Smart investing tips for the new year and beyond.
What is a Good IRA Investment?
A good IRA investment might be a target date exchange-traded fund (ETF). They’re called target date funds because you choose one that’s closest to the year when you plan to retire or access the money. For example, if you’re 35 years old and want to retire in 2040, you could choose the iShares S&P Target Date 2040 Index Fund which trades as symbol TZV. Target date funds are very convenient for many investors because they automatically rebalance on a periodic basis to achieve growth in the early years and capital preservation as you approach retirement.
Recommendation #3: Invest in a Taxable Brokerage Account
The third best investment option is a taxable brokerage account. You can open one with brokerage companies or online sites like the ones I previously mentioned. Consider making taxable investments only after you’ve maxed out contributions to your workplace plan or IRA.
Quick and Dirty Tip: Invest Early
The most important point to take away from this article is that you should start investing early and consistently. Investing less money sooner, rather than more money later, is the secret to investment success. Investors who start late usually have to make huge financial sacrifices to accumulate enough money to reach their goals.
Invest More This Year
If you have a workplace plan, consider increasing your contribution by one percent. Ask your benefits administrator for the form to sign up or to increase your current contribution. If your best investment option is an IRA, get it set up for a recurring electronic deposit from another account. Find the grit and determination to always invest at least 10% of your income. I want to challenge you to stay ahead of the financial game by investing more this year.
Again, this post is the third in our five-part series about taking charge of your finances in 2010. Each article in the series is about a pillar of personal finance—setting goals, saving, investing, being properly insured, and reducing your taxes. Please click on the links to head over to the other episodes.
And, please, get more advice on investing with my Quick and Dirty Tips compatriot, The Winning Investor.
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