Planning for Your Next Big Purchase
By Megan Morrow
Published February 16, 2017
Whether it is a vacation home, luxury vehicle or a trip around the globe, planning for your next big purchase involves determining how you will pay for that purchase as well as what your ultimate goals are – fun? Financial security? An investment for the family?
Cash payments are often ideal to prevent assuming further debt, but a sizable down payment can also make a difference in terms of repayment plans. Even if you can afford an item or experience outright, it might make sense to wait several months to better time the market. Rather than impulsively springing for a new boat, a new swimming pool or even a new major appliance, it is wise to plan a course for your next major purchase.
The following tips can help you prepare, allowing for some fun along the way:
- Do the math. First, determine how much you want to spend, and then examine how you will obtain the funds. It might make sense to enhance your savings strategies for a few months in order to pay cash for that cruise to Alaska or take an African safari rather than on credit cards. If you are making a significant purchase that will impact your financial and retirement planning, it is a good idea to connect with your financial advisor about your future plans. Your advisor can help you set up a special fund that is allocated for this planned purchase.
- Invest wisely. Saving for retirement is imperative, yet it is also smart to plan for income for life’s milestones along the way. This can be achieved through investments in bonds, individual stocks, mutual funds and CDs—all viable investment options. Ultimately, your purchase should figure into your overall financial plan.
- Seek the best deal. If you are allocating the luxury of time into your planning process, then you can research the market for your big-ticket item. Look for annual sales, seasonal markdowns and other options that will allow you to get a great deal on a desired item or vacation. For example, October is the best month to buy a home while April is the worst, and weekdays during fall and winter months are well-suited for buying a car.
- Make the most of your investment. Finally, it is imperative to make sure that you get the most – use and/or enjoyment – from your investment. This often entails insurance, such as travel insurance or home insurance, for instance, to safeguard your investment for the long term. Evaluate your goal, your purchase and your investment to ensure that it is the best fit.
Making a major purchase can be challenging in terms of details, timing and pricing, but it can also be an exciting and enjoyable experience. The saying that “anything worth doing is worth doing well” applies particularly well when planning for a significant purchase.
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Consult with your financial advisor today to create a plan that accommodates your goals.
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The material presented here is for information purposes only and is not to be considered an offer to buy or sell any security. This report was prepared from sources believed to be reliable but it is not guaranteed as to accuracy and it is not a complete summary of statement of all available data. Information and opinions are current up to the date of publication and are subject to change without notice. The purchase and sale of securities should be conducted on an individual basis considering the risk tolerance and investment objective of each investor and with the advice and counsel of a professional advisor.
The opinions expressed by Ms. Morrow are strictly her own and do not necessarily reflect those of Herbert J. Sims & Co., Inc. or their affiliates. This is not a solicitation to buy or an offer to sell any particular investment. All investment involves risk and may result in a loss of principal. Investors should carefully consider their own circumstances before making any investment decision.