Are you new to investing and don’t know how to get started? Here are 5 questions to ask yourself to help you create a plan to fit your needs.

5 Questions to Ask Yourself in Crafting an Investing Plan


How much can you afford to invest? 

First, determine how much money you can afford to invest without putting an undue strain on your everyday financial needs. You should consider your investing dollars off-limits; not all accounts can be accessed easily, and even if you can, early withdrawals from some can carry a hefty penalty.

What is your tolerance for risk?

This is especially important for those who choose to invest in stocks and bonds, which can be highly volatile. Ask yourself: Over a 12-month period, what is the maximum downside exposure you could tolerate from your investment? Generally, the further away you are from retirement, the more risk you should be able to take on. For those who are closer to retirement, asset protection may be the priority.

What is your timeline?

Are you able to build your portfolio over several decades in the workforce? Or you will you be retiring within 5 to 7 years? If you are investing through an IRA, you cannot withdraw any funds prior to age 59½ without incurring an early-withdrawal penalty. With certain types of accounts, the government also has Required Minimum Distributions that must be taken beginning at age 70½.

What should you invest in?

 For some people, investing in stocks, bonds and other traded assets makes sense. Others may prefer a wider variety of alternative assets within their portfolio. Employer-sponsored retirement plans such as a 401(k) may limit your selection of investments, but with an IRA, almost any type of investment is permissible. This includes stocks, bonds, mutual funds, collectibles, real estate and others. A self-directed IRA offers you the most freedom in deciding how much to invest, and into which assets to put your funds.

How can you get started with a self-directed IRA? 

By law, money for your IRA must be held by a Custodian, so the most important step is to select a qualified provider. The trustee/custodian provides custody of the assets, processes all transactions, maintains other records pertaining to them, files required IRS reports, issues client statements, helps clients understand the rules and regulations pertaining to certain prohibited transactions, and performs other administrative duties on behalf of the self-directed IRA owner.

Even though that sounds all-encompassing, you as the account holder don’t sit passively on the sideline. You are responsible for conducting all due diligence and research about your chosen investment and you must provide all instructions to the account administrator to execute. It is a good idea also to seek additional tax, financial or legal advice to ensure your decisions make economic sense and keep you on the right side of the law.

You can find additional information elsewhere on our website, including our blog and Frequently Asked Questions page. Or contact Investment Resource of AZ, LLC directly at 602-773-5801 or

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