If you’ve been saving, you clearly understand how important financial security is to funding your dreams for the future. It has taken willpower and restraint to put money away for later that you could spend now. Putting that hard-earned savings into the market can sound risky.

But failing to invest may be even riskier.

With life expectancies increasing, Americans will have more years of retirement to enjoy—and to fund. Nobody wants to look back and wonder if they could have put their savings to better use by generating investment income.

The key to starting to invest is to put risk into perspective.

Like most Americans, I will never forget the 2008 recession. As an investor, however, I also keep in mind that from January 2007 to December 2017—a timeline that includes the financial crisis—the S&P 500 still managed a 7.92 percent return (adjusted for inflation and with dividends reinvested).1 By comparison, the average annual return for money market bank accounts hasn’t topped 0.3 percent in the past eight years.2 Those who believed they were playing it safe by not playing at all actually put themselves in a riskier long-term position—getting closer to retirement with less wealth to fund it.

For those who are risk-averse, there are options that can protect you from the impact of market swings while continuing to generate protected income. An annuity, for example, may be a great option for those with a low risk tolerance. An annuity can provide protections from downside risk, while still benefiting when the markets rise. Giving up some upside potential can offer you greater protection from market losses.

What else should you consider when starting to invest?

Figure Out What Your Big Goals Are.
Investing and purpose should go hand in hand. Ask yourself what you’re hoping to do with the money you earn from your investments. This will give you a clear idea of your investment time frame and risk tolerance, both of which are essential for guiding your investment choices. Check out Tossing and Turning  Over Your Retirement Plans for tips on how to start determining your personal goals.

Start Small and Be Systematic.
Commit to putting some money away each month. This way, you can adjust your approach over time, mitigating the risks associated with investing one large lump sum on Day 1. One common form of this approach is dollar-cost averaging. This means that the investor commits to buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. As a result, the investor purchases more shares when prices are low and fewer shares when prices are high. This helps mitigate the impact of the highs and lows of the market.

Get the Basics Down.
Develop a healthy understanding of your investment options. Even if you are going to find a financial advisor, take the time to understand the products in which your money would be invested. Do you know what stocks and bonds and mutual funds and index funds are? Investopedia and The Balance provide great resources for beginners, and HerMoney and Ellevest both provide investment platforms tailored to women who are starting to invest.

Speak with a Financial Advisor
Ask family or friends if they have an advisor that they trust. You’ll be more likely to find someone who’s a good fit for you if recommended by people who are in the same tax bracket as you. The Garrett Planning Network also offers a map of the U.S. where you can click on a state and find a listing of financial advisors who don’t require minimum investments to set up accounts. 

"Your savings matter to you because your future matters to you. By getting informed to make smart decisions now, you can make your future financial health less vulnerable to risk."

You may be wondering why you shouldn’t just use an online robo-advisor. Although this digitized option can appear more convenient, it doesn’t replace some of the benefits of working with a human advisor. For example, in the event that there are big changes in the market or in your life, a robo-advisor can’t have an actual conversation with you. A person will be able to actually discuss your questions and concerns. You don’t want the first conversation you have with an in-person advisor to be when you’ve had a big life event. Your advisor should already have a holistic understanding of what matters to you in the context of your finances. A human advisor can help clients adapt as their lives change.

In addition, human advisors can also give you greater control over your investment choices. The platforms behind robo-advisors calculate your risk tolerance based on the answers from your initial questionnaire and use it to create a portfolio suited to that risk tolerance. You will not have the opportunity to customize your portfolio in any way. If you’re not comfortable with some allocations in your portfolio, you don’t have the flexibility to adjust. An in-person financial advisor can give you this flexibility.

Your savings matter to you because your future matters to you. By getting informed to make smart decisions now, you can make your future financial health less vulnerable to risk. It can be easy to lose sight of the bigger financial picture when you’ve heard stories of financial loss. But by crafting a practical approach, you can save yourself from the risk of missing out on the future you’ve saved for.


1 Millenials are Good At Saving, But Investing? Not So Much,” Forbes.com, March 13, 2018. 

2 Millenials are Good At Saving, But Investing? Not So Much,” Forbes.com, March 13, 2018. 


*What is an annuity?

Annuities are long-term, tax-deferred investments designed for retirement. Variable annuities involve risks and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½. Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity. Guarantees are based upon the claims paying ability of the issuing insurance company.

Annuities are not for everyone. And, it’s important to remember that these products are meant to be long-term investments designed for retirement, so there are restrictions in place to discourage you from withdrawing all of your money at once or taking withdrawals before age 59½. However, most annuities do allow for exceptions based on specific circumstances such as a terminal illness or other emergencies.

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.

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