As a financial planner, I tell everyone the best time to start investing is always now — I have 3 ways to get started (2024)

FAQs

What is the best time to start financial planning? ›

When You Start Making Your Own Money. The first time you should start financial planning is once you start earning, regardless of age or income. Of course, there is nothing wrong with celebrating your first paycheck! But years down the road, you will be happy that you started on the right foot by planning ahead.

As market conditions change, your financial advisor can help you review your goals and portfolio and adjust if and as needed, whether to rebalance your portfolio, revisit your risk tolerance, or take advantage of potential investment or tax opportunities.

A financial plan can help you create an investment portfolio. Your financial plan can give you the full lay of the land: You'll know what your goals are, how much time you have to reach them, and how comfortable you are with risk. Once you have a comprehensive view, you can figure out how to reach each individual goal.

Finance experts advise that individual finance planning should be guided by three principles: prioritizing, appraisal and restraint. Understanding these concepts is the key to putting your personal finances on track.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

$10,000 is a healthy chunk of cash and enough to give you cold feet when deciding how to invest it. Some of the best ways to invest $10,000 include funding a 401(k) or opening and funding an IRA or brokerage account. We'll help you walk through those options below.

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

The classic approach of doubling your money by investing in a diversified portfolio of stocks and bonds is probably the one that applies to most investors. Investing to double your money can be done safely over several years, but for those who are impatient, there's more of a risk of losing most or all of their money.

Regardless of whether they work for a bank or a financial planning firm, your financial advisor cannot access your account without your permission.

How do I trust a financial planner? ›

An advisor who believes in having a long-term relationship with you—and not merely a series of commission-generating transactions—can be considered trustworthy. Ask for referrals and then run a background check on the advisors that you narrow down such as from FINRA's free BrokerCheck service.

A good financial planner will ask you about your goals: What do you want to achieve? What's most important to you? What do you want your life to look like?

Flat fee per plan

Cost: The cost will vary by service, but $1,000 to $3,000 is typical for a financial plan. What you get for that fee: A comprehensive financial plan and guidance for how to follow it, but no ongoing services or investment management. The advisor charges a set fee for each type of service.

Reasons for a Financial Plan

It's a money tool for everyone, regardless of age, earnings, net worth, or financial dreams. It offers individuals a way to document their personal goals and corresponding financial goals. It can keep people on track to meet ongoing financial needs and major financial goals.

An investment can be characterized by three factors: safety, income, and capital growth. Every investor has to select an appropriate mix of these three factors. One will be preeminent. The appropriate mix for you will change over time as your life circ*mstances and needs change.

YOUR BUDGET

The 80/20 budget is a simpler version of it. Using the 80/20 budgeting method, 80% of your income goes toward monthly expenses and spending, while the other 20% goes toward savings and investments.

The 4% rule limits annual withdrawals from your retirement accounts to 4% of the total balance in your first year of retirement. That means if you retire with $1 million saved, you'd take out $40,000. According to the rule, this amount is safe enough that you won't risk running out of money during a 30-year retirement.

Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.

Should I get a financial advisor in my 20s? Not every decision requires a financial advisor, but if you prefer to have someone to talk to about major financial decisions, or if you'd like someone to manage your assets, then an advisor may make sense for you.