When, and How, to Start Saving for Retirement .
My summary and take:
#1 basic point: first pay off high interest debt and set up emergency fund.
#2 basic point: use company 401(k) up to the point of the company match. IF YOU DON'T KNOW IF YOUR COMPANY HAS A MATCH, FIND OUT ON MONDAY MORNING BY ASKING YOUR BENEFITS PERSON.
#3 basic point: if you can save more, then learn how to invest in low-cost, well-diversified funds and open up an IRA. TO DO THIS, OPEN AN ACCOUNT WITH A DISCOUNT BROKER AND BUY THE ETFS ON LINE. TARGET A PRE-SET ASSET ALLOCATION.
#4 basic point: save as well in a taxable account. The thing is that we don't know what the future brings. Even though we may have the standard emergency fund established, our wants change over time. Four years from now, you may want to buy a house, change professions, or start a small business. Too often these events lead people to tap their retirement funds.
The bottom line is that one day you will be 65 years old and, at that point, have choices available to you that depend on your saving habits today. Putting this off until next month or next year may very well take away these choices. By all means, don't let the confusion surrounding these different investment vehicles result in inaction and, thereby, steal your retirement!
Thoughts and observations for those investing on their own or contemplating doing it themselves.
If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.
Sunday, November 3, 2013
When and How to Save for Retirement Addendum
Posted by Robert Wasilewski at 9:49 AM
Labels: DIY investor newbie
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Good points Robert! There was a time in my life where I was over-thinking and pondering if I should invest in a Traditional or Roth IRA... then decided, why not both? No one knows what my tax rate will be when I retire!ReplyDelete
Over thinking in many ways holds many investors from getting into the market. They go down the "what if" road and reasons for not investing pile up. As the market rises the reasons for not getting in fall to the wayside and they get in near the top.ReplyDelete
Hi Robert, good advice. The emergency fund will be very essential. What would you recommend for that? Six months of living expenses?ReplyDelete
I think the emergency fund depends on the situation. If your job is stable, living accommodations fairly new and transportation in reasonable shape you can get away with 3 month's living expenses. If, on the other hand, if you've got elderly relatives living cross country, have friends who may invite you to participate in a wedding, or are driving a piece of junk then you may want to bolster the fund.ReplyDelete
The bottom line is you want to avoid tapping the 401(k) or IRA etc.
nice article impressive blogReplyDelete