Investing in a Retirement Plan That Fits You


Too many individuals approach their golden years without being properly prepared, and there is unfortunately nothing that can be done if the necessary steps are not taken in time. One of the most common excuses is that the investor simply did not know what to invest in, and the result was procrastination due to fear. The good news is that help is available and it does not have to be a daunting task. The following guide can serve as a valuable resource and allow an individual to set aside their worries and take the steps needed to adequately prepare for the future.

It is necessary for consumers to understand that not all retirement plans are created equal, and there are a variety of different choices to select from. The most popular type of retirement account is a 401k, and many employees are able to invest in their company’s program. If a 401k is not an option, there will be an alternative discussed later in the article. Whether a company is going to match the contributions or not, an employee can have money taken out of their paycheck prior to taxes. In other words, saving in a 401k is accomplished with funds that have not been taxes, and the growth will be tax deferred. Deciding on the exact amount of the contribution can be difficult, but it should never be less than the level at which the company is willing to match. The actual investments that should be chosen will be discussed later.

A person that cannot invest in a 401k is certainly not left without a retirement plan option, and even those with 401k’s can take advantage of an IRA, or Individual Retirement Account. The best way to view an IRA is to think of an umbrella, and any number of different types of investments can be covered under this type of account. Any working individual can contribute money either before or after taxes, and the difference will make it either a Traditional IRA or a ROTH IRA. There are many benefits and drawbacks of each type of account, and an individual should contact a financial advisor or other professional for help determining exactly which one will be the most suitable.

Selecting investments is an important part of the process associated with any type of retirement plan, and individuals should keep the following in mind. Stocks are often seen as a more risky investment than other options, but the growth potential is certainly the highest. If an individual is relatively young and has a number of years left before they retire, the best course of action is to design a portfolio that is geared towards growth. Investment losses will have time to return to their initial value and experience growth, and young people should not be worried about their investments on a day to day basis. Mutual funds are a collection of different stocks, and there are several options within this arena that will allow an individual to choose between an aggressive plan or a conservative one. Money market funds and bonds provide a very safe investment that can be the best choice for individuals approaching retirement. Annuities are an insurance product that are among the safest investments, and the gains will often be less but could be appropriate for older individuals as well.

A consumer basically needs to make choices that are the most comfortable for them, but they should never be afraid to solicit advice from a professional that can provide more insight. The most critical mistake is not saving anything at all, and even the most aggressive plan that occasionally loses money on a day to day basis will have time to grow long term. Investing in a retirement plan is never a bad idea, and it truly is not difficult to set up automatic deposits or have the money drawn out of a paycheck. Any investment choice is better than nothing at all.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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