Y dollar you contribute up to a specified percentage of your salary Thats free money euivalent to an immediate % or % return Theres nowhere you can beat this In fact if your company offers such a fabulous matching deal you should probably contribute to the plan even before paying off your high rate debt In addition the federal government allows the money to grow tax free Click here for an explanation of how this saves you evenmoney It may seem crazy to lock up your money in a retirement savings plan Ignore that feeling While its true that you wont be able to withdraw your money from a k until you reach age without facing a penalty the benefits of matching and tax advantaged growth are so huge that this is still the best deal out there If you switch jobs you may be able to move your k money into your new employers plan or transfer it into something called an IRA see below Also most plans allow employees to borrow against their retirement savings in an emergency As of the maximum you can contribute annually is which may bethan you can manage but try to at least contribute the maximum amount for which youre eligible to receive matching funds If you dont work for an employer who offers a k or a similar retirement plan you should start investing in an individual retirement account IRA The most you can contribute to an IRA as of is annually if at all possible contribute the maximum amount every year IRAs dont provide matching contributions so putting money in one is somewhat less pressing than enrolling in a company sponsored plan that offers a match That said certain IRAs known as Roth IRAs do offer one special benefit Theres no penalty for withdrawing the money you contribute to them at any time Youre not allowed to freely withdraw the interest you earned on the money you contributed until after you turn Note that theres also something called a Roth k click here Bottom line Max out your companys k up to the matching limit if you have one If thats not an option go with an IRA For all your uestions on tax favored retirement savings plans see Chapter Build an emergency cushion using an automatic savings plan If you find it nearly impossible to save money youre not alone But once youve gotten rid of your high rate debt taken care of health insurance and started saving for retirement its time to begin stashing away three to six months worth of living expenses Your safest choice is to have money automatically withdrawn from each paycheck and funneled into an old school savings account Thats a relatively painless way to force yourself to accumulate a cushion The downside to all that safety Interest rates on savings accounts are generally low though Internet only banks tend to offer slightly better rates At various times a type of investment called a money market fund aka a money fund which is considered almost as safe as a traditional bank savings account has tended to pay higher interest rates To comparison shop for the best rates on money funds check out iMoneyNet and Cranedata You can set up an automatic transfer from your checking account once or twice a month so its as easy as saving in a bank savings account Foron money market funds see Chapter No matter what type of automatic savings plan you choose focus on your goal of accumulating that emergency cushion To figure out how much you need to save use the worksheet Figure Consider investing in stock and bond funds Once you have your savings cushion in a low risk bank account or money market fund its time to getaggressive with your investments The advantage of stocks and bonds is that theyve tended to earnfor investors over long periods of time yielding higher returns that stay ahead of inflation For a discussion of inflation and why you need to worry about it see Chapter The downside of stocks and bonds is that theyre riskier than savings accounts or money market funds Translation You can lose money by investing in them So for money that you absolutely need to be theresay youve set it aside for a down payment on a home in a couple of yearsdont invest it in stocks or bonds Only you can decide how much risk youre willing to accept but theres an old rule of thumb that you subtract your age from and thats the percentage of your investment money that should be in stocks the rest should be in bonds and money market funds Like any generalization this one has to be tailored to your specific situation but it can be a useful starting point If you do decide to put some of your money in stocks and bonds invest it in funds a type of investment that pools together the money of thousands of people Here are some general rules Avoid investing in funds with a load which is the commission that some companies charge each time you put money into or take money out of a fund They dont perform any better on average than no load funds so theres no point in paying extra for them I also recommend that you consider only funds with low expenses the annual fees charged by the fund that can take a huge bite out of your investment returns if youre not careful Although stock funds are considered somewhat riskier than bond funds see below they have also performed somewhat better over long periods of time If you decide to invest in a stock fund I like low cost stock index funds and exchange traded funds ETFs To find out exactly what these are youll need to read Chapter Two companies that offer a large selection of low cost index funds are Charles Schwab Schwab and Vanguard Vanguard Youll generally need to commit to to open an account if you want to invest in their stock index funds If you dont have a lot of money for about you can start investing in a Vanguard ETF Click here fordetails Holding bonds as well as stocks will help to diversify your investments reducing your overall risk Vanguard also offers low cost bond funds While there are several different types of bond funds a reasonable approach would be to choose a bond index fund that invests in government securities or highly rated corporations To learnabout stocks bonds index funds ETFs.
financial free life ebok personal download finance book your ebok twenties kindle thirties epub Get a ebok Financial Life pdf Financial Life Personal Finance kindle a Financial Life kindle a Financial Life Personal Finance epub Get a Financial Life Personal Finance In Your Twenties and Thirties ePUBY dollar you contribute up to a specified percentage of your salary Thats free money euivalent to an immediate % or % return Theres nowhere you can beat this In fact if your company offers such a fabulous matching deal you should probably contribute to the plan even before paying off your high rate debt In addition the federal government allows the money to grow tax free Click here for an explanation of how this saves you evenmoney It may seem crazy to lock up your money in a retirement savings plan Ignore that feeling While its true that you wont be able to withdraw your money from a k until you reach age without facing a penalty the benefits of matching and tax advantaged growth are so huge that this is still the best deal out there If you switch jobs you may be able to move your k money into your new employers plan or transfer it into something called an IRA see below Also most plans allow employees to borrow against their retirement savings in an emergency As of the maximum you can contribute annually is which may bethan you can manage but try to at least contribute the maximum amount for which youre eligible to receive matching funds If you dont work for an employer who offers a k or a similar retirement plan you should start investing in an individual retirement account IRA The most you can contribute to an IRA as of is annually if at all possible contribute the maximum amount every year IRAs dont provide matching contributions so putting money in one is somewhat less pressing than enrolling in a company sponsored plan that offers a match That said certain IRAs known as Roth IRAs do offer one special benefit Theres no penalty for withdrawing the money you contribute to them at any time Youre not allowed to freely withdraw the interest you earned on the money you contributed until after you turn Note that theres also something called a Roth k click here Bottom line Max out your companys k up to the matching limit if you have one If thats not an option go with an IRA For all your uestions on tax favored retirement savings plans see Chapter Build an emergency cushion using an automatic savings plan If you find it nearly impossible to save money youre not alone But once youve gotten rid of your high rate debt taken care of health insurance and started saving for retirement its time to begin stashing away three to six months worth of living expenses Your safest choice is to have money automatically withdrawn from each paycheck and funneled into an old school savings account Thats a relatively painless way to force yourself to accumulate a cushion The downside to all that safety Interest rates on savings accounts are generally low though Internet only banks tend to offer slightly better rates At various times a type of investment called a money market fund aka a money fund which is considered almost as safe as a traditional bank savings account has tended to pay higher interest rates To comparison shop for the best rates on money funds check out iMoneyNet and Cranedata You can set up an automatic transfer from your checking account once or twice a month so its as easy as saving in a bank savings account Foron money market funds see Chapter No matter what type of automatic savings plan you choose focus on your goal of accumulating that emergency cushion To figure out how much you need to save use the worksheet Figure Consider investing in stock and bond funds Once you have your savings cushion in a low risk bank account or money market fund its time to getaggressive with your investments The advantage of stocks and bonds is that theyve tended to earnfor investors over long periods of time yielding higher returns that stay ahead of inflation For a discussion of inflation and why you need to worry about it see Chapter The downside of stocks and bonds is that theyre riskier than savings accounts or money market funds Translation You can lose money by investing in them So for money that you absolutely need to be theresay youve set it aside for a down payment on a home in a couple of yearsdont invest it in stocks or bonds Only you can decide how much risk youre willing to accept but theres an old rule of thumb that you subtract your age from and thats the percentage of your investment money that should be in stocks the rest should be in bonds and money market funds Like any generalization this one has to be tailored to your specific situation but it can be a useful starting point If you do decide to put some of your money in stocks and bonds invest it in funds a type of investment that pools together the money of thousands of people Here are some general rules Avoid investing in funds with a load which is the commission that some companies charge each time you put money into or take money out of a fund They dont perform any better on average than no load funds so theres no point in paying extra for them I also recommend that you consider only funds with low expenses the annual fees charged by the fund that can take a huge bite out of your investment returns if youre not careful Although stock funds are considered somewhat riskier than bond funds see below they have also performed somewhat better over long periods of time If you decide to invest in a stock fund I like low cost stock index funds and exchange traded funds ETFs To find out exactly what these are youll need to read Chapter Two companies that offer a large selection of low cost index funds are Charles Schwab Schwab and Vanguard Vanguard Youll generally need to commit to to open an account if you want to invest in their stock index funds If you dont have a lot of money for about you can start investing in a Vanguard ETF Click here fordetails Holding bonds as well as stocks will help to diversify your investments reducing your overall risk Vanguard also offers low cost bond funds While there are several different types of bond funds a reasonable approach would be to choose a bond index fund that invests in government securities or highly rated corporations To learnabout stocks bonds index funds ETFs.
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