While it's just common sense that saving money is a smart move, we don't always know how to set up a savings plan for our retirement years. There are so many types of investments, and with so much economic instability these days, it's difficult to know where we should put our money. However, if you haven't begun to save for your golden years, there is no time like the present. Here is some helpful information that will help you formulate a retirement plan.
You can consider many kinds of investment strategies, but one easy way to save is to take advantage of your company 401 (k) plan. This is a retirement plan where you select a portion of your income to take out of each paycheck. The money is placed in a special 401 (k) account, and then often your employer will add to this amount, matching it up to a set amount. Matching just means that if you put in $500, your employer also puts $500 into the account. Think of it as free money for retirement, a gift from your employer.
It is a great idea to put in as much as your employer will match; otherwise you are simply throwing money away. So if your employer will match up to $2,000, be sure to put in at least $2,000 per year. When you are young and earn a lower salary, $2,000 obviously seems like a ton of money, but it's really just $167 per month. If you start at age 25, you will have more than $600,000 saved up in 40 years, doing nothing more than setting aside a small amount of your paycheck.
If your company doesn't have a 401 (k) plan or you just want to save a little more, an individual retirement account is a safe way to invest. Most banks offer these accounts, which are commonly known as IRAs. There are several different kinds, and some you get directly from a bank or financial service and others you can get through your employer. Talk to the financial advisor at your bank or someone in the HR department of your company and ask about different types of IRAs.
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.
Just as there are many industries and many companies out there in the market, there are thousands of mutual funds. Talking to a trusted finance advisor is always a smart idea before you invest. There are many mutual funds, and each focuses on something specific. For instance, a green energy fund will focus on alternative sources of energy such as companies who work with solar power or wind power. A China fund will focus on holdings or companies that are based only in China and Hong Kong, and these companies will be from a variety of industries, from technology to banking. There are mutual funds for just about every country, region or industry imaginable, so there are plenty of interesting investment choices to consider.
You can consider many kinds of investment strategies, but one easy way to save is to take advantage of your company 401 (k) plan. This is a retirement plan where you select a portion of your income to take out of each paycheck. The money is placed in a special 401 (k) account, and then often your employer will add to this amount, matching it up to a set amount. Matching just means that if you put in $500, your employer also puts $500 into the account. Think of it as free money for retirement, a gift from your employer.
It is a great idea to put in as much as your employer will match; otherwise you are simply throwing money away. So if your employer will match up to $2,000, be sure to put in at least $2,000 per year. When you are young and earn a lower salary, $2,000 obviously seems like a ton of money, but it's really just $167 per month. If you start at age 25, you will have more than $600,000 saved up in 40 years, doing nothing more than setting aside a small amount of your paycheck.
If your company doesn't have a 401 (k) plan or you just want to save a little more, an individual retirement account is a safe way to invest. Most banks offer these accounts, which are commonly known as IRAs. There are several different kinds, and some you get directly from a bank or financial service and others you can get through your employer. Talk to the financial advisor at your bank or someone in the HR department of your company and ask about different types of IRAs.
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.
Just as there are many industries and many companies out there in the market, there are thousands of mutual funds. Talking to a trusted finance advisor is always a smart idea before you invest. There are many mutual funds, and each focuses on something specific. For instance, a green energy fund will focus on alternative sources of energy such as companies who work with solar power or wind power. A China fund will focus on holdings or companies that are based only in China and Hong Kong, and these companies will be from a variety of industries, from technology to banking. There are mutual funds for just about every country, region or industry imaginable, so there are plenty of interesting investment choices to consider.
About the Author:
Cleveland Jernigan likes blogging about investments. For further information regarding Asian Pacific mutual funds, click here. Or to discover a China investment fund, check out these fund sites today.
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