Retirement may be a long way off for you – or it might be right around the corner. No matter how near or far it is, you’ve absolutely got to start saving for it now. However, saving for retirement isn’t what it used to be with the increase in cost of living and the instability of social security. You have to invest for your retirement, as opposed to saving for it!
Let’s start by taking a look at the retirement plan offered by your company. Once upon a time, these plans were quite sound. However, after the Enron upset and all that followed, people aren’t as secure in their company retirement plans anymore. If you choose not to invest in your company’s retirement plan, you do have other options.
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Are you wasting or investing your time?
Time is the most precious value we have. Time is the greatest equalizer of human beings. If we don’t ant to admit his and to treat time with respect then we will only have to lose. It doesn’t matter if you are rich or poor, healthy or sick, you will only have 24 hours a day either way, and you should try to use them wisely.
Most of the times, we waste our time and energy worrying and thinking about things like how to win more money and how to leave a better life. Well, when we do this we usually forget about the most important think – the time to live our life in. A wise man will always tell you: “You can always make more money, but you can never buy more time”.
How many times are we aware of the ways we invest our time? And the word “investment” is the most accurate because the way we choose to spend our time is a true investment in ourselves and our own lives. And you will never find the true value of time in the way people around you act and talk.
People usually spend time for hours in front of the TV, or they spent a lot of time browsing the net with no purpose whatsoever. Some of us even try to steal more time with the cost of many healthy sleep hours. If you wake up earlier in the morning just to smoke a few cigarettes and to fill your self up with coffee so you won’t feel sleepy it doesn’t mean you won quality time. Also, inefficient work or spending more hours at work that you have to is equal to borrowing your life to someone else.
Everyone always says things like: “I’m just counting the hours to go home” or “I wish it were Friday” on a Monday and so on. These are just signs that those persons usually waste their time. If you organize our time efficiently and if you choose to do only activities that motivate us somehow, then we will find ourselves able to work everyday without feeling tired or sleepy.
At any moment that you just let time pass by you think about what Romans said:”Carpe Diem” – it has a great meaning for our everyday life, it means “Live the day” or better said “Organize your day”. Make more time to analyze the way you invest or waste your time. And never forget that you can’t tell anything about tomorrow so “Carpe Diem!”
First, you can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts. You do not have to state to anybody that the returns on these investments are to be used for retirement. Just simply let your money grow overtime, and when certain investments reach their maturity, reinvest them and continue to let your money grow.
You can also open an Individual Retirement Account (IRA). IRA’s are quite popular because the money is not taxed until you withdraw the funds. You may also be able to deduct your IRA contributions from the taxes that you owe. An IRA can be opened at most banks. A ROTH IRA is a newer type of retirement account. With a Roth, you pay taxes on the money that you are investing in your account, but when you cash out, no federal taxes are owed. Roth IRA’s can also be opened at a financial institution.
Another popular type of retirement account is the 401(k). 401(k’s) are typically offered through employers, but you may be able to open a 401(k) on your own. You should speak with a financial planner or accountant to help you with this. The Keogh plan is another type of IRA that is suitable for self employed people. Self-employed small business owners may also be interested in Simplified Employee Pension Plans (SEP). This is another type of Keogh plan that people typically find easier to administer than a regular Keogh plan.
Whichever retirement investment you choose, just make sure you choose one! Again, do not depend on social security, company retirement plans, or even an inheritance that may or may not come through! Take care of your financial future by investing in it today.
Investing Basics – What Are Your Investment Goals
When it comes to investing, many first time investors want to jump right in with both feet. Unfortunately, very few of those investors are successful. Investing in anything requires some degree of skill. It is important to remember that few investments are a sure thing – there is the risk of losing your money!
Before you jump right in, it is better to not only find out more about investing and how it all works, but also to determine what your goals are. What do you hope to achieve with your investments? Will you be funding a college education? Buying a home? Retiring? Before you invest a single penny, really think about what you hope to achieve with that investment. Knowing what your goal is will help you make smarter investment decisions along the way!
Too often, people invest money with dreams of becoming rich overnight. This is possible – but it is also rare. It is usually a very bad idea to start investing with hopes of becoming rich overnight. It is safer to invest your money in such a way that it will grow slowly over time, and be used for retirement or a child’s education. However, if your investment goal is to get rich quick, you should learn as much about high-yield, short term investing as you possibly can before you invest.
You should strongly consider talking to a financial planner before making any investments. Your financial planner can help you determine what type of investing you must do to reach the financial goals that you have set. He or she can give you realistic information as to what kind of returns you can expect and how long it will take to reach your specific goals.
Again, remember that investing requires more than calling a broker and telling them that you want to buy stocks or bonds. It takes a certain amount of research and knowledge about the market if you hope to invest successfully.
A Quick Guide To Understanding Your Individual Retirement Account
It’s never too early to begin preparing for your retirement and one of the best ways to prepare is to set up an Individual Retirement Account (often referred to as an IRA).
The purpose of an IRA is to serve as a personal tax-qualified retirement savings plan. Anyone who works, whether as an employee or self-employed, can set aside a set amount in an IRA, with the earnings on these investments tax-deferred until the date of distribution. In addition, certain individuals are permitted to deduct all or part of their contributions to the IRA. Plus, as of 1998, certain individuals can also set up Roth IRAs, to which contributions are not deductible, but from which withdrawals at retirement won’t be taxed.
It doesn’t take much to set up an IRA. The trustee (or custodian) can be a bank, mutual fund, brokerage house or other financial institution. You cannot be your own trustee. An IRA can be established and a contribution made after year-end, no later than the due date for filing the income tax return for that year, not including extensions. This generally means that you have until April 15th of the following year to make the contribution and deduct it on your tax return.
The most you can contribute to an IRA in any single year (as of 2006) is the smaller of $4,000 or an amount equal to the compensation includible in income for the year. Those 50 years old and above will also be allowed to make additional $1,000 catch-up contributions to an IRA each year to help them save more for retirement.
The same limit applies even if you have more than one IRA, or more than one type of IRA. When both you and your spouse have compensation, you can each contribute the maximum, which means $8,000 total ($10,000 if you are both 50 or over). In 2008, IRA contribution limits will be raised to $5,000, while the catch up contribution for those 50 years old and above will remain at $1,000.
You do not have to contribute the full amount allowed every year. You may skip a year or even several years. You may resume making contributions in any subsequent year, but you cannot add additional funds to make up for those years when no contribution was made.
Contributions must be from compensation. This can be from wages, salaries, commissions and other sources of earned income. Contributions do not include such things as deferred compensations, retirement payments, or portfolio income from interest or dividends.
You can contribute more than the allowable amount, however, a 6 percent excise tax penalty will be assessed.
No contributions may be made to an inherited IRA, in a form other than cash, or during or after the year in which the individual reaches age 70.5.
You must begin taking distributions from an IRA no later than April 1st of the year following the year in which you reach age 70.5, or the year in which you retire, whichever is later.
This is a quick and general overview of IRAs. The rules are slightly different for Roth IRAs, which have their own contribution and distribution limitations. Before setting up an IRA, take the time to talk to your banker, accountant, or financial advisor to make sure you have a firm grasp on your options and set up the IRA which best serves your personal needs.
Investing Mistakes to Avoid
Along the way, you may make a few investing mistakes, however there are big mistakes that you absolutely must avoid if you are to be a successful investor. For instance, the biggest investing mistake that you could ever make is to not invest at all, or to put off investing until later. Make your money work for you – even if all you can spare is $20 a week to invest!
While not investing at all or putting off investing until later are big mistakes, investing before you are in the financial position to do so is another big mistake. Get your current financial situation in order first, and then start investing. Get your credit cleaned up, pay off high interest loans and credit cards, and put at least three months of living expenses in savings. Once this is done, you are ready to start letting your money work for you.
Don’t invest to get rich quick. That is the riskiest type of investing that there is, and you will more than likely lose. If it was easy, everyone would be doing it! Instead, invest for the long term, and have the patience to weather the storms and allow your money to grow. Only invest for the short term when you know you will need the money in a short amount of time, and then stick with safe investments, such as certificates of deposit.
Don’t put all of your eggs into one basket. Scatter it around various types of investments for the best returns. Also, don’t move your money around too much. Let it ride. Pick your investments carefully, invest your money, and allow it to grow – don’t panic if the stock drops a few dollars. If the stock is a stable stock, it will go back up.
A common mistake that a lot of people make is thinking that their investments in collectibles will really pay off. Again, if this were true, everyone would do it. Don’t count on your Coke collection or your book collection to pay for your retirement years! Count on investments made with cold hard cash instead.