In almost any endeavor you can think of, your success depends on a number of different factors.
And the same is true of investing.
You can create a strategy to help you achieve your long-term goals, such as a comfortable retirement, but your results will depend a great deal on how you adjust some key "variables."
What are some of these variables? Consider the following:
* Retirement age -- clearly, the age at which you plan to retire can have a big impact on your savings and investment strategies. If you want to retire early, you will likely need to accumulate more financial resources than if you were to work well into your 60s. To build these additional resources, you might have to invest more aggressively -- that is, include more "growth" vehicles in your portfolio -- during your working years;
* Lifestyle -- we all have different thoughts on the "ideal" retirement and these differences affect our investment strategies. For example, if you plan on spending your retirement traveling around the world, you'll likely need to accumulate more money than your neighbors, who plan on sticking close to home and pursuing inexpensive hobbies. Therefore, you may need to achieve more growth from your investments than your neighbors need from theirs;
* Inflation -- if you're trying to calculate type of performance you might need from your investments to reach your goals, you should consider your "real" rate of return -- that is, the return you get after inflation. If we experienced an annual inflation rate of 3 percent, you would lose about half of your purchasing power after 25 years. To stay ahead of inflation, you'll need to include some growth-oriented investments in your portfolio;
* Life expectancy -- obviously, you can't say exactly how long you're going to live. Still, if you consider your family's history of longevity, and your own level of health, you can probably make an educated guess.
If you think it's entirely possible that you could spend two or three decades in retirement, as many people do, then you'll need to plan carefully so that you don't outlive your resources. This may mean that, during your retirement years, you'll need to structure your investment portfolio to provide you with both growth and income opportunities;
* Taxes -- many people assume that their tax burden will decrease significantly when they retire, but that's not always the case. Income from a variety of sources, such as retirement plans and individual investments, is going to be taxable when you retire, so you'll need to have the money available to pay these taxes; and
* Health care -- health care costs continue to rise. When you retire, you become eligible for Medicare, but this won't cover all your costs. So, as you save and invest for the future, you may want to factor in the need to have sufficient liquid resources to cover your doctors' visits, prescriptions and other health care expenses.
As you move ahead with your investment strategies, you may want to consult with a financial advisor -- someone who can look at these factors and help you create a "big picture" solution that's right for your needs. But no matter how you proceed, don't wait too long to get started -- because life, with all its variables, has a way of moving quickly