Planning for the Future

Financial planning is about preparing for both your short-term needs and long-term goals. It involves making deliberate decisions about your money today to secure your financial future. Whether you're planning for retirement, major life events, or building wealth, having a strategic approach is essential.

Retirement Planning

Retirement planning involves determining how much money you'll need to live comfortably after you stop working and developing a strategy to achieve that goal. The earlier you start saving for retirement, the more you can benefit from compound growth.

Common Retirement Accounts

  • 401(k)/403(b): Employer-sponsored retirement plans that allow pre-tax contributions. Many employers offer matching contributions, which is essentially free money for your retirement.
  • Traditional IRA: Individual Retirement Account that allows tax-deductible contributions. Taxes are paid when you withdraw the money in retirement.
  • Roth IRA: Contributions are made with after-tax money, but qualified withdrawals in retirement are tax-free.
  • SEP IRA and Solo 401(k): Retirement options for self-employed individuals and small business owners.
Senior couple planning retirement

The Power of Compound Interest

Starting early can dramatically increase your retirement savings thanks to compound interest. Consider these examples:

Starting Age Monthly Contribution Retirement Age Total Contributed Estimated Value at Retirement
25 $300 65 $144,000 $798,000
35 $300 65 $108,000 $367,000
45 $300 65 $72,000 $162,000

Assumes 7% average annual return, compounded monthly. Values are rounded and for illustration purposes only.

Investing Basics

Investing is putting your money to work with the goal of growing your wealth over time. While investing involves risk, it also offers the potential for higher returns compared to traditional savings accounts, especially over long periods.

Common Investment Types

Stocks

Represent ownership in a company. Stocks offer high potential returns but also come with higher volatility and risk.

Risk Level:

Bonds

Represent loans to companies or governments. Bonds typically offer lower returns than stocks but with reduced risk and more predictable income.

Risk Level:

Mutual Funds

Pools of money from many investors used to purchase a diversified portfolio of stocks, bonds, or other securities. Offers instant diversification but comes with management fees.

Risk Level:

Exchange-Traded Funds (ETFs)

Similar to mutual funds but traded like stocks. Often have lower fees than mutual funds and offer tax advantages.

Risk Level:

Real Estate

Investing in property, either directly through ownership or indirectly through Real Estate Investment Trusts (REITs). Can provide both income and appreciation.

Risk Level:

Certificates of Deposit (CDs)

Time deposits offered by banks with fixed interest rates and maturity dates. Very low risk but also lower returns.

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Key Investment Principles

Diversification

Spreading your investments across different asset classes, industries, and geographic regions to reduce risk.

Long-Term Perspective

Historically, the stock market has yielded positive returns over long periods despite short-term volatility.

Regular Contributions

Consistently investing money over time (dollar-cost averaging) can reduce the impact of market volatility.

Understanding Risk Tolerance

Aligning your investment strategy with your comfort level regarding risk and potential losses.

Building a Diversified Portfolio

A well-diversified investment portfolio typically includes a mix of different asset classes based on your age, risk tolerance, and financial goals. For example, some individuals open accounts with institutions like Huntington to begin building savings with low-risk options before diversifying into other investment vehicles as their financial knowledge and comfort grows.

Sample Asset Allocation by Age

In Your 20s-30s

80% Stocks
15% Bonds
5% Cash

In Your 40s-50s

60% Stocks
30% Bonds
10% Cash

In Your 60s+

40% Stocks
40% Bonds
20% Cash

These allocations are general guidelines. Individual circumstances may warrant different approaches.