When building your financial strategy, factor in the need for short and long term planning.

You may need your money soon, but don’t forget to put some of it aside in a long term investment for your retirement

Every investment you makYour finances in one basketCredit: Image: ddpavumba / FreeDigitalPhotos.nete has its own time frame. While bank deposits and money market funds may make sense for your short-term liquidity needs, stocks and other risky investments should only be considered for the long term. How long is the long term? A gentleman once called me and said that he had sold a property and wanted to invest the proceeds for the long term. When I asked him how long he meant, he said, “At least 60, and maybe even 90 days. I don't have to make a payment on my new real estate until then.” Before I even began discussing investments, I took the time to discuss what a time frame means.


When you place money in any program, speak to your advisor about what sort of time outlook you should have. Clients who pick up a stock portfolio and then start worrying a month later when it drops need to recalibrate their sense of time. Stocks will always have volatility, and short-teFinancial planningCredit: http://www.freedigitalphotos.net/images/view_photog.php?photogid=721rm fluctuations are normal.


If your financial plan applies to many years, perhaps even the rest of your life, then long-term, meaning riskier, investments might play a part in your overall asset allocation. This is because over the years you may have a chance to recoup any losses, or if your portfolio is smaller than you hoped for, you have the time to re-evaluate your goals and make adjustments. But if you have short-term needs, be sure to keep the funds in something safe, even if the interest rate that you will receive seems low.  Keeping the money you have is better than potentially losing it!  A bird in the hand today is worth much more than a potentially empty nest in the future.


Don’t be greedy and get drawn into overly volatile investments just to get a greater return, because you may lose real money.  While wealth may be fleeting, keeping track of your time frame and preparing appropriately is the best thing you can do to help ensure your financial situation.  Remember, time is money.


For more information on investment planning strategy, read A Selection of Top Tips for Planning Your Financial Future.