Have a Plan Before You Invest

A lot of people don't really give any thought to an investment plan before they begin investing. They buy some stocks, bonds or mutual funds or maybe a combination of investments, but don't really have any definite goals set out that they wish to achieve. It is very important to take the time to figure out where you are financially and where you would like to be, so you can establish a plan to get you from point A to point B. You should set a specific time frame for accomplishing your goals. Your plan should be in place before you invest any money, otherwise you may just end up spinning your wheels so to speak. Once you've established your current financial position and you've set a goal that you would like to reach by a certain deadline, it is also important to keep an open mind about investing. In order to reach your goals, you may need to move beyond the type of investments you are comfortable with. I'm not saying you should get involved in high risk situations, like I said in my post yesterday morning, you should invest in what you know. Something to keep in mind though is that the more you know about a different types of investments, the less risk there is involved. Because you learn how to avoid the mistakes. Like it says in the Bible, "There is nothing new under the sun." So any type of investment that you may be considering, someone else has already been there. You may need to attend a seminar to learn about a new investment, or talk with people you know who have already done what you would like to do. For example, I'm planning to broaden my investment plan to include rental properties. I have to admit that I currently know little about investing in real estate. However, one of my best friends has owned and managed rental properties for over 20 years and has been very successful with his investments. Also, my younger sister has purchased several properties at very low prices and rehabbed them for rentals and resale and done very well. So in my case, I'm not jumping in to real estate blindly. My time horizon for making my first purchase is within the next 2 years. However, before I buy my first property, I intend to learn everything I can from their experiences. This will lessen the risk of, what for me, is a new investment, in the sense that I will be able to avoid many of the mistakes that a lot of first time real estate investors make. My comfort zone for investing has always been with the stock market, since that is where I have the most knowledge and experience. However, after reviewing my plan I saw the need to broaden my investments beyond the stock market. The point being, that once you have your plan and your time horizon in place, your mind begins to work on ways to help you accomplish your goals. You will be able to reach them, if you learn to not limit yourself. Opportunities for making money abound in this country, we simply have to educate ourselves and open our eyes and minds to take advantage of them.