Retirement Investing – 6 Tips for Success
It seems so easy… buy low, sell high, and spend your Golden years in a hammock without a care in the world. Unfortunately, though, retirement investing is not nearly that easy!
If you want to get the most out of your investments so that you don’t have to work until you’re 100, follow these 6 tips:
1. Make sure that your investments match your goals
If you want to retire in a couple of years, your investment plan is going to be very different from someone who has 20 years to go before retirement. If you’re 60 and looking at a bunch of long-term investment strategies, you’re making a big mistake. Or, conversely, if you’re 30 and looking at a bunch of short-term investment opportunities, you’re taking risks that you don’t have to take.
2. Start early
When it comes to retirement investing, it is never too late to start! Even if you are 25, you should be thinking ahead to retirement. The money you put into a 401K or IRA now may not seem like much, but it will come in awfully handy in a few decades. The last thing you want is to hit age 65 or 70 and realize that you can’t afford to retire.
But it’s not just good enough to start early. Once you start a retirement investment plan, you need to keep it up. Make sure that you make regular investments and contributions. A portfolio that sits untouched for months or years on end can cost you a fortune!
3. Estimate carefully
Before you can begin any type of retirement investment plan, you have to figure out how much money you will need. That means asking yourself a few questions:
- How much money will you spend each month?
- How much money will you have to pay in taxes?
- Do you have expensive hobbies – like travelling – that you plan on keeping up after you retire?
- Will you have any guaranteed sources of income – like a company pension – to fall back on? If so, how much will it pay you every month?
Once you figure out the answers to those questions, you can figure out a rough estimate of how much you’ll need in savings to pay for everything. Then, you can move forward with an investment plan.
4. Don’t take money out early
All of that money sitting your IRA may seem tempting when the transmission on your car goes out, or when the kids need braces. However, by taking your money out of your portfolio early, you are costing yourself big bucks. For example, in an IRA, any withdrawals before you turn 59 ½ are considered “early withdrawals” – meaning you will have to pay a 10% penalty on top of the state and federal income taxes that you may already owe.
If you really want your retirement investing plan to work, put your money in, and keep it there!
5. Don’t fall for sales pitches
That lunch and seminar on retirement investing may seem great, but is it really a wealth of information or just a salesman looking for a quick commission?
Before you buy any products, pay for tips, or invest in advice, do your homework. Make sure you’ve found something with substance – not just style.
6. Once you have a good plan, stick to it
Lots of people fail at retirement investing because they spend years going from one shiny object to another. Instead of creating a solid plan and sticking to it, they search for short-term opportunities that seem great – but really aren’t, in the end.
If you have a solid retirement plan, it will be able to weather the ups and downs that you will inevitably experience over the years. Depending on how old you are right now, you may have decades to reach your retirement goals. You don’t need “get rich quick” schemes.
To learn more, go to investing for beginners.