When it comes to financial strategy, many of us feel intimidated by the idea of financial planning. However, financial strategy is much easier to understand than you might think.
When it comes to financial planning, there are four key steps that should be followed:
1) Establishing goals
2) Estimating future cash flows
3) Assessing risk
4) Selecting investments
College savings plans provide families with a way to save for their children’s college education without worrying about penalties or taxes on their investment earnings. These accounts allow parents to start investing for a child’s future as early as birth, and can save thousands of dollars in college tuition costs.
401k plans give employees the ability to set aside a portion of their paycheck into an account that is pre-taxed, meaning that it doesn’t cost them any extra money come tax time. Through this financial strategy, employees are able to save money on their taxes while also saving for retirement.
IRA accounts (Individual Retirement Accounts) allow individuals over the age of 18 to invest up to $5,500 per year without paying taxes or penalties on their earnings. 
This financial strategy is beneficial because you get the benefits of tax-deferred growth (meaning your investment grows faster since you don’t have to pay taxes on the earnings) and tax-free withdrawals after age 59.
401k plans give employees the ability to set aside a portion of their paycheck into an account that is pre-taxed, meaning that it doesn’t cost them any extra money come tax time. Through this financial strategy, employees are able to save money on their taxes while also saving for retirement.
Roth IRA accounts work in a similar way as standard IRA accounts, except they have different withdrawal rules at age 59 and beyond. With a Roth IRA, you won’t receive a tax break for your contribution, but when you make withdrawals from your account in retirement, all earnings will be completely tax free.
Once you create these financial strategies, it is important to make financial decisions that align with your financial plan. This financial strategy is called asset allocation. Your asset allocation should be determined by how long you plan on holding an investment and the amount of risk that you are willing to take on.
There are several types of financial strategies when it comes to choosing investments:
Equity financial strategies focus on growth, either through stocks, companies, or any other avenue in which one would expect growth in their portfolio. The amount of risk associated with these financial strategies can vary widely and sometimes require a longer-term investment time horizon than other types of financial strategies.
Fixed income financial strategies take short-term risks in exchange for higher interest payments. These financial strategies typically consist of investments such as bonds, CDs, and other financial products that pay a fixed rate of return.
Balanced financial strategies consist of both stocks and bonds and offer investors a middle ground between long-term growth and more stable investment income. These financial strategies typically require a longer-term time horizon than financial strategies that focus on one or the other. This financial strategy can also give investors more financial freedom down the line if their financial strategy accounts are well diversified.
Cash financial strategies consist of short-term “cash equivalents” that gain interest fairly quickly and can be turned into cash at any time for low risk financial strategies. These financial strategies include treasury notes, savings accounts, money market funds, or CDs that do not have penalties for access to the cash.
Alternative financial strategies are financial products that do not adhere to the same standards as traditional financial strategies. These financial strategies include hedge funds, private equity, or commodities.
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