4 Ways to Instantly Improve Your Financial Plan | Personal finance

3. Don’t despise money

While many people view cash as a low-income investment, cash serves many purposes that contribute to a healthy financial situation overall.

Cash provides a sense of psychological safety when markets turn south and also prevents you from selling stocks to cover short-term emergencies. Sell ​​shares after that they have fallen is a good way to limit long-term growth prospects, so it is imperative to always have enough cash on hand.

Also, having enough cash is a reminder that the stock market is a risky place. Although long-term returns have been strong, it’s unclear what the market will do over the next one, two or five years. A cash buffer is there to protect you if future returns end up being lower than expected.

4. Be a self-directed investor

Saving money on fees by self-managing your investments is an important step to retaining as much of your returns as possible. Even a seemingly innocuous 1% annual fee can have a deleterious effect on a growing investment portfolio, especially over long periods of time.

For example, imagine two people: Beth and Joe. Also imagine that the two start with $10,000 and plan to invest over the next 40 years. They both add $8,000 each year to their investments.