Your first consideration should be 6-12 months of living expenses in a bank or money market fund to cover unforeseen emergencies such as a job loss or large car repair.
You don’t want to risk having to sell an investment at a loss to cover an emergency.
Next, if you have interest bearing debt, you should pay it down as quickly as possible. For instance, if you pay off a credit card with 18% interest, you have effectively earned a guaranteed 18% return. You have no such guarantee in the stock and bond markets.
Once you have that covered, great way to determine your best long-term investment strategy is to take a short, easy asset allocation/risk tolerance test at the following link. https://personal.vanguard.com/us/FundsInvQuestionnaire
This test will determine your optimal mix of stocks, bonds, and cash reserves given your risk tolerance and temperament’ This strategy is called “asset allocation” which some say is the key to preserving and growing wealth.
To implement the above result, call the Vanguard at the phone number referenced on the above web pages Tell them you are a new investor and they will guide you from there.
Of course, feel free to contact us for follow up investment related questions.
