If the current financial situation has taught us anything, it's that having some money saved is a great idea and that you have to be very careful when making investments. If you are working on setting up a portfolio that maximizes growth yet minimizes risk, consider the following tips.
Even if you are in your 50s or 60s, it is absolutely never too late to start saving money. Conversely, the opposite is also true, and no matter how young you are, it's never too soon to create a savings and retirement plan. If your employee provides a 401 (k) plan, take advantage of this, even if you can only afford to put away just a little bit of money each paycheck. Your employer will match a portion of the money you invest, so try to at least put aside that amount. For example, if your employee will fund up to $5,000 per year, but you only saved $4,000, while you will have a total of $8,000 in your 401 (k), you miss out on that extra $1,000 your employer would have added.
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.
There are other ways to build up your financial strength, and these include making investments in various stock and bond markets. You can buy and sell stocks and bonds, but you also might consider opting to invest in some type of mutual fund. This is a professionally managed fund that includes a variety of holdings in order to limit risk. The more diversified the fund, typically the less risk you face. While a riskier investment might yield a better rate of growth, you also face the possibility of losing everything. So a mutual fund might pay a bit less, but typically your return is greater than a regular savings account without the risk associated with throwing all of your eggs into one basket.
While there are four types of mutual funds, the two that are quite popular with investors are open-end mutual funds and ETFs, which stands for exchange-traded funds. These are both similar in that the fund is required to buy back your shares, but with an open-end fund, you must sell at the end of the trading day, which is when the value is set. An ETF trades throughout the market day, so you could sell at anytime during trading, which might yield a higher financial gain.
The types of investments that exist in a mutual fund vary widely, and there are hundreds of different kinds. For instance, perhaps you will want to invest in an Asia fund or an Asia Pacific fund that includes companies in China, Malaysia, Indonesia, Thailand and several other Asian nations that are experiencing economic growth. Another example might be a fund that invests in a specific currency, such as Renminbi fund. You don't have to just invest in foreign countries; you can invest in a fund that includes different types of American companies or even a fund with a theme, such as an energy fund. This might include petroleum-related holdings, or perhaps you would want to invest in a green energy fund which focuses on alternative sources of energy.
Even if you are in your 50s or 60s, it is absolutely never too late to start saving money. Conversely, the opposite is also true, and no matter how young you are, it's never too soon to create a savings and retirement plan. If your employee provides a 401 (k) plan, take advantage of this, even if you can only afford to put away just a little bit of money each paycheck. Your employer will match a portion of the money you invest, so try to at least put aside that amount. For example, if your employee will fund up to $5,000 per year, but you only saved $4,000, while you will have a total of $8,000 in your 401 (k), you miss out on that extra $1,000 your employer would have added.
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.
There are other ways to build up your financial strength, and these include making investments in various stock and bond markets. You can buy and sell stocks and bonds, but you also might consider opting to invest in some type of mutual fund. This is a professionally managed fund that includes a variety of holdings in order to limit risk. The more diversified the fund, typically the less risk you face. While a riskier investment might yield a better rate of growth, you also face the possibility of losing everything. So a mutual fund might pay a bit less, but typically your return is greater than a regular savings account without the risk associated with throwing all of your eggs into one basket.
While there are four types of mutual funds, the two that are quite popular with investors are open-end mutual funds and ETFs, which stands for exchange-traded funds. These are both similar in that the fund is required to buy back your shares, but with an open-end fund, you must sell at the end of the trading day, which is when the value is set. An ETF trades throughout the market day, so you could sell at anytime during trading, which might yield a higher financial gain.
The types of investments that exist in a mutual fund vary widely, and there are hundreds of different kinds. For instance, perhaps you will want to invest in an Asia fund or an Asia Pacific fund that includes companies in China, Malaysia, Indonesia, Thailand and several other Asian nations that are experiencing economic growth. Another example might be a fund that invests in a specific currency, such as Renminbi fund. You don't have to just invest in foreign countries; you can invest in a fund that includes different types of American companies or even a fund with a theme, such as an energy fund. This might include petroleum-related holdings, or perhaps you would want to invest in a green energy fund which focuses on alternative sources of energy.
About the Author:
Cleveland Jernigan loves blogging about investments. To get further info about Asian Pacific mutual funds or to find out more about China investment funds, go to these fund websites now.
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