Establishing Your Goals
Begin the process of establishing
your goals with the Setting
Target Dates For Personal Goals work sheet.
Estimate the
amount of time and money you
will need to achieve each goal.
Once you have an idea of what
investment instruments are
available, you can consider specific
alternatives. Take time to
research the materials available,
consult with knowledgeable
sources and read each prospectus
carefully. Make sure that
the investment instrument you
choose is one that matches your
goal and risk tolerance.
Every alternative comes with its
own level of risk and opportunity
for profit or loss. Likewise,
you will find different levels of
liquidity. Whether you have a
short-, intermediate- or long-term
goal will affect the way you
evaluate these characteristics.
A short-term goal usually
requires a very liquid type of
investment, one that is easily
converted to cash without loss
of principal. However, all highly
liquid investments do not have
the same risk and reward potential;
you have to evaluate the
amount of risk you are willing
to take for the goal you have in
mind. In one situation you may
have to accept a lower return
in order to be assured that your
principal is preserved. Under
different circumstances, you
may be able to take a higher risk
in the hopes of a significantly
higher return.
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Investment Characteristics
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| Your investment choice is a complex decision,
and the following factors must be weighed before a choice is made. |
- Liquidity
- Risk Level And Type
- Potential Reward
- Preservation Of Principal
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Goal Characteristics
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- Time Available
- Money Required
- Importance
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Basic Money Management
Basic Money Management
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