How Do I Come Up with an Investment Strategy?

When you’re just getting started, it can be tough to plan for something as far off as retirement. Even a 5-year plan that includes a new car or buying a home can be hard to imagine. Still, time flies — investing now could get you to that goal easier than you think.

So. How do you decide where to invest and what type of investing to do? You’ll want to analyze, research, and consider investment choices, then act on what you learn. Here’s the process:

1. Solidify your goals

Know what you want to do, when you want to do it, and why it’s important. Your priorities may look different from a friend’s — stay motivated by focusing on what you want for your future.

2. Know what’s needed

Determine what it’s going to take to accomplish each goal using either a basic calculator or an online tool designed for your specific goal. How much does that home or car cost? What’s your basic retirement goal? In short, how much will you need to set aside each month to make your goals a reality?

3. Weigh the alternatives

Consider investment options. What can you get started, easily? Start by investigating easy accounts, like the TSP. Add other accounts geared toward your goals. Read, think, and compare so you know the risks, the fees, and the potential results.

4. Pick a path

Select investment approaches that you think are likely to help you achieve your goals. Will you manage investments DIY style, get help, or do some of each? Work on developing investment mindsets, skills, and habits you’ll stick with over time.

Have a plan but be careful not to over-analyze, over-research and over-consider. Starting early with investing is one of the best steps you can take to achieving your goals. Get moving and keep moving.