Retirement Investing: Five Smart Money Moves to Make Now
If you’re thinking about retirement, now is the time to do something. It doesn’t matter if you’re 25 or 55, because it’s never too soon to start planning for the future. At any stage in your life, you can start setting yourself up for a successful retirement where you can enjoy your life and do as you please without having to worry about money.
There are no two people who are the same or who have the same retirement goals. Therefore, you’ll have to take an individualized approach to your strategy and goals. However, some generalized tips can help along the way. In the list below, you’ll find five of the smartest money moves to make, no matter where you’re at or how far off retirement might (or might not) be.
(If you’ve already done any of these, pat yourself on the back and cross them off your to-do list. Otherwise, take notes and start taking action.)
Get Honest and Get Informed
The very first thing you can do that will work in your favor in planning for retirement is to be honest with yourself and take a good look at where you stand. You can’t plan for your future without understanding your current situation, after all. Look at your money, what investments you already have, which ones you could benefit from, and how you can improve your situation both now and for your retirement by educating yourself.
Study Up on Investing and Retirement Finances
Speaking of education, now is also the time to read up on investing and retirement as much as you possibly can. Either with blogs like ours or through books, podcasts, and other sources, you can get all kinds of insights, assistance, and perspectives that will help you formulate your ideas about retirement and decide on the best courses of action for your investing needs. Think about what you want out of your retirement and then research how to get it—the resources are available so it’s going to be up to you to take advantage of them.
Hire an Investment Advisor
There is no better resource to have on your side than an experienced, dedicated investment advisor. This professional is trained and experienced in all areas of investing and financial management and will be able to help you look at your options and choose the best possible course of action. An investment advisor will ask you what you want out of retirement, how much money you need to have or want to save, and other details to come up with an idea of what you need. Then, they will advise you on what will get you where you want to be.
Save More When You Can
Again, it doesn’t matter your current age. At any moment, you can start saving for retirement or increase your savings. Even if it’s just another $5 per week, every little bit counts. Make sure that you’re investing as much as you can, though, because, in 20 years, five bucks in the safe will still be a five-dollar bill. Five dollars invested properly could easily become hundreds, or thousands, over the course of two decades. Do your homework and find the absolute best ways to save and maximize your investments by earning while you save.
Start Choosing Your Investment Mix
You don’t have to make any decisions right away, but it’s definitely a good idea to think about what you want to invest in. Start with the long-term investments and get those out of the way. That will allow you to focus on short-term investments and other additions to the mix that will give you several different financial options for your future. The idea is to have cash for now, cash for later, and cash for the rest of your life, and the right investment mix can deliver that. Consider:
Stock and bonds
Mutual funds
Annuities
401(k) funds and IRAs
Alternative investments like real estate
It’s All About Planning
The biggest thing that people don’t realize is that retirement doesn’t have to be this big, scary, looming thing that seems uncertain and difficult to plan. It can be simple, and it can be less stressful than you expect. If you prepare and invest properly, it can even be easy to sit back and know that you’ll have the money that you want during retirement, for all of your future needs, and perhaps even to leave it to your loved ones after you are gone.
You should vary the mix of your investment risk, too. It's great to have safe investments, but there’s never a lot of profit with safety. If you can choose the occasional higher-risk investment, you can yield a much higher return than even you might have expected. Of course, you don’t want to put all of your eggs in this basket, which is why diversifying your retirement investments is such an important part of the process.
So, what should you be aiming for? Well, again, everyone has their own expectations and goals. However, a good portfolio is typically going to be designed to have a total rate of return over the long term of between seven and ten percent (7-10%). With that being said, that leaves plenty of room for safe investments and long-term savings on a smaller scale because you aren’t expecting to double your returns or anything. However, it still means that you have to choose the investments that will get you there.
Keep this information in mind and it should be easy for you to feel more confident when it comes to planning for retirement and retirement investing. You’ll want to also make sure that you have an income plan, tax plan, and an idea of what you plan to do during retirement so that you can get all of your finances in order well ahead of time. Then, when you do get to retirement, you’ll be able to sit back and relax and enjoy your well-earned break.
Resources
https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/top-10-ways-to-prepare-for-retirement.pdf
https://www.investopedia.com/articles/retirement/11/5-steps-to-retirement-plan.asp