Knowing when to shift more savings to investments

Have you been wondering if you should move more of your savings to an investment account to capitalize on the chance of higher returns? It’s a great question to ask yourself because it means you’re thinking about your financial future on a higher level.

Before moving some of your savings into your Online Investing account, it’s important to ask yourself a few questions first. Let’s dig deep and chat about some questions to ask yourself before you shuffle money from savings to Online Investing.

• What’s my comfort level with risk? Wall Street offers no guarantees, and there’s no crystal ball to tell you what can transpire in any given year within the stock market. You need to be comfortable taking risk with your money before investing it. While most years will have a positive return, there will be some years with a negative return on your investments.
• How hands-off can I be? Investing favors those who are patient and non-reactive. Long-term returns are the aim, so it’s important to invest your funds and remain hands-off through the valleys and peaks of the stock market. Selling when your investments are down forces you to realize the loss whereas letting it sit during down times and allowing it to rebound will pay off. In fact, those times when the market is low are great times to invest even more. Additionally, because of its automatic rebalancing, staying hands-off is where your Online Investing account can really shine.
• What’s my debt situation? If you have any bad debt (think: credit cards), it’s best to have a plan to pay those off before putting money into investments. Otherwise, the potential for returns on your investments will be negated by the interest you’re paying on the debt you owe to the credit card companies. And in that situation, there’s only one winner. (Hint: It’s not you.)
• How’s my emergency fund looking? We suggest you have an emergency fund established with 4-5 months of expenses before you move the excess to the stock market. This will ensure you have money to put toward those little lemons life throws your way.
• What’s the end game for my investments? This seems cut-and-dried, right? The goal is to make more money! But the bigger question is, are your investments for short-term or long-term goals? If you’re saving for expenses that are coming up soon like school tuition, insurance payments, or appliance replacement, those are great short-term goals and likely make more sense for a traditional savings account. If you’re saving for retirement or a child’s college education, those are long-term goals that would be great for Online Investing. 

Once you’ve analyzed the answers to the questions above, you’re ready to decide to invest more in the market and (hopefully) net higher returns. We created Online Investing to help all kinds of people with a variety of investment goals. We’re always here to help, so reach out to a member of our team with any questions you have.