Saving a portion of your income for a rainy day as well as for retirement is just common sense. However, finding investments that will make the most of your hard-earned money can be an arduous task. Here are a few tips to help you get started creating that important financial portfolio.
It's never too early and really never too late to start planning for your retirement years, so if your boss offers a 401 (k) plan, consider signing up. Money is deducted before taxes, so you will owe taxes years later when you withdraw the money, but the good news is that many employers match the funds up to a set amount, so that is a big bonus. You can also decide how much you want to pull from your paycheck, but it is wise to at least save as much as your employer will match.
An Investment Retirement Account or IRA is another retirement planning tool, and for those who make less than $95,000 or $150,000 as a married couple, a Roth IRA is an excellent option. While the amount you contribute has a yearly limit, the money is deducted from your pay after taxes, so there aren't really any more taxes that you have to pay. Also, money can be taken out whenever you need it. So if something catastrophic happens, you will have some funds. If you hit the market right, you could end up with hundreds of thousands of tax-free dollars sitting in your IRA waiting for you to enjoy during retirement, or if you wait to take out money, until after you turn 60.
In years past, investing in one specific company has certainly yielded some pretty amazing results. In general, however, few of us are lucky enough to get on at the ground floor and then ride a stock all the way to the top. While the stock market is gaining strength, it's still a bit dodgy to put a large amount of money into just one holding. However, investing in mutual funds offers a lower-risk way to capitalize on long-term market growth. These funds are highly diversified to lower risk and professionally managed to make things simpler for the consumer.
There are several different forms of mutual funds, but two of the most common are exchange-traded funds (ETF) and open-end funds. The open-end fund is positive because at the end of every market day, an investor can sell back their shares and the fund must re-purchase those shares. You also have no limit on how many shares you can purchase. An ETF is slightly different because its value goes up and down during the trading day while the open-end fund's value is set at the end of each trading day. With an ETF, you can sell during trading and possibly sell at a higher price than what you would have received after the markets have closed.
There are thousands of mutual funds, and each is unique. For example, you might wish to invest in some type of energy fund. This might be a fund or ETF that invests in energy-related holdings such as petroleum companies, natural gas companies or oil drilling companies. Another option would be a clean energy fund that invests in companies that produce products to harness wind energy, hydroelectric energy or solar energy. In addition, you could invest in a specific country or perhaps a region. A BRIC fund, for example, invests in holdings in Brazil, Russia, India and China. A China fund will include holdings only from China and Hong Kong. There are many other options to consider, so talk to your financial planner about the possibilities you might want to consider.
It's never too early and really never too late to start planning for your retirement years, so if your boss offers a 401 (k) plan, consider signing up. Money is deducted before taxes, so you will owe taxes years later when you withdraw the money, but the good news is that many employers match the funds up to a set amount, so that is a big bonus. You can also decide how much you want to pull from your paycheck, but it is wise to at least save as much as your employer will match.
An Investment Retirement Account or IRA is another retirement planning tool, and for those who make less than $95,000 or $150,000 as a married couple, a Roth IRA is an excellent option. While the amount you contribute has a yearly limit, the money is deducted from your pay after taxes, so there aren't really any more taxes that you have to pay. Also, money can be taken out whenever you need it. So if something catastrophic happens, you will have some funds. If you hit the market right, you could end up with hundreds of thousands of tax-free dollars sitting in your IRA waiting for you to enjoy during retirement, or if you wait to take out money, until after you turn 60.
In years past, investing in one specific company has certainly yielded some pretty amazing results. In general, however, few of us are lucky enough to get on at the ground floor and then ride a stock all the way to the top. While the stock market is gaining strength, it's still a bit dodgy to put a large amount of money into just one holding. However, investing in mutual funds offers a lower-risk way to capitalize on long-term market growth. These funds are highly diversified to lower risk and professionally managed to make things simpler for the consumer.
There are several different forms of mutual funds, but two of the most common are exchange-traded funds (ETF) and open-end funds. The open-end fund is positive because at the end of every market day, an investor can sell back their shares and the fund must re-purchase those shares. You also have no limit on how many shares you can purchase. An ETF is slightly different because its value goes up and down during the trading day while the open-end fund's value is set at the end of each trading day. With an ETF, you can sell during trading and possibly sell at a higher price than what you would have received after the markets have closed.
There are thousands of mutual funds, and each is unique. For example, you might wish to invest in some type of energy fund. This might be a fund or ETF that invests in energy-related holdings such as petroleum companies, natural gas companies or oil drilling companies. Another option would be a clean energy fund that invests in companies that produce products to harness wind energy, hydroelectric energy or solar energy. In addition, you could invest in a specific country or perhaps a region. A BRIC fund, for example, invests in holdings in Brazil, Russia, India and China. A China fund will include holdings only from China and Hong Kong. There are many other options to consider, so talk to your financial planner about the possibilities you might want to consider.
About the Author:
Cleveland Jernigan likes blogging about investments. To get further info about Asian Pacific mutual funds or to know more about China investment funds, go to these fund websites now.
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