Investments and Personal Finance

Personal finance

Personal finance

Today we will try to answer the question of how to set financial goals and invest money in a way that makes those goals easy to achieve.


Financial Plan

Now that you have some free money, it’s time to have a personal financial plan. To do this, you need to translate abstract desires into specific goals and estimate the amount of money that will be needed to implement them. The resulting list must be sorted by priority – the more important the goal, the higher its priority.

Next, evaluate the assets that are already available and that can be sold. For example, an old car can be sold to buy a new one. But this is an obvious example, but about unnecessary gadgets and furniture are often forgotten, although some money can be obtained from their sale. Here it is necessary to take into account the existing savings if any. Having receipts, too, will not hurt, and not only in investments, so read how to get pay stubs from the previous employer.

Finally, estimate the amount that you are willing to save each month. Don’t feel bad if it’s not enough to achieve all of your goals within a reasonable amount of time. At first, you can limit yourself to the goals that have the highest priority. Allocate between them the value of the assets to be sold and the monthly savings. In the process of allocating, you will be able to visually see in what time frame at your current rate of savings you will be able to achieve certain goals.

As a result, you will have a personal financial plan, under which investments will be formed. This plan can be drawn upon paper, in spreadsheets, in notes on your phone, or, if it is simple enough, in the investor’s head. The main thing is that such a plan should be understandable and user-friendly. This is.


Investing by Science. Different tasks – different portfolios.

 We have already written in detail about how to invest depending on the objectives in a special material. Here we will reduce the information to a concise form. Almost all financial goals can be classified into one of the following categories, for which certain classes of financial instruments are appropriate.


Financial cushion – the most reliable and liquid instrument.

  • Short-term savings (up to 1.5-2 years) – short and medium-term bonds. A small percentage of low-risk stocks is possible
  • Long-term savings (over 2 years) – shares and a small portion of bonds
  • Passive income – reliable dividend stocks and medium-term bonds
  • Pension savings and inheritance – reliable long-term stocks and bonds, including inflation-protected
  • Aggressive investments (higher risk for the sake of high returns) – stocks, futures, options, high-yield bonds.


Even simpler

In the first stages, the above classification may be complicated and redundant. Then you can simplify and break down piggy banks into just three key categories:

  • Current capital – capital that is used for current consumption and short-term purposes. It can be placed in short-term bonds, savings accounts, deposits, and protected structured products.
  • Reserve capital – financial cushion and long-term savings. Some of this money should be placed in deposits (including foreign currency deposits) for quick access to it, and the other part should be placed in long-term secure instruments, such as stocks of large companies.
  • Investment capital is money that an investor is willing to risk to earn a higher return. It has no specific purpose. It can be used to speculate on stocks, high-yield bonds, and other financial instruments. As the investment capital grows, some of it may be transferred to a reserve or current account.


The quieter the ride, the farther you ride.

When you save regularly, there can be a sporting excitement – you want the capital to grow even faster. The desire is reasonable, but it is important not to go to extremes. Typical mistakes: making too much money and too risky an investment.

If the contributions are feasible but make you cut back a little on spending on pleasures, they will be a good motivator to increase income. With a small deficit, entrepreneurs begin to vigorously look for business growth points; employees are more actively interested in career opportunities.

But too many savings can lead to lower quality of life, poor health, tensions in relationships with family, and other problems. That’s why it’s important to strike a balance between investing in the future and spending on the present.



As you gain knowledge and experience in the stock market, you can increase your investment returns naturally. There is only one way to force this process – through education. You can find a wide range of interesting and useful materials on the subject of investments and not only on our website in a special section.


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