How to use the capital markets
This guide introduces investing and is a great resource for learning how to use the capital markets to meet financial goals, from paying for education to enjoying a secure retirement.
taking the first steps
getting started is tough, but the earlier you start investing, the more it should pay off in the long run.
Investing hasn’t replaced sports as the national pastime. But it’s increasingly a part of many people’s financial lives. One reason is that while a college education is more important than ever before, it is also more expensive. So if you’re a parent or a grandparent, you may be investing to cover at least some of those cots for your family.
Similarly, the sources of income that helped make your parents’ or grandparents’ retirement secure—pensions and Social Security—are likely to play a smaller role for you. And you’re likely to live longer after you retire. So it’s more important than ever to invest for your long-term security.
Perhaps the greatest challenge in investing—whether you have lots of experience, you’ve just started, or you’re uncertain about how to begin—is finding the information you need to make decisions confidently. Among other things, this includes choosing what investments to buy, which ones to keep, and when to sell. The next challenge is translating your knowledge into action.
making a financial plan
a financial plan is a working document that can be as flexible or as focused as you want it to be.
Whether you work with an adviser to create a plan, use computer-based software, tap into a financial planning site, or devise one on your own, you’ll need some basic financial documents to establish your starting point. Advisors, for example, usually ask to see recent income tax returns, a summary of your investments, information on your retirement plans, and your life insurance policies.
By evaluating the financial choices you’ve made so far, it’s easier to plan for the future. This involves defining your priorities and developing a timeline for meeting them. Otherwise it’s too easy to find yourself making random decisions that won’t move you forward toward your goals and may even interfere with achieving them.
A good financial plan is always a work in progress, though. You’ll modify it regularly as time goes by, having reached some goals and redefined others.