First, contribute more to your IRA and your 401(k) or other employer-sponsored retirement plan.
Next, try to build an emergency fund containing six to 12 months’ worth of living expenses. Without such a fund, you may have to dip into your long-term investments to pay for unexpected bills.
Also, try to reduce your debt as much as possible. The lower your debt load, the more money you’ll have available to invest for the future.
And here’s one more idea: Don’t overreact to volatility in the financial markets. Sharp, short-term price drops can be unsettling, but if you follow a long-term strategy, you can help yourself make progress toward your important financial goals.
What Does Investment Landscape Look Like in 2012?
As an investor, you know that 2011 was a somewhat “choppy” year, with the financial markets going through many ups and downs. So what can you expect in 2012?
On the one hand, corporate profits are generally healthy, and borrowing costs remain low. These positive fundamentals may bode well for investors.
On the other hand, the financial difficulties facing Europe could continue to cause disruptions in our financial markets. However, since you can’t predict the future, you’re better off focusing on actions you can control. For example, by diversifying your investments, you can help reduce the effects of volatility on your portfolio, although diversification, by itself, can’t guarantee profits or prevent losses.
Here’s another suggestion: Don’t overreact to short-term events. By sticking with an investment strategy that’s appropriate for your situation, you can still chart a course that can allow you to make progress toward your goals no matter what happens in 2012.
Contact Wendell at Edward Jones www.edwardjones.com.