You know about stocks, bonds, the market, but what you want to know about is investing for your retirement. You can invest for both long term and short term goals. The most popular way to do this is via a 401(k) or IRA account. Chances are you have one or more of these type of accounts.
One of the sites I like is MarketWatch from the Wall Street Journal. The great thing about this site is lots and lots of information and opinions; the bad thing about this site is lots and lots information and opinions. Never hesitate to contact a certified financial planner (CFP) to get advice to suit your circumstances.
The tips of the article I recommend is:
Park your money in the right accounts – max out your contribution limit. If you can’t right away, make a commitment to build up to the max. Go up a percentage point every time you get a raise and right before bonus time. Take advantage of other types of accounts, especially if you 100% in your employers 401(k).
Focus on asset allocation – according to the article a key study shows that 91% of a portfolio’s performance is determined by asset allocation. However, it doesn’t mention which study. Basically, don’t put all of your eggs in one basket and make sure it’s the right amount in the right baskets. If your approaching retirement your baskets should be more aggressive.
Pick the right investments – fees add up quickly, be mindful of how much you’re paying in commissions, adviser fees, etc. Total fees should be no more than 1% of your total portfolio. Diversify, again…eggs…different baskets.
What not to do – don’t try to time the market to get a bigger bang for your buck. Morningstar (I used to work there) found that people who did this end up with significantly lower returns. Don’t mess around with your asset allocation too much, it’s a long term game. Don’t assume you can make up for lost time and delay maxing out your contribution limit.
Not from the article, but something to consider when looking at all of your options. Do you understand how banks and investment firms make their money? It isn’t from the fees. They use YOUR money to invest and make a much better return than the one they make for you. In other words they turn your $100 into $1,000 for you and $10,000 for themselves. I’m not advocating against these type of accounts. Have you ever heard of a self-directed IRA? You put your money in and YOU determine in what you will invest. It doesn’t just have to be stock, mutual funds, etc. You can put a house, a horse, or other tangible asset into this account. I’ll talk more about this in a later post, but in the mean time here’s an article from MarketWatch
. Mitt Romney reportedly holds most of his wealth in self-directed IRAs.
For 25% of black women, social security is the only means of retirement income and single black women have a median wealth of $100. Retirement funds is a large component of wealth.
I’m just keeping it new.