Much of financial planning involves investment management and selecting the best investments to reach your financial goals. There are long-term goals like accumulating money for retirement or earning more investment income in retirement. And there are shorter-term goals like putting money aside for future college expenses, for a cash reserve, or for a down payment on a new house. What investment basics should you consider before investing money earmarked for specific goals? Keep in mind that the first step in financial planning is to define your financial goals.

For shorter-term goals SAFETY and LIQUIDITY are the investment basics that take center stage. Here you are investing money that needs to be safe and available when you need it. The best investments in this case are the likes of bank CDs and savings accounts, money market mutual funds and perhaps short-term bond funds. Don’t earmark stock funds or other riskier investments for short term goals. The cash you need might not be available when you need it if the market goes south at the wrong time.

If you are doing financial planning to accumulate a retirement nest egg you have a long- term financial goal, and GROWTH and TAX ADVANTAGES are the investment basics to concentrate on. Growth simply refers to earning a higher return over the long term. The best investments for most people here are stock funds, which come in many varieties. How much of your investment portfolio you allocate to stocks will depend on your age and risk tolerance. Here is where investing money in stocks and accepting more risk makes good sense. If you have a bad year or two you’ve got time to recover and won’t need to liquidate or sell at a loss… because you have this money earmarked for retirement, and other funds like a cash reserve to cover short-term needs.

Look for tax advantages when investing money for retirement. In a 401k or traditional IRA most people can accumulate money tax-deferred, with a tax deduction each year you add to it. There is no limit imposed by the IRS on the amount you can invest in a tax deferred annuity, and a Roth IRA offers tax-free investing. If you invest $5000 a year into a stock fund averaging 10% growth per year in a tax-free or tax-deferred account your money grows to $286,000 in 20 years. This money can continue to grow uninterrupted by taxes until you start pulling money out in retirement. In a Roth plan there will be no income taxes to pay if you follow the rules.

The last factor to consider is INCOME. For most people in search of higher income or interest, bonds and bond funds have been the best investments over the years. Millions of retired folks invest in bonds to supplement their income. Investing money in bonds for the income they produce is secondary for average younger investors, who should include bond funds in their retirement portfolio primarily to add balance and decrease overall risk. Please note that bonds and the funds that invest in them are not without risk. There are numerous articles available on the subject.

When it comes to investment opportunities you will never know how much profit you are going to make until you sell on your investment at a later date. This means that there is always going to be risks involved when investing your money but as long as you use basic common sense you should eliminate most of these risks.

So how are you supposed to know what good investment opportunities are? In the business world this is defined as a financial investment that
makes a good profit. The places you are most likely to get this from are stocks, real estate, private equity in companies and any other
businesses that aren’t in decline.

Property investment is a good idea if you are looking for investment opportunities as house prices are constantly going up. This means that you are very likely to make a profit when you go on to selling your home.

Property investment is always popular and it’s always a good time for investment opportunities in property. No – one will ever know when exactly property values will increase as there can be many influencing factors such as interest rates which effects property pricing. If interest rates are stabilised then property pricing is stabilised as a result of this. With housing pricing continually increasing you are very likely to get a good return on your investment. Buy to let is not good for you if you are looking to get rich quickly but it is worth doing if you think about the long term gains.

All investment opportunities have positive and negative factors. For example, real estate is a good investment because you get tax advantages and it allows you to use other people’s money. However, it can be hard to sell and you usually have to give part of your profit to brokers.

It is also important to make sure you buy to let mortgage funding on a regular basis as this can have a big impact on your success and cash flow.

Although no – one except for you knows what you should invest in or can invest on your behalf, you can hand your money over to someone who makes investment choices for a living. This is ideal if the world of investment opportunities is new to you. If you want to invest on your own you have to go shopping just as you would for a car or a house. However, make sure that you never take advice about investment opportunities over the Internet from someone you’ve never met before.