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October is Financial Planning Month, making it a great time to take a closer look at your financial goals and how you’re working toward them. One of the key things to consider when planning your finances is timing. How soon you’ll need the money for a goal—whether over a few months or several decades—should shape how you save or invest. This is called your time horizon, and it plays a major role in determining the best strategy for reaching your objective.

In this post, we’ll break down some common financial goals, savings tips, and discuss how you can tailor your savings strategy to fit your time frame. That way, you’ll be better equipped to grow your money wisely.

Short-Term Goals (0-3 Years)

Short-term goals usually involve things you’ll need money for within the next few years. Think of building an emergency fund, saving for a vacation, buying a car, or covering a medical expense. Since these goals are coming up soon, you want to focus on saving strategies that are low-risk and keep your money accessible.

Savings Strategy for Short-Term Goals

When it comes to short-term goals, your number one priority is keeping your money safe. You're not looking to make a huge return; instead, you want to make sure the cash will be there when you need it. Here are a few types of savings accounts that work well for reaching short-term goals:

• High-Yield Savings Accounts: These accounts offer higher interest rates than traditional savings accounts while still keeping your money easy to access.
• Money Market Accounts: These function like savings accounts but tend to offer slightly higher returns. Plus, you still get the benefit of being able to access your money when you need it. With an American Heritage Money Market Account, members earn higher dividends than a standard Share Savings Account by maintaining a balance of $25,000 or more.
• Term Share Certificates: These let you lock in a fixed interest rate for a set amount of time. They usually offer higher returns than regular savings accounts, but you’ll want to make sure the maturity date of the certificate lines up with when you need the money.

The main idea for short-term savings is to keep things simple and safe. Since you'll need the money soon, it's all about liquidity - making sure you can access your cash without losing value. Tools such as online banking and debit cards can help make these funds accessible for when you will need them.

Medium-Term Goals (3 - 10 Years)

Medium-term goals cover things that are still a few years away, like saving for a down payment on a house, paying for a big wedding, or setting aside money for a big home project. With a bit more time on your hands, you can afford to explore strategies that offer a higher return while still managing risk.

Savings Strategy for Medium-Term Goals

Since you have a longer window before you need the cash, you can aim for a balance between growth and security. You don’t want to take on too much risk, but you can look for options that give you a better return than just a savings account. Some good choices include:

• Bonds and Bond Funds: Bonds typically offer better returns than savings accounts, and they're considered relatively safe. Bond funds can give you steady growth over a medium-term period.
• Balanced Funds: These are funds that mix stock and bonds, offering both growth potential and some level of safety. They're a solid choice if you want to give your money a chance to grow without taking on the higher risk of investing solely in stocks.
• Short-Term Term Share Certificates or Treasury Notes: If your goal is on the shorter end of the medium-term range, short-term Term Share Certificates or Treasury Notes can provide predictable returns with minimal risk.

Flexibility is key when saving for medium-term goals. You want to give your money a chance to grow while protecting it from major market swings.

Long-Term Goals (10+ Years)

Long-term goals are your big-picture financial plans: things like saving for retirement, building a college fund for your kids, or creating a large estate. Because these goals are so far away, you have a lot more time to take advantage of the potential for growth.

Savings Strategy for Long-Term Goals

The longer your time horizon, the more risk you can afford to take on, which means you can aim for strategies that offer higher returns. Even though there's more risk, the idea is that over a long period, the market will generally grow. Here are some options to consider:

• Stock Market Investments: The stock market is known for its long-term growth potential. While it can be volatile in the short term, history shows that stocks tend to perform well over long periods.
• Mutual Funds and Exchange-Traded Funds (ETFs): These funds will allow you to spread your investments across multiple assets, which helps reduce risk while still giving you solid growth potential. ETFs are a popular choice because of their low fees.
• 401(k) and IRAs: For retirement savings, tax-advantaged accounts like 401(k)s and IRAs are essential. These accounts let your money grow tax-free (or tax-deferred), and if your employer offers matching contributions, you're getting free money on top of your savings!
• Real Estate: Investing in real estate can be a smart long-term strategy, whether you're buying a home to live in or investing in rental properties. Over time, real estate values tend to go up, and they can provide additional income.

With long-term goals, the focus is on growth. Since you have plenty of time, you can afford to take more risk in exchange for the potential to build significant wealth.

Planning for retirement and long-term investment goals can be complicated. American Heritage’s Investment & Retirement Center (IRC) can provide the guidance and services you need. Your IRC representative will listen to your needs, review your goals, and make recommendations.

Review and Adjust Your Plan as Needed

While it’s important to match your savings strategy to your time horizon, it’s equally important to revisit your plan regularly. Life changes, whether it’s a new job, starting a family, or an unexpected expense, can shift your goals and time horizons.

Make a habit of reviewing your financial plan at least once a year to ensure you’re still on track. Ask yourself:

• Have my financial goals changed?
• Has the timeline for any of my goals shifted?
• Am I still comfortable with the level of risk I'm taking?
• Do I need to adjust how much I'm saving to stay on track?

By staying flexible and adjusting your strategy as your life changes, you can keep your plan working toward your overall financial success.

Get Expert Guidance

Understanding how timing factors into your savings strategy is crucial for reaching your financial goals. Whether your focus is on short-term needs, medium-term plans, or long-term dreams, the way you save or invest should reflect your time horizon. Our team of financial experts is here to provide personalized guidance and support every step of the way. Contact us today to get started!