Making success happen

First, set yourself up to succeed. These basic steps can help you with investing plans:

1. Talk with people who are close to you about your investment goals. It is important for loved ones to support your efforts to invest and grow your money. Talking with family members about money issues can be difficult, but it can help avoid problems. Let your family know that you have a goal that is important to you. It is much easier to reach your goal if the people you love are cheering for you. Who knows - you may find that they will want to start funds of their own, too!

If you know someone who is interested in putting money aside and making it grow, and you feel comfortable talking about your plans, call or meet with that person on a regular basis to share tips. This will help you stay firm in your decision to make more money through investing, and you can also exchange information and ideas.

2. Decide how much risk you can handle. All investment decisions carry risk. How much risk should you take? The answer can depend on your personality, family situation, and age. You can choose a mix of investments that provide a comfortable risk level, then change that risk level as your situation changes (for example, becoming more conservative as you near retirement). In general, riskier investments, like small growth stocks, often result in a big gain or a big loss. Investments with less risk, like a Treasury bond or money market accounts insured by the FDIC, may offer a steady return with little chance of either high growth or a loss. Other investments, like stocks of big blue chip companies, fall somewhere in between.

3. Decide how much money to put aside for your goal. How much you invest depends on when you begin and what your specific goal is. Put aside a portion of your income that's comfortable for you. If you track your spending for one month, you will be surprised where some of it goes, and where you find room to free up money for your goal. Try to put aside the maximum amounts allowed by law under your employer-sponsored retirement plan, or your personal Individual Retirement Account (IRA).

4. Automate your investment. Arranging for part of your paycheck to be directed into an investment account means not having to worry about making this decision each month. This is a simple, "automatic" way to ensure that you will build up a solid fund over time. You can also arrange with a bank or insurance company to have a certain amount taken from your checking account to fund an investment.

5. Set smaller goals along the way and celebrate when you reach them. When you are trying to build up a large sum of money, it helps to track your progress along the way. Give yourself a low cost treat to celebrate each victory. For example, if you want to save $1,000 you could buy yourself a favorite food for each $100 you set aside.

6. Let the money grow. Resist temptations to take money out of your investment account. Withdraw money only for a true emergency.

Are you ready for an emergency?

  Experts recommend that you create a separate emergency fund, to cover your living expenses for three to six months or more, in addition to putting aside money for investment. Your emergency fund should be easily accessible. For example, a savings or money market account might be a good choice for this. Keep a current list of your financial resources and evidence of your ownership in a container that is waterproof and fireproof, and put it in a safe place.