It's smart to invest your money so that you can have a large nest egg at retirement and the sooner you start, the better. Unfortunately, making the wrong investment choices could cause to lose, rather than make, money. You need to carefully manage your risk, so that your money is relatively safe, but still growing at an acceptable rate.
Employer Sponsored Programs
If you work for a company that offers an employer-sponsored retirement plan, such as a 401K or a 403B, investing in that is a no-brainer. Your company is going to offer a plan through a reputable financial institution and will have someone managing your accounts for you. Your contributions are automatic and tax-free. Furthermore, your employer probably matches your contribution, up to a certain amount. That's free money and you should never turn down free money.
Diversifying Your Portfolio
The key to investing your money safely is to diversity your investment portfolio. When you do this, you won't take a big hit if a single company goes downhill. Purchase mutual funds, which spread the investment over a number of companies. Also vary your investments by adding stocks and bonds to your portfolio. Most financial institutions have pre-selected programs in high- medium- and low-risk categories to do this automatically for you. If you're investing in your company's 401K program, you simply have to select from the available plans on the application. If you're investing on your own, you can make the purchase through your investment company's online portal; simply select the mutual fund, stock or bond and specify how many shares or how much money you want to invest.
The S&P 500
The Standard & Poor's 500 is a mutual fund that contains the stocks of 500 of the country's best companies. Though you should always be aware that past performance doesn't guarantee future success, the S&P 500 has traditionally followed the path of the market. This makes it a relatively safe investment for newbie investors. Look for the S&P 500 fund through your investment company. If the company doesn't offer this as an option, it will have an alternative fund that acts in a similar manner. The cost of this fund varies along with the stock market, but you should prepare to have more than $1,000 to purchase a share.
Investing in Yourself
Investing doesn't have to be all about stocks and bonds. You can also make an investment in yourself. For example, investing money to get an MBA or to rent an office for your freelancing business can increase your earning potential down the line. The more money you are making, the more you'll be able to put into more traditional investments. Consider ways to improve your own financial outlook and invest the money to help you do so.
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