Business & Finance Finance

What Is A Great Personal Finance Plan For Investing For Retirement?

For some retirement may seem like it is a long way off. For others retirement may be rapidly approaching. No matter how close it is, now is the time to start investing. With the stock market on the rise again, it may be years before you will have an opportunity like you can have now. So how do you get started?

You cannot save for retirement. The cost of living and inflation will always out run any small amount of interest that you might earn. Social Security will continue to be unstable with many doubts to how long it will last. Investing is the only way you can create enough money to enjoy your golden years.

Things have changed; years ago you could count on working for the same company for many years. They would offer you a great retirement plan and a gold watch. Now company retirement plans are insecure at best and nonexistent at the worst. The best scenario with a company retirement plan is if they offer a 401k with matching funds of any type. This will leverage your dividends and your return on investment. If you have this option try to contribute the maximum that they will allow you and that they will still add matching funds.

Next you have many options. The most secure is certificates of deposits and money market accounts. These are great if you can stand a lower return with little to no risk. In most cases though the time required to build up a good income will make this a bad investment.

You can invest in stocks, bonds and mutual funds. Be prepared for the long haul with these investments. Do not look at it as something you need to buy and trade on a daily basis. The average investor in the stock market that sees the biggest gains is the investor who puts 10-20% of their income in to long term stable stock for growth and dividend. Then reinvesting the dividends back in the same stock will get the best return for your money.

Better still is investing in Individual Retirement Accounts (IRA). IRA's are not taxed until you withdraw the money and will allow you in some cases a tax deduction. The best option on IRA's is a Roth IRA. You pay taxes on the money you invest and do not get an upfront tax break. When you withdraw money after you retire though, you pay no federal income tax. Roth IRA's can be open at most banking institutions.

The most important parts of investing in your retirement is to choose a plan and to invest the most money possible for the longest period of time. Most people wait until it puts a stain on their lifestyles to start and then have to suffer through tight financial times during their golden years. Make your retirement a golden time start now.

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