When you first enter the job market as a young adult, rarely are you thinking about saving for your retirement years. Most of your income is designated for housing, transportation and food. However, it is always wise to set aside some money for emergencies and for retirement. The earlier you start saving for retirement, the more comfortable you will be financially when that time arrives. Here are some helpful tips that might lead you to start planning for the future.
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.
Playing the stock market is risky, but the returns can be quite handsome. Of course, the losses can be terrible, as well. Generally, it is risky to put all of your money into just one company, but investing in mutual funds can be a way to take advantage of the stock market with much lower risk. Mutual funds are a special type of fund that includes a variety of different companies. This variety means that you aren't depending on one single holding to produce results. The diversity in the fund lowers the risk but often pays out much more than any type of savings account. So over the course of many years, you potentially will enjoy much more growth without as much risk as a single stock.
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.
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.
Playing the stock market is risky, but the returns can be quite handsome. Of course, the losses can be terrible, as well. Generally, it is risky to put all of your money into just one company, but investing in mutual funds can be a way to take advantage of the stock market with much lower risk. Mutual funds are a special type of fund that includes a variety of different companies. This variety means that you aren't depending on one single holding to produce results. The diversity in the fund lowers the risk but often pays out much more than any type of savings account. So over the course of many years, you potentially will enjoy much more growth without as much risk as a single stock.
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 likes blogging about investments. For further 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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