We all understand that it is smart to save our money for the future. After all, even if social security payments are still around once we hit retirement age, it's certainly not going to provide sufficient income to keep us comfortable. Planning your financial future is a must, but it can be difficult, especially if you are young and have no experience with any type of investing. Consider the following tips to get you started.
There are quite a few different options for investing, and one that is both easy and relatively low-risk and affordable is investing in a 401 (k) plan. These plans are typically offered through your work, and the great thing about a 401 (k) is that most companies will match some of the funds that you place into the account. Your company might match up to any amount from $1,000 to $50,000, depending on the size of the company and your particular level of income. At any rate, it just means that if you save $200 out of a paycheck for your 401 (k), your boss kicks in an additional $200 into the account as well, which is basically just free money.
When it comes to 401 (k) plans, it is wise to consider putting in as much money as your company will match. So if your company matches up to $5,000 per year, put in $5,000 of your own money, too. If you put in less, you will miss out on some easy money. While $5,000 might seem like a lot, it's about $415 per month, and if you started saving this amount each year at age 25, you will have well over $1 million in your 401 (k) by age 65.
Not all companies offer a 401 (k) plan, so it's good to look at other options such as an IRA, which stands for individual retirement account. These also might be available through your employer, but you can also set one up through a bank. You also can consider investing in both an IRA and a 401 (k) as these all have different types of tax advantages and disadvantages. There are a few different IRAs, so talk to a banking advisor or a human resources representative at your workplace to discuss your options.
Certainly the stock market is still a place where money can be made and often at a much faster pace than any type of savings account. Of course, the risk is much higher, especially if you simply purchase stock in a single company. After all, if the company isn't doing well, neither is their stock. One way to minimize the risk of the stock market, but still take advantage of potential earnings, is to buy shares of a mutual fund. This is a diversified type of investment where your money is spread among many different holdings or companies in order to keep the risk as low as possible. With diversity, your risk is lower simply because you aren't betting on one single company. Most mutual funds are considered to be long-term investment strategies and a good way to build a future retirement portfolio.
There are literally thousands of different mutual funds out there for investors. These funds focus on many different areas of business. For instance, you might find a mutual fund that focuses on a particular world economy, such as a China fund where all the holdings are in China or Hong Kong. Another fund might invest in oil, natural gas and coal, which is a traditional energy fund. There are also funds that invest in green energy, in a specific world currency or perhaps you might consider an inflation managed fund that pays out dividends. There are many funds, so it is best to find a trusted financial institution and build a relationship with a financial advisor.
There are quite a few different options for investing, and one that is both easy and relatively low-risk and affordable is investing in a 401 (k) plan. These plans are typically offered through your work, and the great thing about a 401 (k) is that most companies will match some of the funds that you place into the account. Your company might match up to any amount from $1,000 to $50,000, depending on the size of the company and your particular level of income. At any rate, it just means that if you save $200 out of a paycheck for your 401 (k), your boss kicks in an additional $200 into the account as well, which is basically just free money.
When it comes to 401 (k) plans, it is wise to consider putting in as much money as your company will match. So if your company matches up to $5,000 per year, put in $5,000 of your own money, too. If you put in less, you will miss out on some easy money. While $5,000 might seem like a lot, it's about $415 per month, and if you started saving this amount each year at age 25, you will have well over $1 million in your 401 (k) by age 65.
Not all companies offer a 401 (k) plan, so it's good to look at other options such as an IRA, which stands for individual retirement account. These also might be available through your employer, but you can also set one up through a bank. You also can consider investing in both an IRA and a 401 (k) as these all have different types of tax advantages and disadvantages. There are a few different IRAs, so talk to a banking advisor or a human resources representative at your workplace to discuss your options.
Certainly the stock market is still a place where money can be made and often at a much faster pace than any type of savings account. Of course, the risk is much higher, especially if you simply purchase stock in a single company. After all, if the company isn't doing well, neither is their stock. One way to minimize the risk of the stock market, but still take advantage of potential earnings, is to buy shares of a mutual fund. This is a diversified type of investment where your money is spread among many different holdings or companies in order to keep the risk as low as possible. With diversity, your risk is lower simply because you aren't betting on one single company. Most mutual funds are considered to be long-term investment strategies and a good way to build a future retirement portfolio.
There are literally thousands of different mutual funds out there for investors. These funds focus on many different areas of business. For instance, you might find a mutual fund that focuses on a particular world economy, such as a China fund where all the holdings are in China or Hong Kong. Another fund might invest in oil, natural gas and coal, which is a traditional energy fund. There are also funds that invest in green energy, in a specific world currency or perhaps you might consider an inflation managed fund that pays out dividends. There are many funds, so it is best to find a trusted financial institution and build a relationship with a financial advisor.
About the Author:
Cleveland Jernigan loves writing about investments. For additional information about Asian Pacific mutual funds, click here. Or to discover a China investment fund, check out these fund websites today.
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