earmarked for a large purchase. Do not use funds that you will need to buy a house, fund an education or buy some other large item with. You should not borrow to invest or use moneythat you need to live on. Also you will need to plan the associated costs that come with investing. When you have a budget for your investing you can better manage your investing and plan to have a profitable return on the money that you do use.


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