In terms of debt management, I plan to continue making loan and credit card payments on time and paying extra on these bills when possible. As of this moment, there are no major purchases looming, so I do not have a plan to set aside money for these during the next year. When planning for medical costs, my family contributes to a flexible spending account through my husband’s employer. This should be enough to cover any out of pocket medical expenses during the year. When examining the role of risk in a financial plan, one must not forget to evaluate property and liability risks. To manage these risks, my short-term goal is to maintain current auto, home, life and health insurance coverages. However, in the next 6 months, I need to research and see if there are more cost-effective options available. My most important short-term financial goal is to build up an emergency savings fund of $1,000. To meet this goal, I must contribute $84 per month into a savings account created for this emergency fund. After setting short-term financial goals, the next step in financial planning is to set intermediate goals. These are goals that should be reachable within the next five to ten years. These goals will be significantly impacted by life-stage adjustments as financial needs will change drastically over a period of several years. Some of the needs that will change are housing, insurance, and …show more content…
More simply, risk tolerance is the ability of the investor to handle the ups and downs of investments. My personal risk tolerance is not extremely high and I would not feel comfortable to great fluctuations with investments. This affects the way in which I would be able to invest making more stable and lower risk investments a good choice. This could mean that in order to meet my investment goals, I might need to increase the amount of money I invest to meet investment goals. The concept of risk tolerance leads right into the concept of time horizon. Time horizon risk is “the role of time” and how it affects investments (Garman, 2015, p. 391). Essentially, the longer money is invested in a single investment, the higher the risk associated with this investment. Although, these longer investments could lead to potentially higher returns. My time horizon could be rather long based on the numbers of years I can invest before expecting a return on my investment due to my age. However, because of my low risk tolerance, these types of investments are not well suited for