Recent Posts
You’ve got the job, the friends and the soulmate of your dreams. The only catch? You want to make sure your happy lifestyle transforms into an equally happy – and even more financially stable – future. According to the Rich Dad website, 90 percent of women will be solely responsible for their finances sometime in life, but 79 percent haven’t planned for that.
Here are some of the best investments – according to financial experts from Women’s Health Mag, Business 2 Community, and Quick and Dirty Tips – that you can make now to appreciate later.
You’ve probably heard the saying, “The early bird gets the worm.” Well, in this case, the early bird invests the worm early and gets ten worms down the road. As financial expert Lisa Serwin from Women’s Health Mag explains, the earlier you invest, the more you can take advantage of the interest that builds over time. Still clutching last week’s paycheck? Know that:
– A 21 year old who invests $100 each month in an account with 5% interest will have an $80,000 nest egg by her 50th birthday
– A 31 year old who invests the same amount in the same account blows out her 50th birthday candles with only $40,0000
– If you doubled their interest, the 21-year-old rocks a cool $203,000 while the late bloomer only has $70,000
Procrastinating on your investments is starting to sound pricy, isn’t it?
Are you part of the 55 percent of women not taking advantage of your workplace retirement plan? Then that needs to change, ASAP. According Women’s Health Mag, a 401(k) lets you invest a percentage of your paycheck into a “tax-deferred investment account.” This is known as a defined contribution plan and, if your company offers a matching plan, they’ll even put in 75 cents for every dollar you invest. In other words, you can get paid to save money – talk about ka-ching!
This is why you should be aware of a company’s 401(k) policy when starting a new job. Depending on how long you’ve been with an employee, you might only be able to take a percentage of the money your employer added to your 401(k). If you’re close to meeting the minimum time needed to access a bigger lump of your company’s contribution, it may be worth sticking with your old job for a little longer.
If your job doesn’t come with a retirement plan or doesn’t offer matching benefits, you might want to explore investing in an IRA. According to Laura “Money Girl” Adams from Quick and Dirty Tips, IRAs allow you to pick from a variety of investments and offer several tax benefits. As of 2011, you could invest up to $5,000 (or $6,000 if age 50+) for that year. Some of the online brokerages that Adams suggests?
– While Fidelity doesn’t have an annual fee, investors must start with at least $2,500 or commit to automatically investing at $200 each month.
– Schwab also nixed the annual fee, but you need at least $1,000 to open an account – unless you agree to contributing at least $100 each month.
– No annual fee or account minimum here! Capital One’s automatic investing plan also means that you can buy partial shares of stocks or funds. This means that, even if a stock costs $500 a share and you only have $50, you can still own a piece of the (financial) pie.
So you’ve contributed to your 401(k) and/or your IRA – and you still have some extra money you want to invest. What’s a girl to do? Laura Adams then advises people to open a taxable brokerage account. You can stash as much cash as you want in these accounts. Also, unlike retirement accounts, you can withdraw money at any time without being penalized. Some good online brokerages to use include ETRADE, Scottrade and Zecco.
One important tip for all of these accounts? Be sure to invest – whether in your 401(k), IRA or taxable brokerage account – regularly. Decide on a set amount of money to invest each month, or each paycheck, and do it. Financial experts like Laura Adams also suggest increasing your contributions each year by a small amount. More money invested = quicker returns = a comfortable retirement right on time!
Equally important to the money you’re investing is the money you owe. As Women’s Health Mag explains, the more time you owe money, the more interest you have to pay rather than earn from money in the bank. Not to mention that debt can also harm your credit score. This means, if you do need to borrow money, you’ll probably deal with higher interest rates than people with good credit. Maybe your friend isn’t totally crazy for only using cash when she goes clothes shopping…
Just picture this: you spend years working for a promotion at work but as soon as you raise your annual income, you jump into a high tax bracket. In other words, the more money you make, the more money you pay in taxes (in terms of receiving a lower refund or actually owing money). Because of this equation, donating to charity may be one of the best “investments” you can make.
As Cosette Jarrett Business 2 Community points out, when you donate to charities, you receive a tax break. As a result, spending money on a good cause – not to mention helping out your local community along the way – can actually save you money when tax season hits. To start is simple. Just pick one or two charities you believe in and sign up for an ongoing donation. Your future – and other people’s futures – just got a little brighter.
When you think of the American dream, do you pick a house of your own, complete with a white picket fence? When it comes to investments, though, this dream might turn into a beneficial reality. According to Cosette Jarrett, buying a house can actually be cheaper than renting, depending on the area you live. Before you consider becoming a homeowner, make sure you have enough savings to cover a down payment. During that time, do plenty of research on your area and on buying your first home. When you have the down payment ready, you can meet with a lender to get pre-approved and set a housing budget.
Believe it or not, your brain might be the best place to invest. As Cosette Jarrett explains, boosting your skills and education can also boost your odds at scoring a promotion of a higher-paying position. Now, you don’t have to drop out of the workforce and relive your freshman year in college. Instead, fill any available time with classes at a local university. Look for courses that teach skills related to your field and would be equally viable today as in the future. Access to a smart, financially stable future really does lie in your hands – and in your head.
