5 Year Buckets For Investing

What is the most important thing to do when it comes to investing? START! Often when you are looking at making an investment, it can seem like a daunting task so taking that first leap is the most essential. Once you have taken that crucial first step, it does not have to be a confusing road to making smart investment decisions. It can be as simple as looking at your life (and investments) in five year increments.

The concept of five year buckets is so simple but it is a great way to look at your investments and deciding when to put your money in the market. The principle is this: if you are going to need the money within the next five years, it should not be attached to any investment. This is important because you cannot risk losing the money in the short term because you simply will not have enough time to recover it before you need it. That can put you at the risk of incurring debt when you could have paid for the expense in cash.

If you are looking into the future and decide you will not need the money within the next five years, you should definitely tie it to some sort of investment vehicle, that suits your risk tolerance, or else you will face the next obstacle of inflation. Make sure your money is working for you to at least outpace inflation.

Investing is as simple as deciding to start and then figuring out when you will need the money. If you need it in the short term, now is not the best time to put it in the market. But if you can put the money away for longer than five years, investing is the way to go. There is always a risk associated with investing and the short term can be particularly volatile but, if you make wise decisions, starting to invest will be a decision you will not regret.  

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