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Investing for Major Financial Goals

How do you set goals?
The first step in investing is defining your dreams for the future.  Spend some time discussing your specific goals. For instance, you may know you want to retire, but when? If you want to send your child to college, does that mean a public or private school?
Some of these goals will be short, intermediate and long term. You can then decide how much money you'll need to accumulate and which investments can best help you meet your goals.

Looking forward to retirement
Retirement may seem a long way off, but it's never too early to start saving. The sooner you start, the more ability you have to let time do some of the work of making your money grow.
Let's say that your goal is to retire at age 65 with $500,000 in your retirement fund. At age 25 you begin contributing $250 per month to your 401(k) plan. If your investment earns 6 percent per year, compounded monthly, you would have more than $500,000 in your 401(k) account when you retire. However, if you wait until you're 35, you would end up with only about half the amount in the first example.  As you can see, early decisions can have enormous consequences later on.

Some other points to keep in mind as you're planning:
 - Plan for a long life. Average life expectancies in this country have been increasing for many years. and many people live even longer than those averages. 

 - Work with your financial advisor to invest accordingly. For instance, if retirement is a long way off you can handle some risk in your portfolio. Conversely, if you're nearing retirement, a greater portion of your nest egg might be devoted to investments focused on income and preservation of your capital.

 - Consider how inflation will affect your retirement savings. When determining how much you'll need for retirement, don't forget that the higher the cost of living, the lower your real rate of return on your investment dollars.

Facing the truth about college savings
Whether you're saving for a child's education or planning to return to school yourself, paying tuition costs definitely requires forethought--and the sooner the better. With college costs typically rising faster than the rate of inflation, getting an early start and understanding how to use tax advantages and investment strategy to make the most of your savings can make an enormous difference in reducing or eliminating any post-graduation debt burden. The more time you have before you need the money, the more you're able to take advantage of compounding to build a substantial college fund. With a longer investment time frame and a tolerance for some risk, you might also be willing to put some of your money into investments that offer the potential for growth.
Consider these tips as well:
 - Estimate how much it will cost to send your child to college and plan accordingly. 

 - Research financial aid packages that can help offset part of the cost of college. Although there's no guarantee your child will receive financial aid, at least you'll know what kind of help is available should you need it.

 - Think about how you might resolve conflicts between goals. For instance, if you need to save for your child's education and your own retirement at the same time, how will you do it?

Investing for something big
At some point, you'll probably want to buy a home, a car, maybe even that yacht that you've always wanted. Although they're hardly impulse items, large purchases often have a shorter time frame than other financial goals; one to five years is common.
Because you don't have much time to invest, you'll have to budget your investment dollars wisely. Rather than choosing growth investments, you may want to put your money into less volatile, highly liquid investments that have some potential for growth, but that offer you quick and easy access to your money should you need it.




IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019.