Whether you are just graduating from college or you have been working in your chosen field for some time, it is never too late to begin investing for your future and your retirement. Here are three ways you can invest your income to save for your retirement.
Open a Brokerage Account
A good way to start investing is to talk to a financial planner and set up a brokerage account. A financial planner who offers brokerage services can help you determine how much of a goal you want to contribute to your brokerage account and which stocks or mutual funds are a good choice for you to invest with. Most financial planners can offer a variety of different mutual funds their brokerage has created for clients to invest with.
Mutual funds are a good way to diversify your money because they are not tied to one single stock, but instead are created from a mixture of different stocks. This diversification helps prevent huge losses to you if, for example, the one stock you were to be invested with falls in price. And you can choose which ones you want to invest with, depending on the risk of each mutual fund. Some mutual funds are aggressive with a high amount of risk and can have large gains but also large losses, and less aggressive mutual funds have much less risk.
Contribute to a 401K
If you work at a company that provides a 401k for its employees, you can contribute a percentage of your income each paycheck to it. This allows you to contribute money to your retirement automatically from your check so you are less likely to miss the money. And because it is a 401k contribution, it is taken from your paycheck tax-free.
Just as with a brokerage account, you can choose which mutual funds offered through your work that you want to invest your paycheck contributions to. Some companies will match your contribution when you first begin to contribute or after a certain time frame of working there. If you choose to leave the company, you can roll your 401k into an IRA account to continue the growth of your investment.
Invest in Real Estate
Real estate is another good way to invest your money for your retirement. Buying a single-family rental home can help you diversity your investments and provide quality housing to your community.
When you buy a rental property, you benefit from many tax deductions for your income. You also receive rent from your tenant, which helps pay for the mortgage and other expenses on the property. Then, when you sell the property you receive the capital gains from the sale, which you can put toward the purchase of another rental property.Share
21 February 2018
After we bought a house, I started realizing that we were going to need to learn to save a little money. We had become pretty laid back about spending because we were so accustomed to making so much extra each month, but with a mortgage, we found ourselves running out of money on a regular basis. I decided to get real about our finances, which is why I set up a financial plan to stick with year round. You wouldn't believe how much of a difference that simple plan made. We went from scraping together money to head to the grocery store to sticking with a rock solid budget.