No matter how old you are, retirement is likely to be approaching in the future, and not being financially prepared for it will expose you to a lot of stress and trouble. Granted, if he’s still in his 20s or her 30s, this isn’t an emergency, but a young person who starts saving for early retirement can not only retire comfortably, but possibly retire early. there is.
Here are three great ways to invest in your retirement, regardless of your age.
1. Invest regularly and effectively
Check out the chart below to see what you can achieve if you save and invest regularly and invest effectively.
Calculations by the author.
There is no optimal amount to invest at any given time. We all have different incomes and different ability to save money. The table above shows how much you can accumulate by investing $7,000 or $15,000 per year ($583 or $1,250 per month, respectively), but it is possible to invest much more or much less. There is a nature.
Also, the amount you can save and invest can change over time as your income changes. Aim to invest fairly aggressively. This is because the first money invested is the strongest money and has the longest growing period.
To invest effectively, aim to meet or exceed your overall investment. Average Annual Stock Market Return with your long term money. (While the stock market grows over the long term, it can fluctuate from year to year, so short-term money should not be invested in stocks.) Over the years, the stock market has averaged about 10%, It may even exceed that. Decrease in the particular year you invested. (Thus, the table above assumes an annual growth rate of 8%.)
One or more ways to get a profit that approximates the stock market return Wide market index fund with low fees,Such SPDR S&P 500 ETF (spy), Vanguard Total Stock Market ETF (VTI), and Vanguard Total World Stock ETF (VT). Respectively, they would invest in his 80% of the US market, the entire US market, or most of the world’s stock markets.
Consider adding it if you want to beat the market. growth stock But keep in mind that after that you’ll have to catch up with them. Index funds require little attention.
2. Invest with a tax-advantaged account
Another great way to invest for retirement is to invest within a tax-advantaged account, such as: IRAs and 401(k)s. Both mainly he is of two kinds – Tradition and Roth.
Traditional accounts receive pre-tax contributions, resulting in less taxable income and less tax in the year of contribution. A Roth account, on the other hand, is funded with after-tax money, so your taxable income and tax bill remain the same. But here’s what’s great about the Roth account: All post-retirement withdrawals can be free if you play by the rules. No tax. It can be hard.
For example, imagine retiring with a Roth IRA account worth $500,000. You could spend all your dollars on retirement without paying any taxes. However, traditional accounts make more sense to some people, so read them carefully before focusing on Ross’ account.
Many 401(k) plans allow you to invest some or all of your funds in an index fund, so check to see if that’s possible. If your employer contributes by contribution, aim to contribute enough to maximize that contribution. free money. And don’t forget to try to increase your donation each year, if possible.
3. Invest patiently
The final best way to invest for your old age may be simple, but it’s actually the most important. It’s about waiting patiently. Remember that impressive table of potential returns at the top? It will only come true if you keep doing it for years.
So don’t be discouraged and stop investing. If you think that may be the case, read more To increase your confidence in your plans, work on your investments. If you really work hard, you can build a very comfortable and financially secure future.
Serena Maranjan does not have any positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends the Vanguard Index Fund (the Vanguard Total Stock Market ETF). The Motley Fool has Disclosure policy.
The Motley Fool is a USA TODAY content partner providing financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
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