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The Two Financial Planning Must-Haves [Part 2]

In Part 2 of this series, Jeff Rose, CFP, shares how you can invest your first $2,000.

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Part 2 – Investing

A few years ago some clients of mine were planning their annual vacation to Disney World. They told me about all the planning that goes into securing the right resort, reserving meal times and arm bands that allow you to jump to the front of the line.

I couldn’t believe how much effort went into a Disney World vacation. I asked how long they spent on planning the trip, which they half jokingly (and half seriously) replied, “Months!”

Are you one of those who spend more time planning their family vacations than designing a solid financial plan? While it does take some effort to create a financial plan, it’s certainly not any more difficult or time consuming than cashing in airline miles or scouring the Internet for a good hotel deal.

The simple truth is that financial planning focuses on two key (and necessary) areas: financial protection and increasing your wealth.

I already explained how to protect your finances in my first article of this series. Now that you know how to protect your money, it’s time to make more of it.

How to Invest $2,000

Let’s say that you have $2,000 sitting in your bank account, doing very little other than earning very small amounts of interest. It’s not a part of your emergency fund – you’ve already funded that to the max. It’s simply sitting there waiting for something more to do. Assuming you’ve paid off your consumer debt, why not put your money to work and make more money with it?

After all, money is subject to inflation which means your $1 will be worth less when you retire in 30 or so years. While inflation rates are currently low, they will most certainly go up again and eat away at your purchasing power. That’s why it’s important to combat inflation through smart investments.

“Whoa Jeff, investing? That’s scary. Haven’t you heard about China and Greece? The markets are in turmoil! Are you really expecting me to invest?”

Yes, that’s exactly what I’m asking you to do.

Even in times of uncertainty, it’s important to think long-term. Don’t pay so much attention to the markets that you freak out during selloffs and are tempted to sell your shares at record lows.

Long story short, investing your $2,000 is a great way to keep your money working for you, and this is how you can get started.

Employer-Sponsored Plans

Employer-sponsored plans, like 401(k)s, can be a great way to invest your money. You can simply designate a certain percentage of your income to the plan so that your contributions are automated. This means that you’ll not only contribute $2,000 over time, you’ll contribute more than that (which I definitely recommend).

A huge bonus with many employer-sponsored plans is the potential employer match. Some employers will match a certain percentage of your contributions to the plan. That’s free money, folks. It’s a 100% return on  investment for the amount matched. Don’t pass that up!

While I love employer-sponsored plans because of their automatic investing and match potential, it’s important to be aware that employer plans are limited to a select menu of investment options. I recommend that you have a professional financial advisor review your 401(k) to help ensure that the investments in your 401(k) make sense for your particular scenario. keeps a large database of several 401k plans to help you determine how good your plan really is. shows you how much you’re really paying in fees on your 401k. This can help keep you from investing in a fund with high fees and no solid track record of strong performance.

I see too many people blindly putting in their 401k without having any clue how it’s actually invested. Don’t be one of those people.

Your Own Retirement Plans

I love the Roth IRA. It allows you to invest post-tax dollars, watch them grow tax-free, and make qualified withdrawals tax- and penalty-free after age 59.5 Amazing? Yes. Yes, indeed.

While you can’t get a match on your own individual retirement plans like with many employer-sponsored plans, you’ll have an abundance of investment options to choose from – your employer won’t curate a menu for you (and that can be a good thing).

There are two great ways you can open a Roth IRA (or even a traditional IRA). One way is to use a robo-advisor. Robo-advisors are online wealth management services that provide portfolio management through the use of pre-programmed computer algorithms. Some of the most popular robo-advisors include Betterment, Wealthfront and Motif Investing.

The benefit of these type of companies is that they have low minimums – perfect for those who want to invest $2,000. If you prefer a self-directed option, they’re a great place to start.

Hiring a traditional financial advisor is another option for opening a Roth IRA. Some financial advisors have high minimums, so not every traditional financial advisor will allow you to invest just $2,000, but many will present you with a number of options.

If you like sitting down face to face with professionals, skip the robo-advisors and find a credentialed financial advisor instead.

A few great resources to find a financial advisor are and the XY Planning Network which is a community of Fee-Only financial advisors committed to serving Gen X and Gen Y. Fee-only financial advisors do not work on commissions, and can offer holistic, unbiased advice.


While many people think of investments being composed of stocks and bonds, those aren’t the only places to invest $2,000. In fact, investing in one’s education can have a great return on investment.

In fact, investing in your education could very well turn out to be the best way to invest your money. Developing skills that are worth money in the marketplace can be a great way to increase your wealth throughout your career.

Take, for example, someone who pursues a nursing degree. While they may spend up to $25,000 for their education, they could make over two times that amount annually for the rest of their career in the field. That, my friends, is a fantastic return on investment.

One personal example of how I invested into my education was obtaining my CERTIFIED FINANCIAL PLANNER™ certification. By going through the program I was able to learn what was the equivalent of 5 years of work experience in 1/5 the time. It has paid for itself time and time again.

Ask yourself how an education might benefit your finances and family. What are some jobs you’d like to explore? How much does it cost to get the education you would need to get hired in those fields, and how much would it increase your income? Which professions make the most sense for your lifestyle?

All of these questions lead to answers that inevitably increase your odds of building wealth over time.


Another fantastic way to invest your $2,000 is to start your own business with the money. This can lead to another income source, although starting your business – like investing in your education – doesn’t usually result in immediate profits.

Many businesses require a significant amount of capital in order to get up and running. Unless you have some venture capitalists backing your new business, you’ll probably be starting from scratch with a very tight budget (assuming you don’t have more money sitting around in the bank).

However, there are a few business ideas that you can start today with very few upfront costs. When I started my financial blog,, I really only had to pay for hosting, a domain, and a theme. Although I started out with a web design firm in the very beginning, I soon found out that I could purchase hosting, a domain, and a theme at a bargain. And yes, you can make money blogging – advertisements, affiliate marketing, and selling your digital products are all great ways to make money from your blog.

Time to Transfer Knowledge Into Action

Don’t think you should only choose one of these approaches to building wealth. Perhaps you’d like to invest a few bucks in the stock market using a Roth IRA, put a chunk into your education, and put the rest into buying materials to build a prototype product destined for the masses.

The experience alone of opening your first investment account, working with an investment company to make your first investment and being exposed to the entire process is extremely valuable. Working with a credentialed financial planner can also increase your confidence and help you continue on a fruitful path of making your money work for you.

Remember:  to achieve financial success you have to take action.  So go invest some money and watch it grow!

Once you start increasing your wealth, don’t forget to protect it. Read Part 1 – Financial Protection, if you missed it. Incorporate both financial planning must-haves into your life to find financial success.

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About Jeff Rose

Jeff Rose is a certified financial planner and runs the blog Good Financial Cents. He’s the father of three boys, husband to Mandy and is obsessed with In-N-Out Burger (understandable).

Read more by Jeff Rose

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Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

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