Your saving and investment activity should be consistent in good and bad economic times. You, your spouse, and advisors should consider your risk tolerance, current age, probable longevity, and income needed to fund the lifestyle you want once you retire from your usual employment. To be sure, you should not at any point in life stop doing good works and being involved in services that help other people, however you should work in accordance with biblical instruction to get you to a financial position in which you no longer need to rely on an employer to provide income for your needs. Instead, you should build an amount of assets through long term investing (20 to 40 years) that brings abundant growth allowing you to give and live at a reasonable level of comfort at which it is highly likely the value of your assets and your annual withdrawal amount will outlive you, no matter the age of your demise.
Realize that when it is time to withdraw money from long-term investments you should not plan on withdrawing more than five percent of the value of your invested assets in any year. A greater proportion of your current investible income should put in at least six different types of equity investments like stocks, real estate, etc. A variety of no load, low expense stock index funds fit the bill for most people because they are easier to understand and there is a lot of market information you can research in order to appropriately measure them for your portfolio. One could consider a base portfolio that is 75% stock based investments and 25% bond based investments and tweak it to fit his or her particular situation. Others may choose to partially invest in a debt-free manner in a diversified portfolio of low cost, debt-free real estate flips and/or rental units or in an entrepreneurial endeavor that thru research, wise advisors, hard work, great management and leadership could grow to epic value.
You can invest on a long-term basis largely in equities that fluctuate from day to day or year to year, without pulling your money out of such investments due to fear when the market has declined because you have been working heartily at first building an emergency fund to cover your monthly expenses when emergency situations occur that take you away from debt repayment / elimination for a short period of time. Also, you can feel secure because research will show you that the history of the stock market is such that declines are overtaken by growth that eventually takes the market to a higher point than it was at when the decline started. Most times this growth takes place in two years or less.
You should immediately build your emergency fund to $1,000 before you begin to pay higher than minimum required monthly payments in order pay off all non-mortgage debt within the next couple of years or less. Then, build it to $10,000 after all non-mortgage debt is paid off. Finally, build it to six to twelve months of income necessary to pay bills after you have paid off all mortgage debt or when the $10,000 emergency fund would not cover at least five months of mortgage payments in the event of an emergency or before you eliminate debt whenever you have credible news of imminent job loss, layoff, a big decline in take home pay, a large uncovered medical bill that will soon occur, or another large unplanned expense that it seems is going to soon occur in your life.
Use investment accounts with various brokerage houses in a manner that diversifies your money across a broad spectrum of risk from large capitalization stocks to small capitalization stocks, from corporate bonds to government bonds, and from real estate to other sound investments. As you age, you could place a greater percentage of your money in bonds and fixed-income investments so that more of your principle is safe when you don’t foresee your lifespan allowing the short and intermediate term market fluctuations to smooth themselves out to result in higher returns over the long-term (10 or more years). Once you have paid off your debts, faithfully invest at least ten percent of your monthly income and work your budget in order to increase this amount over the years until retirement. A debt-free lifestyle with investment growth over the 20 to 30 years that mimics historical stock market growth should allow you to comfortably continue your current lifestyle through your older years.
Please pray for this ministry and email any questions. May God bless you richly as you follow His plan!!!
Genesis 13:2, 1Chronicles 29:3, Proverbs 21:20, Matthew 25:20, 1Timothy 6:17-19
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