Plan your finances

Managing your finances is an everyday affair so you must do it right. By doing it correctly, you make sure you are always ready for any unexpected events.

• set aside a fund in case of loss of employment or illness
• contribute the maximum amount allowed to your retirement plan
• establish clear financial goals
• general investment advice:
  • set goals and develop well thought out investment strategies before getting into the stock market
  • learn more about possible investment alternatives by talking to an expert
  • establish your level/appetite for risk and learn more about your investment decisions

Develop a financial plan

In order to develop an effective financial plan, consider these aspects:

• Determine your financial position
  • take a look at your accounts, salary and expenses
  • identify your total capital amount: the sum of your assets minus the sum of your liabilities
  • determine what your current financial situation is and what you want it to be in the future
• Establish goals
  • determine what you want to achieve
  • decide how to achieve it
  • Establish your savings plan: weekly, monthly and yearly targets
  • consider the investment possibilities
• Consider your tax situation
  • be informed about your contributions before filling your tax form
  • know what your sources of income are and the amount over which you have to pay taxes
  • learn more about what deductions you can take at the end of the year
  • learn more about the tax benefits of opening a retirement account that allow you to save and invest while assuring a future source of income

Establish investment goals and strategies

The most important step when deciding how to invest your money is to know why you are investing and what you want to obtain with the investment. Establish your investment objectives.

Some financial objectives are:

• planning for retirement
• accumulate liquid assets to assure your financial stability
• obtain funds to buy a house or make any other investment or mayor purchase
• pay for your children’s education

Select an investment strategy

• passive strategy – Based on the diversification of your portfolio. Involves minimum contribution and it is a relatively low risk investment for you.
• active strategy – Is based on market projection techniques using detailed information about market movements to obtain the highest possible returns.
• structured strategy – Designed to maximize the performance of certain pre-determined liabilities which will automatically become due at a set future date.
• When selecting an investment, strategy you need to consider:
  • investment objectives
  • nature of your liabilities
  • vision of the market
  • your market preferences
  • your liquidity needs
  • your capacity and tolerance for risk
  • legal restrictions and regulations
  • Maintaining a profitable investment portfolio
• General investment advice:
  • be aware that investing in the market is risky and the invested principal is not necessarily guaranteed
  • never invest money you cannot afford to loose
  • establish clear investment objectives
  • diversify
  • do not use emotions or temporary changes in the stock/market behavior as a guide
  • have a flexible plan since the stock market can be volatile
  • be well-informed
  • use a trusted investment advisor