According to the Federal Reserve, the typical american has barely enough money to cover a $400 emergency expenses. One of the most surprising thing Americans are unaware of is savings alone is not enough. Putting money in a traditional savings account cannot keep up with inflation. The purchasing power of $5 in 1980 in today's dollars would be $15. Being aware of the impact inflation is critical to one's financial well being,
Traditional savings accounts are good for only short term goals. For long term goals like purchasing a home or planning for retirement savings accounts aren't ideal. Inflation the cruelest tax of all, forces one take more risk in order achieve more growth of your savings. If your goal is retirement then setup a tax advantaged type of account like IRA or Roth IRA. If your goal is to buy a home, open up a stock account. Unfortunately I cannot make a detailed asset allocation recommendation or selected individual securities, I did a search on the web and consensus from financial experts was buying an index fund that offers broad diversification and low cost or a robo advisor (typically lower cost than a human advisor).
The most critical aspect of achieving your long term goals is you. Yes you! Even if you are as frugal as possible with your investing accounts in terms of costs, your reaction to market volatility (fancy way of saying the market's ups and downs) will determine your success or failure in achieving your long term goals. Your behavior matters the most in achieving your goals. According to Dalbar, the investor who looked at their portfolios the least made the most money. Sounds counter intuitive right? The less I do, the more I make? Wow right? Dalbar's findings implied investors sell at the lows and buy at the highs. Investors panic when the market has sharp drops and investors feel the pressure of "competing with the Jones'" when the market rises over a short period of time.
The main points of the post is as follows, consistently invest your hard earned money, keep your investing costs low and do not allow your emotions get the best of you.
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