invest money for several different purposes simultaneously. Either way, you
should establish your financial goals before you begin investing. Otherwise,
you won’t know how much to save.
For example, when I was in my 20s, I put away some money for retirement,
but I also saved a stash so I could hit the eject button from my job in management consulting. I knew that I wanted to pursue an entrepreneurial path and
that in the early years of starting my own business, I couldn’t count on an
income as stable or as large as the one I made from consulting.
I invested my two “pots” of money — one for retirement and the other for
my small-business cushion — quite differently. As I discuss in the section
“Choosing the Right Investment Mix” later in this chapter, you can afford
to take more risk with the money that you plan on using longer term. So I
invested the bulk of my retirement nest egg in stock mutual funds.
With the money I saved for the start-up of my small business, I took an
entirely different track. I had no desire to put this money in risky stocks —
what if the market plummeted just as I was ready to leave the security of my
full-time job? Thus, I kept this money safely invested in a money market fund
that had a decent yield but didn’t fluctuate in value.
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