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Jeff Grange: Investing for All Your Life Stages

An appropriate strategy will help ensure a financially secure future

It goes without saying that over the course of your lifetime, you’ll need financial resources for many important decisions and goals. Buying a car, putting a down payment on a new home and financing a child’s education may be among your priorities, but even while you’re earning and accumulating money for your more immediate goals, you should be saving for one of your most important long-term goals — your retirement.

Jeff Grange
Jeff Grange

Preparing for a financially secure future means having an appropriate investment strategy for each stage of your life.

An Early Start

When you are just starting out as a young professional, coming up with extra cash to invest may not be high on your list of priorities.

But by beginning to save in your 20s — even if it is just a small amount — you will have many years to benefit from compounding, that is, the continuing reinvestment of earnings from your initial investments.

At this age, there is plenty of time before you will need too much of your money, and you may be able to take more investment risk. Consider allocating a significant portion of your portfolio to investments with growth potential. And, if your employer offers a qualified retirement plan, by contributing as soon as you are eligible, your assets will have many years to potentially grow, tax deferred.

The Growth Years

By the time you are in your 30s and 40s, you may have reached many of your other goals, such as buying a house and paying off student loans. During these middle-aged years, you should aim to achieve maximum asset growth by saving as much as you can in both your retirement and your other investment accounts.

You still have a long time until you will need your retirement money, so consider keeping a large portion of your portfolio invested in securities with the potential for strong returns.

Protecting Your Retirement

By the time you reach your 50s and 60s, you may have considerable assets in your retirement accounts. So your objective during your later working years may be to preserve your gains and protect against losses. You might want to reduce your portfolio’s exposure to riskier investments by moving some of your assets into lower-risk investments.

Keep in mind that even modest inflation can wear down the future buying power of your money. Consider leaving a portion of your portfolio invested in assets with the potential for growth even after you retire.

— Jeff Grange is a financial advisor with Crowell, Weedon & Co. of Santa Barbara.

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