You’ve been reading and reading, trying to figure out all of these new things about the stock market, and now, you’re ready. You’ve started to look at mip fund accounting and you’re saving money as much as you can.
There are a few different ways you can look at your portfolio in order to best build it. In good economic times, it’s not a bad thing to take some risks. Put more of the money that you are investing into stocks and a smaller amount into more secure accounts. For example, out of a $10,000 investment:
· Put 70% to 85% in stocks, depending on how risky you feel. $7,000 to $8,500 of your investment is in the stock market. Try to put this between 4-8 different stocks to insure yourself.
· Put 15% to 30% ($1500 to $3000 in our example) in “insurance” investments. This part you don’t necessarily have to diversify; if you want to put it all in a 401k, that’s fine, but if you have different reasons to be saving, go ahead. For example, say you’re doing 20%, so you have $2,000 for these funds. If you’re a 40 year old dad with 2 kids, you may want to put $500 in a 401k, $500 in a separate 529 for each of your kids, and $500 into a 7 month CD for that family vacation you’re taking next summer. But, if you’re a 25 year old single woman with no kids, you may just want to put that $2000 into a couple rotating CDs of different lengths.
As you can see, there are a lot of things to think about here, so be sure that you’re looking at your options and figuring out just what it is that you’ll want to do in order to stay ahead of the game and save as much money as possible.