So, if you are like me, you’ll sit around sometimes, and think of all the things you want to do later in life, but sadly, you can’t do now, because you don’t have enough money. Well, you start early, and play your cards right, all of those dreams you have “down the road” may become a reality. I’ve compiled all of the best tips I could come up with to help you put your kids through college, and take a tour of Europe.
This doesn’t have to be your retirement plan!
Relying on Social Security may not be a wise choice, since by the time we (those my age – let’s say mid 20’s) retire, that may not be an option. Can you believe that only half the women between the ages of 20 and 30 have even started saving for retirement, at all? It may not seem like a viable option if you live paycheck to paycheck, but there’s always a small amount that you can put away. You can have your work put your check into your checking account with direct deposit, and put a percentage into a savings account automatically. You won’t even know that small amounts are missing from your checking, and they will all add up. Check out these stats: If a 21 year old making 30K a year saves 15% of her salary in a 401K with a 3% employer match rate, they could have almost 2 million by the time they are 60. Nice, huh?
Take advantage of work benefits.
- If your employer offers a 401K, you should sign up. Experts say contributing the max, 10-15 percent of your salary. If that seems like too much, start with 2 percent. Invest wisely! One way to figure out how to gauge how much to put into different kinds of funds (stocks and bonds) is to take your age from 100. Put that percent of your contribution into stocks, and the rest into bonds. If you are 25, that means 75 % in stocks, and 25% in bonds.
- For ratings of funds, go to Morningstar.com and click on “Funds“. Then find your fund company under “Fund Family Data Pages” click on a fund, then use the Data Interpreter for details. Avoid funds ranked in 2 stars or less. Look for a below average expense ratio (to reduce fees) and a manager who’s been with the fund for at least five years. From those, look under trailing returns for funds that match or beat the stated benchmark such as the S&P 500, over 5 years. Never cash out of a 401K early, or you could pay a hefty benefit. You can also check out sites like fidelitly.com or vanguard.com to start your own Roth IRA account as well.
These are all suggestions I found in magazines, I am not a professional financial expert, and I am just relaying some great articles that I found. Choose wisely! I also know a great person at Northwestern Mutual that sat down with me and talked to me about all of my choices at the age of 29. Looks like I may be able to start saving after all! Happy Saving!