If you've recently gotten hitched, you and your spouse may have raked in some money as wedding gifts. To make the funds go as far as possible and, ideally, grow, you should consider investing a portion of it. Investing may seem daunting at first, but doing proper research and getting on the same page about your financial goals can help.
Before deciding how to invest your money, first consider your financial goals for the future, which can affect your investment methods. For example, discuss how soon you need access to the funds. If you hope to buy a car, you'll need more liquid funds and a shorter-term investment method, such as a Certificate of Deposit (CD). On the other hand, if you are planning for longer-term savings, you can select an investment venue such as a retirement account or stocks. In any case, decide ahead of time how much you're looking to invest as well as the purpose.
Retirement may seem like a long way off, but invest in your future now for dividends in the long run. Investing your funds in an account such as an IRA (Individual Retirement Account) or Roth IRA is a wise move. The main difference between the two accounts has to do with when you'll be taxed on your contributions. With a Roth, you'll get taxed now, but retirement distributions are free of tax. With a regular IRA, you'll pay taxes later, but earn a tax deduction now. Additionally, if your employer offers a plan, with or without matching contributions, take advantage of that opportunity to build your retirement funds. In addition to securing your future, sometimes you can borrow from these accounts for a major purchase (such as a home) or in case of serious need.
The advantage of starting young as an investor in the stock market is that you'll be able to weather the highs and lows of the market; this has historically been one of the best ways to increase your invested dollars. You can consult others with stock knowledge before buying stocks, but you might decide to go it alone. If you're new to the market, do research and stick with what is familiar. For example, bigger companies and brands are a safer bet than small start-ups. You'll also feel more comfortable following the stocks if you know what the company is all about.
Certificate of Deposits (CDs) can get you a higher rate of return than a traditional savings account. It's a good option if you can put aside a chunk on money for a period of time, whether it be $500 or $5,000. The rule of thumb is the larger the sum and the longer the investment period, the higher the yield. You don't stand to earn as much as in other markets, but CDs are a low-risk option if you know you'll need the money in the next few years.
Julia Forneris has been a writer and editor since 2002. Her work has appeared in economics magazines such as "Region Focus" and on various websites. The editor of Scratch That! Editorial, Forneris holds a Master of Arts in literature from Virginia Commonwealth University.