Thursday,
December 30, 2021
Top Story
Investing: Back to Basics
Investing is a powerful tool that allows you to put your money to work to help you reach future financial goals.
Before you start investing, it is important to identify and understand your financial goals. For example, one common goal many people have is retirement planning. For any goal, selecting an investment strategy depends on your goal amount, the time horizon, and your risk tolerance.
Goals can be broken down into short-term, medium-term, and long-term goals. Determining the time horizon of your goals can help you decide which type of portfolio to build. This idea is known as goals-based investing.
For example, if you’re young (18-32 years old) and one of your goals is retirement, you may consider an aggressive portfolio—since your retirement date is 20+ years out, your portfolio can weather the market ups and downs. As you get closer to retirement age, it may make sense to move to a more conservative portfolio—the closer your goal is, the less risk you’ll likely want to take.
Market fluctuations are a natural part of the market cycle. Investors may get nervous and be tempted to sell when prices drop. But when they do, investors lock in their losses and often miss out on subsequent market rebounds.
Investors practicing buy-and-hold strategies tend to buy investments and hang on to them over the long term, regardless of short-term movements in the market. Doing so can help curb the tendency to panic sell, and it can also help minimize fees associated with trading, which can boost overall portfolio returns.
Investing is an ongoing and dynamic process. Your life, goals, and financial needs will all change as your circumstances do. For example, may you get a raise at work, get married and have a child, or you decide to retire early. Factors like these will change how much money you need to save and how you invest. Monitor your portfolio and make adjustments as needed.
Investing That's Easy to Use
Investing isn’t just for the wealthy; it’s for anyone who wants to achieve financial goals. There are low-cost, simple, and effective investing options that are accessible to investors of all sizes.
As you learn more about stocks, you can use that knowledge to create a portfolio that reflects your financial needs and goals.
SoFi Invest® makes it easy to get started with stock trading and investing. Members can choose which stocks to buy or sell, based on their investment objectives and risk tolerance, and purchase shares in some of the market’s biggest companies through fractional share investing. Get started!
Deep Dives from SoFi Learn
Investing for Beginners: Basic Strategies to Know Your investment needs are unique, and choosing the right investment strategies can help you build a portfolio to help you meet your needs. Read more >> Buy Low, Sell High Strategy: An Investor's Guide Buy low, sell high is one of the most often repeated investing rules of thumb. Learn how to buy low and sell high successfully. Read more >> 6 Things to Know Before Investing in Crypto There are some things you should know and consider before investing in cryptocurrency. Read our list of the things you should know and start investing. Read more >>Financial Planner Tip of the Day
"Rebalancing an investment portfolio can help investors stay on track to meet their long-term goals. By ensuring that there is a steady mix—or diversification—of assets in their portfolio, they can stay on top of their investments in a way that works with their risk tolerance and their financial needs."
Brian Walsh, CFP® at SoFi