New to Investing
Many people don’t know where to begin when it comes to investing. They find themselves overwhelmed by the vast amount of information, wide array of choices, and the risks involved so much so that it prevents them from taking those first steps and, as a result, they never start at all. Whether you are a recent college graduate, climbing the corporate ladder, or preparing for retirement, it’s never too soon nor too late to begin. Here are a few basics to keep in mind:
Have a Plan
Set your goals. Are you saving for a house? A college education? Retirement? The right type of investment for you will depend upon your objectives, tolerance for risk, and time horizon. Through Lincoln Investment, our advisors offer many investment products to choose from.
Get Your Feet Wet
A good place to test the waters is with an employer-sponsored plan such as a 401(k), 403(b), 457(b), etc. Whether your company offers matching dollars or not, contributing pre-tax dollars is a good way to start yourself on the right path to saving for your retirement. If you don't have access to an employer sponsored plan, you may want to consider a Roth IRA or Traditional IRA. Whatever vehicle you choose, try to set up automatic contributions each and every month. You may be surprised – you won’t miss what you don’t see.
Spreading your money over different types of investments, i.e. allocating and diversifying* your assets, may help reduce the overall volatility in your portfolio. An investment that leads one year may lag the next and one type of investment may do well when another does not. Many beginning investors choose stock mutual funds because they may be less risky than stocks in an individual company. Equity funds invest in many companies; therefore, if one company does poorly, the fund as a whole may still have promise. If you buy stock in one company and the company does poorly, you may lose money.
*Diversification does not guarantee a profit or protect against a loss.
Pinch Those Pennies
Saving a little can go a long way. Even if you feel you don’t have the extra money to put aside and invest, there are options available to get you started with generally low initial investments. Consider cutting out extra expenses such as that $2 cup of coffee, use your bonus at work or put your tax refund to work for you. Some mutual funds may even allow investors to skip the initial lump sum investment if you sign up for automatic monthly contributions of $25 to $50 from your checking account or as a payroll deduction.
You are not alone
Crafting your investment strategy is a team effort. Let a Legend Group Financial Professional walk you through the process every step of the way. Whether you are a beginner or have experience in the industry, The Legend Group is here for you. Our Financial Professionals have the skills, knowledge and experience to guide you in creating and implementing an effective plan designed to reflect your unique investment goals. He or she will help you determine your risk tolerance, time horizon and investment objectives, as well as choose the appropriate options to help you feel more secure and worry a little less. Your Financial Professional can meet with you periodically to review your needs and discuss any changes in your financial objectives or situation to help ensure you remain on track as your plan progresses.
Diversification does not assure a profit or protect against market loss.
An individual retirement account (IRA) allows individuals to direct pretax income, up to specific annual limits, toward investments that can grow tax-deferred (no capital gains or dividend income is taxed). Individual taxpayers are allowed to contribute 100% of compensation up to a specified maximum dollar amount to their Traditional IRA. Contributions to the Traditional IRA may be tax-deductible depending on the taxpayer's income, tax-filing status and other factors. Taxes must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59½, distributions may be taken for certain reasons without incurring a 10 percent penalty on earnings. None of the information in this document should be considered tax or legal advice. Please consult with your legal or tax advisor for more information concerning your individual situation. Contributions to a Roth IRA are not tax deductible and there is no mandatory distribution age. All earnings and principal are tax free if rules and regulations are followed. Eligibility for a Roth account depends on income. Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).