So you have a great job, sweet apartment and a cool partner. Next you need to find a few good ways to invest your hard-earned cash. Sure, that new car looks really great, but you want investments that appreciate in value, offer you long-term growth opportunities and fit your busy lifestyle. A few key investment decisions can have you on the path to a better financial future.
If your company offers it, take full advantage of their 401(k) retirement plan. The 401(k) plan gives you a chance to take advantage of two things: ease of investment and other people’s money. Investing in your company’s 401(k) plan takes little effort on your part. Do a little research on the plan’s offerings and select an option that suits your investment objectives. The other advantage and one of the best features of this type of 401(k) is the company match -- it’s like getting free money. If your company matches funds, no matter how much or how little they match, take advantage of it. Sure, you won’t get their contribution if you decide to leave before your fully vested, but if you hang around long enough, it’s money in the bank. Don’t forget to max out your contributions. You might have to decrease date night to once a week, but it’s worth it in the end.
Exchange Traded Funds
Exchange traded funds, or ETFs, look like index mutual funds, trade like stocks and have low transaction fees. Some ETFs allow you to buy as little as one share to start an investment account. Your best bet is to invest in a mixture of different ETFs that invest in foreign and domestic financial instruments. This diversifies your portfolio and hedges your hard earned dollars from experiencing too much lose should one sector of the market decline. (See references 1.)
Many companies offer dividend reinvestment plans (DRP) also known as Drips. Drips allow investors to invest small amounts of cash on a regular basis. For example, if you skip your daily latte for a week, you could invest that $20 in a dividend reinvestment plan. Some companies offer these plans for free. The key to investing in a Drip is consistency. It doesn’t matter how much you invest, but that you do it on a regular basis.
Certificates of Deposit
Let’s face it, everything can’t be as fast-paced as your lifestyle. CDs represent a safe, slow and steady method of investing. When you put your money in a CD it sits and it collects interest. The longer you let it sit, the more interest it collects. CDs don’t pay the highest interest rates in the world but they do provide a high-level of investment security. All banks require a minimum deposit to open a CD, but that minimum deposit ranges from $1 to $500 or more. The FDIC insures certificates of deposit up to $100,000.
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