Whether you’re saving for a child’s education or a new home, there’s a strategy to it. Consider your time horizon and risk tolerance before investing to help ensure you achieve your goals.
Are you thinking about buying a home, taking a dream vacation, or buying a new car? Just like saving for retirement, there are several factors you should consider when saving for a major purchase or other short-term goals.
Saving with low risk vehicles with moderate returns, like money market accounts, offers you more liquidity — meaning you can get to your money faster. That's why these accounts are often better for meeting short-term savings goals like a car or a vacation.
Retirement, college savings and nest eggs are more likely to fit into the long-term goals category. If you can ride out periods of market volatility, you might consider allocating some of your investments to equities for the long run.
The most widely recognized strategy of managing risk is diversification — investing in a variety of asset classes. Please keep in mind that even though diversification is recommended, it’s no guarantee against losses.
We offer several products and solutions that can help you achieve your various goals, both long-term and short-term. The following are some examples:
Example: Saving for college
You want your son or daughter to have the best higher education possible, but you also know that tuition costs are on the rise. There are plans specifically geared toward college savings. Many of these solutions also offer tax savings.
Example: Saving for a new home
You can take up to $10,000 from your IRA — without an early withdrawal excise tax — for a first-time home purchase for you or your spouse, or children, grandchildren, parents, or grandparents of you or your spouse. You may need to consider income taxes, depending upon the type of IRA account you have. Mutual funds and after-tax annuities are two other investment vehicles that can help you save for a house, or any other long-term goal.
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