Put most of your long-term portfolio into equities

With a steady investment pattern, you can get a lot out of equities; they are unpredictable, but by and large produce the best long-term returns—usually about 4 percent to 5 percent a year above inflation. The interest rates offered by banks, on the other hand, barely keep pace with inflation.

Also, invest in foreign stock markets, they can be difficult to understand at first, but they’re usually no riskier than U.S. stock markets, and offer cheaper points of entry and a diversified and greater volume of low risk stock options. In addition to stocks, own some long-term government bonds and some government securities. These are often inflation protected, and are likely to keep their value, or even go up, when stocks plummet.

Remember to be patient; if you invest a sum of money for ten years, it can increase in value by only one and a half times, but invest for forty years and you’ll have 5 times the sum. Don’t cut investments for unnecessary spending, treat it like a savings account.

Buy Insurance

Insurance is necessary, but is generally expensive. The first kind of insurance people tend to buy is car or home insurance. Always purchase high-deductible versions; it saves money in the long run. Also purchase a broad health insurance package. This should ideally be the first kind of insurance people should buy, but they often assume their place of work will cover this benefit.

Check your company’s policy and make up for any shortfall by purchasing insurance of your own (For example: disability insurance) from public or private insurance providers. Buy term life insurance to cover your spouse and dependents. Use any company benefits you can. Contribute as much as possible to your company’s insurance matching plans, if it has one.

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