We just had a record third year in succession with above 20% returns in the stock market. This last year saw the US index funds go up a bit over 30%! Many feel that the stock market in 1998 will be flat or even go way down while others still think the stock market can go up but we do not expect to see huge gains like we have seen in the past. With all this uncertainty, you may be like many and frozen in uncertainty, unable to take the plunge to set you on your way to financial independence. Hopefully, we can help you get started investing and making money above what you would make in a savings account or CD at a bank.
Before you start investing, you need to make an accounting of your assets and liabilities to determine your net worth. Your "investment" assets are your bank accounts, CDs, stocks, mutual funds, IRAs, 401Ks, 403bs and the value of your home. Your liabilities are ALL of your credit card debts, car loans and home mortgage(s). Your net worth is simply assets minus liabilities. You may be pleasantly surprised.
After determining your net worth, write down your long-term goals in a short statement. This should include your age, your children's age (or future children if you plan to have them), plans for a home purchase (or a remodel job), children's college education, age at which you would like to retire and anything else that will take a considerable amount of money to achieve. Maybe your children are educated and doing well on their own so you might make an estimate of how much money you would like to have as income when you retire. This gives you and idea of when you will need major sums of money. Maybe you are like me and your only goals are "a lot of money so I don't have to work in the future unless I want to and still live a good lifestyle."
The goal of all the above is to have your net worth statement showing where you are and your goal statement showing where you want to be in the future. I like to track my net worth where I total it all up on a monthly basis and graph it so I can follow my progress. Monthly is a bit much for some but I think you should total your net worth at least every quarter. I use Quicken to keep track of my assets and liabilities and I chart my monthly progress with Excel.
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