Everybody must prepare for the future, both in terms of their own career and their own finances. Figuring out how to handle your money and to accumulate more money over your life is vital to having a comfortable and safe financial life and easy retirement. Have a look at seven simple investments everyone should be making.
1. Investment Retirement Account (IRA)
Both traditional IRAs and Roth IRAs offer you to accumulate tax advantageous income over the course of your working career. You can set up a retirement account through your employer or create an independent one. Even if you only have a small amount to put in each year, it will help you greatly down the road. Just be sure to hold off on touching the money until you retire.
2. Building Credit
The best way to build credit is to pay off loans and credit card bills quickly. Do not default on payments as this can affect your ability to make large purchases, such as a house or car. If your credit score falls apart, there are many companies that can help. Places like creditrepair.com offer you the chance to restore your credit if it has been damaged.
3. Mix up Your Investments
By diversifying your assets, you ensure that you don’t lose it all at once. Losses in one part of your portfolio may be offset by gains in another. Mixing up your investments with stocks, bonds, cash, and other things like metals typically guarantees you a steady flow of positive income over the course of time, even when certain areas of the market are down.
4. Have an Emergency Fund
Usually it is recommended to have about half a year’s worth of living expenses in savings just in case you get laid off or something else bad happens. This gives you time to recover in a way that is best for you long term.
5. Get Rid of High Interest Debt
While paying off low interest debt slowly is okay, it’s best to erase high interest debt as fast as you can. Credit card bills notoriously carry high interest rates, so paying off those on time is always highly advised. If you have high interest debt now, focus on fixing that issue first before you begin investing in other things.
6. Diversify Your Income
Even if you have a steady nine to five job, it’s best to always have a supplemental source of cash that can help you if that job disappears one day. If you don’t have something on the side, consider finding one or saving more of your income now. You’ll appreciate it if disaster strikes.
7. Build Equity
You need to think about owning something. Having property or a stake in a business offers you opportunities to create income for yourself and not others. Even if you are working at a company, consider one day about creating your own business or becoming a partner at your current company.
In an ideal world, following these seven steps would ensure you success. However, everybody and every situation is different. Be sure to analyze your own situation and what you need and want. Then make an investment you feel good about.
Category: Financial Planning