Building a Retirement Fund that Will LastJacob Wolinsky
When you are young, the idea of putting money away for your savings can seem like a low priority. You may be struggling to make ends meet, and retirement seems far away. By beginning your savings for your nest egg while you are young, you can get by with saving less. The longer you have the benefit of compound interest and the longer your contribution has to grow, the better shape you will be in when it comes time to retire.
Lower Your Monthly Expenses
Lowering your monthly expenses frees up cash from your budget. You can then use this to invest in your retirement account. If you are already investing in your retirement plan, using this to make some unique choices in savings can pay dividends down the road. If you are not currently contributing, use this to start the process. There are a variety of ways you can free up money in your budget. Redirect that into this account. Meal planning can reduce your grocery bill as well as help you resist the impulse to eat out on hectic evenings. Most people have a few areas where they can look to cut costs and build their savings.
Boost Your Income
By making more, you will have more funds to dedicate to retirement savings. One way to do that is by taking out student loans and earning either your undergraduate or graduate degree. While you will temporarily increase your debt, higher learning positions you for a better paying career throughout the remainder of your working years.
Don’t Be Afraid of Aggressive Investments
The younger you are when you begin saving, the more aggressive you can afford to be. Within your investments, you can choose to be more or less aggressive, target your investments in particular industries, or make other choices. The decision is up to you. The best way to become more comfortable with aggressive investing is to educate yourself. Once you know more about how these investments work and what the growth looks like historically rather than short-term, you can become more comfortable with aggressive investments.
Look for Diverse Opportunities
There is no question that the majority of your money should be in a tried and true investment portfolio. Setting aside a little to invest in unique opportunities can be a great choice. Don’t use money that you are dedicated to retirement, this should be some you aren’t afraid to lose. Just because it is not part of your retirement doesn’t mean you should be careless with it. When you hear about an investment opportunity that piques your curiosity, you should research it, talk to the person in charge, ask questions, and make sure you get answers. Anyone that wants your investment without putting in the work to explain it is not someone who you want to do business with.
Thinking of your retirement is difficult. Gone are the days where there was a guarantee you would have a pension waiting on you when you reached retirement age. Regardless of how interested in investing you are, you need to spend at least a little time learning about savings strategies. There is no reason to expect you will know as much as the professionals, but you want to be comfortable with the terms used and be able to follow a discussion with your retirement adviser. You also need to know enough to know if the person you are working with is working for you or for their own benefit.