By Debbie Dragon

Sometimes beginning investors forget the trick to success when it comes to investing money: you need to match your future financial goals to the right kind of investment. If you start with figuring out how to allocate your assets as your primary goal, you’ll have the money you need in the future.

What are your goals?
When deciding where to put your money or how to invest, you need to consider your short- and long-term goals. Are you looking to buy a new car? Do you want to stop renting and buy a house? Maybe you need an emergency fund for unexpected situations, or you’re saving to send your babies to college. And don’t forget about retirement! You probably have several goals -- make a list and prioritize the list by which goals are most important to you. Next to each item on your list, put an estimated value for how much money you need. The number does not need to be exact, but use online calculators to get a good idea for how much you’ll need for college when your children are old enough, how much you’ll need for retirement, and for each of the other goals on your list. Once you see your goals written in black and white and listed in order of priority, put a timeline for each. Which of these goals do you need to achieve first? Maybe your children are in elementary school so you have several years to save toward their college while you may need a car in the next year or two. Put a date next to each goal on your list.

Match your assets with your goals
Short-term goals need short-term assets, or at least access to the money in a short period of time as opposed to long term investments that tie your money up for a specific period of time. Short-term goals are best funded with cash investments like savings accounts, certificates of deposit or money market accounts. These options don’t offer a high return but they are safe and you can easily access your money when you need it for emergencies. Long-term goals can take advantage of investments that earn a higher return or mature at a date further into the future than cash investments. You can look into long-term certificate of deposits or bonds that mature at a specific date to match when you need the money. For retirement, the stock market is an appropriate option as long as you stick with it -- the return generally outpaces inflation over time.

Make changes as you reach your goal dates
In addition to matching your assets with your goals, you need to remember it is not a “set it and forget it” process. As you get close to the dates for each of your goals, you may need to make adjustments or move the money into less risky investments. For example, if you are reaching your retirement age, you will want to move at least a portion of your retirement savings into non-risk savings or short-term investment options.

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