A Modern Guide to Investing and Financial Planning

In 2021, there are so many different ways to invest. If you asked several people what it means to invest successfully you would most likely get a different answer from each person. This is largely due to the fact that our investment activities are tied directly to our personal financial goals. There is a certain level of individuality that is incorporated into each person’s investment portfolio based on their interests, sensitivity to risk, industries they specialize in, and more. There is no one perfect way to invest, but the purpose of investing is universal. The goal of investing is to use your available money or property to create a future profit or economic benefit. 

It is important that we are knowledgeable about all of the ways to effectively invest your hard-earned resources while trying to achieve your financial goals. There is currently a higher rate of young people becoming first-time investors in the stock market and investment property. Unfortunately, education on this topic is not emphasized enough in our school systems. This leaves young individuals unprepared to make important savings and investment decisions in the future. It’s all about setting a realistic goal for yourself and knowing your options so that you can maximize your profits on your terms. Once you set that personal financial goal, you are already well on the way to achieving it!

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Setting Goals for your Personal Assets 

One of the first steps you should take is making sure you have a good understanding of the current status of your own personal assets. Whether that be cash, property, retirement plans, or commodities. In terms of investing, you should consider the specific personal assets that you believe can generate cash flows on either a short- or long-term basis. Do you have immediate access to it? Are you aware of what the current rate of returns is to date? Do you know the tax effect of maintaining that investment? It is important to have a good understanding of these things because it will help you determine the level of risk you are willing to take while using those assets to achieve your investing goals. Knowing how much you are willing to risk over a certain timeframe can make it a lot easier to make the best decision for you. 

Long-Term: Low-Risk Investing

The best investment options are the ones that carry the lowest risk and require the least amount of maintenance. It is easy to overcomplicate investing, but I try to carry a mindset of “work smarter, not harder”. Many people would most likely be satisfied with the growth of their investments over time if they considered trying out these options that don’t even require you to navigate the complexities of trading in the stock market directly. Retirement plans are so commonly used because they allow you to invest your money in a way that ensures you have the security you need once you get older and stop working. Look into your employer’s benefit plan if you have not already. Typically, a company will offer a 401k plan for its employees. You can easily face-track your long-term financial goals by increasing your contribution percentage each pay period.

If you are willing to take a slightly lower paycheck, you can contribute it to your employer’s 401k plan and allow it to be invested for you over a long period of time. This is really beneficial for people whose employer matches up to a certain percentage of your contribution. Imagine the future profits you can gain by increasing your contributions from 4% to 10% per pay period. The only caveat is vesting periods. Every employer has different rules for what percentage of their match is owned by that employee at any given time. For example, a company may say their portion of the contributions to your 401k plan is not owned by you until you complete three consecutive years of work. If you quit the job before then you will end up forfeiting that entire amount. 

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Differences between the types of IRAs

An IRA is another long-term play that is safe and low maintenance. IRAs are funded individually through your choice of a brokerage firm. There are two different types of IRAs—Roth and Traditional. They are both useful in creating long-term saving and investing goals. The key differences between the two of them also explain why they are such popular investment options in the first place. IRAs typically yield higher rates of return over time and come with preferential tax treatment. Roth IRAs allow you to make post-tax contributions to the plan and receive tax-free withdrawals later in retirement. Traditional IRAs allow you to take a tax deduction now for the contributions made to the plan and pay taxes on withdrawals later in retirement. Using this plan will allow you to lower your taxable income in the year the contribution was made, which also decreases your tax liability.

What are the pros and cons?

One of the pros is you can control your assets without having to maintain them regularly outside of adjusting the level of risk as needed. The cons are the penalties and other early withdrawal fees. The CAREs Act legislation allowed penalty-free hardship withdrawals from your retirement plan. This helped a lot of people get access to much-needed funds during the pandemic. As of December 2020, individuals are once again required to pay a 10% penalty on early withdrawals (before the age of 59.5) that are assessed when you file your taxes. The TPA or third-party administrator would typically withhold 20% for federal taxes as well. These are important things to consider when choosing a retirement plan. You may feel like you need more liquidity when it comes to your personal assets. However, there are plenty of investment options that give you flexibility, but sometimes it comes at a higher risk.

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Short Term: High-Risk Investing

In the world today, there are countless ways to generate a profit in different business ventures and investment activities. In some cases, you may want to bypass the long-term retirement plan approach and use the extra cash to fund your goals today. It’s all about weighing the potential future benefit of that investment. The riskier the investment is the more likely it is to yield a high rate of return in the short term if it works out in your favor.

The stock market is a great option for people who want to take a hands-on approach to manage their investments. You can follow publicly traded companies’ business activities and invest directly in them regularly. People diversify their investments by choosing different industries based on interest, the potential for growth, and market fluctuations. Stock trading is seen as more complex because it takes more consideration, time, and upkeep to maintain a balanced portfolio. Research is the key to being successful in the stock market. Study current world events and read through financial updates being released by the public companies you are interested in. These are good indicators of a company’s financial health and ability to grow in the immediate or distant future.

Don’t panic, the fluctuations are normal

There has been a lot of conversation about the fluctuations occurring in the market since the start of the pandemic. This has caused a large influx of activity by new investors. As day trading becomes more popular, it is important to take a step back and remember what your personal definition of effective investing looks like. Watch the amount of time you spend managing your portfolios daily. Time is just as much of an investment as the personal assets you are contributing to your goals. I know it may be tempting to watch it all day, but it often leads to people making hasty and unprofitable stock trades over time. Doing more research before you purchase stock can cut down on a lot of the stress that comes with investing. Afterward, you will be able to pick stocks by generally knowing when to expect your desired return. 

There are many platforms used to maintain stocks commonly traded in the United States. With all the options out there, you want to pick a platform that best suits your personal investing goals. Fidelity, Robinhood, TD Ameritrade, and Coinbase are just a few of the commonly used trading companies available.

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The Future of Investing and Currency in the Technology Era 

Sometimes I say, “the world changed when the iPhone 4 dropped”, as a joke to remind myself just how fast technology has grown. It is continuously changing our daily lives and how we interact with each other. We are also starting to witness how it is affecting investing and currency. Recently, we have seen how people were able to use mass communication and cooperation to cause significant fluctuations in the stock market. This would be impossible without the influence advancements in technology brought to the average person. 

What is Cryptocurrency?

In terms of currency, we are seeing the steady growth of Cryptocurrencies and NFTs in today’s market. Based on Forbes, “Cryptocurrency is a medium of exchange that is digital, encrypted, and decentralized. Unlike the U.S. dollar, there is no central authority, and it is not backed by a physical commodity”. Think about the word “money”–what do you see? Maybe you thought of paper bills, gold, diamonds, or even rare trading cards. Well, try to imagine a world where the prominent form of money becomes digital. Something that you can’t physically hold in your hands. In comparison, the U.S. dollar used to be backed by gold. Technically, you never held that gold but the money you used in the grocery store was backed by the value of it at that time. As digital currency becomes more valuable over time, we may see a change in people’s perceptions.

I was very skeptical at first about the profitability of an investment in digital currency. After studying the successes Bitcoin had, I bought into DOGE coin back in early July 2020 for about $0.003158. As risky of an investment it may have been, I can say it is trending upwards and shows signs of yielding good returns over time.

So, how do NFTs work?

NFTs are non-fungible tokens that are units of currency on a blockchain that can represent art, videos, music, and more. These tokens are commonly purchased using cryptocurrency. This form of investing has been around for years, but it is just now starting to gain more popularity. Recently, Mike Winkelmann sold his digital art entitled “Everyday: The First 5,000 Days” for over $69 million. Music is being sold as NFTs as well. My favorite band, Kings of Leon, announced in March 2021 that they released their new album “When you See Yourself” in the form of a nonfungible token. This makes them the first band to ever do this!

It is exciting to witness all of these changes occurring in real-time and how they are shaping the future of investing and currency as we know it. 


In my personal life, I am an assurance senior at a CPA firm in Atlanta, specializing in construction, higher-ed, and employee benefit plan audits. I use my knowledge of business to do continuous research into my investments. Slowly, I learned to predict what investments to buy into based on the company’s financial data and operational capabilities. Although I am knowledgeable, I still consult an experienced financial advisor to assist me with making important investment decisions. Whether you are purchasing a rental property or planning on rolling over your 401K into an IRA, you always want to have an advisor to go through your personal financial goals. Good luck investing!