Archive

Archive for the ‘Investment tips’ Category

Invest early, often

Investing money for the future, whether it’s for retirement, your child’s college education or some other reason, is one of the most important financial steps you will take. Though it sounds complicated and complex, it doesn’t have to be. Here are a few tips to make things easier.

Start early. If you have a 401k plan at your job, start contributing as soon as you are old enough or have enough service, even if you don’t plan to be there very long. You can always roll that 401k into an individual retirement account later. Anytime you have extra money, think about investing at least some of it for the future in an IRA or another retirement account. The more you sock away early, you more you will have when you retire.

Make saving and investing automatic. The trend at businesses nowadays is to make people opt out of a 401k plan rather than opting in. Make sure you don’t opt out of your 401k, even if you are short on money. Also, up the amount you put into your 401k every time you get a raise. If you get a 3 percent raise every year and put 1 percent of that raise in your 401k, within 10 years you’ll be putting an extra 10 percent of your pay away for retirement and you won’t even miss it. Another way to invest automatically is to set up an IRA and have money automatically routed to it from your checking account every month.

Diversify. Not only should you piut some of your money in investments other than stocks, such as bonds, you should vary the types of stocks you invest in. For example, if you own 10 different stocks but they are all large, multinational companies, you are not diversified. You also need to diversify based on your age and your time horizon for the money. For example, if you are a few years away from retirement, you want to have less of your money in stocks and more in bonds and cash. You also don’t want to invest money you might need quickly, such as emergency savings, in stocks, because stocks can lose value quickly without any warning. You also have to rebalance your portfolio occasionally to stay diversified, because as some asset classes grow and others lose money, your diversification strategy can get out of whack.