In many situations, it is possible to see that a large number of people simply do not know what their financial priorities should be or even what options and decisions they should take when the objective is to diversify and make their savings profitable.
In issues related to financial priorities, opinions arise and all of them present their logic, however, some priorities are fundamental for those who want to achieve all the financial freedom they want.
Life is made up of stages and for each stage, there must be priorities that aim to achieve objectives until you achieve the results you want for your financial life.
So here are some recommendations of financial priorities for the various stages of life.
Your Financial Priority Up
There is no point in having a good salary or good financial planning if you do not know the financial priority that you have to achieve until you reach 35 years of age. Arguably, up to the age of 35 you must be able to set up your emergency fund with at least 6 months of all your expenses.
If you want more security, you should be an emergency fund with 12 months of expenses or 12 months of salaries of your household.
This step may seem easy, however, if you choose 12 months of salary from your household you will have to save for an average of 20% of monthly savings for 5 years to reach the limit where your financial security is established, at least in the that touches the unforeseen events of life.
Similarly, if you use the 10% savings recommendation that most personal finance experts advertise, you will have to save 10 years to reach the optimal limit on your emergency fund.
The benefits are immense in having an emergency fund, from greater protection of your personal finances, you will still feel the financial security to venture on riskier flights in your life, such as investing in risky products, changing jobs, create their own company, among others.
As a general rule, it is recommended that you choose safe and high-liquid financial products to set up your emergency fund, which is right because the profitability of your emergency fund is not your highest priority, but its definitive constitution.
Your Financial Priority
This period of your life should be of financial comfort, where your financial security is assured by your investment fund and it is time to change your strategy. If you have credits look for your final settlement should be your concern, as the gains in profitability and emotional comfort are immense.
For each year of repayment of credits, you save a lot of money on interest over capital throughout the contract, so try to balance a credit settlement strategy with a riskier investment strategy, diversifying, allocating and rebalancing your portfolio.
A good way to invest in security at this stage of life is to find out what your investor profile is and depending on that profile build an investment portfolio capable of replicating that profile.
If you have a conservative investment profile then you know that you should allocate a higher percentage of low-risk products. They regularly advise a 50% risk-free or reduced-risk distribution, 40% moderate-risk products and 10% risk-averse products.
Investors with a moderate profile carry out an allocation of 40% for products at risk or for reduced risk, 40% for moderate risk products and 20% for products of considerable risk.
Aggressive investors opt to apply 20% for products at risk or reduced risk, 40% for products with moderate risk and 40% at considerable risk.
It is true that these distributions are not fixed and that each investor should allocate according as he considers more comfortable.
This is a moment of security and stability. Looking for products without the risk or with reduced risk is advisable at this time of life. The advantages are innumerable not only financial, with the protection of heritage, but also psychological because it allows greater emotional freedom to live a longer life.