(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities).
Point 2: Participate in a workplace retirement plan. Encourage your child or grandchild to participate in a 401 (k) or other employer-sponsored retirement plan if offered. Because funds are deducted from each paycheck before an employee receives their take-home pay, workplace plans add an element of discipline. It's more difficult to spend what you can't access easily. If the employer offers a matching contribution, advise your young adult to contribute at least enough to get the full match. You don’t want them to miss the opportunity to get free money.
Roth IRAs are also worth a closer look for younger investors who meet the income qualifications. Roth IRAs don't offer the possibility of an Infront tax break that traditional IRAs provide. But the Roth IRA account owner won't owe taxes on any earnings or on qualified distribution. For younger investors, that means the potential for decades of tax-free growth and then tax-free income during retirement
Point3: Stay focused on the long term
Emphasize the importance of sticking with a disciplined investment plan, especially during instances of marked volatility. If your young adult sells all stock and then waits until the market improves before buying again, they could miss several years’ worth of good returns on their investments.
Point 4: Diversity to help manage risk
Talk to your child or grandchild about investing in a diversified portfolio. Diversification is a strategy to help reduce investment risk-by spreading your investments among different kinds of assets classes (stock, bonds, and cash), region (such as choosing US and international investments), company sizes, or industries.
If one type of asset loses its value, the others might grow to offset that loss. That tends to smooth out returns so you don't have as bumpy a ride.
Point 5: Choose a trusted advisor
An experienced financial adviser can help your adult child or grandchild establish short-term and long-term goals and build a plan to help them work toward those goals. If your young adult's finances aren't yet complex enough to merit needing their own financial advisor, your financial advisor can explain the different ways.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
