Investing is not a mysterious science and is something that everyone should be doing. Simply placing your money into a bank savings account is not going to generate sufficient returns for most needs. Thankfully, there are many options for investing, and you can easily choose one that is right for you.
Investing in your retirement is not so much a type of investment as it is a strategy of investing for the long-term. There are many choices to consider when planning your retirement investment strategy. You can have a personal IRA or Roth IRA. An IRA is funded with before-tax dollars and a Roth IRA is funded with after-tax dollars. If your employer offers a 401k or Roth 401k plan, then you can contribute a much higher limit each year than you can to an IRA. You may also receive an employer match as a percentage of your contributions to the 401k.
There are also various insurance vehicles that have terms of maturation. These insurance policies earn interest and can be used for loans and other withdrawals. Depending on the type of term, life insurance can be an investment as well as insurance.
Real estate is always a popular choice as an investment option. It is a tangible asset, and it can earn money through rents while it is increasing in value. However, you may be hesitant about investing in real estate because of the recent housing bubble crash in 2008. Rest assured, the housing market has rebounded strongly, and there are many more legal protections in place as a result of the crash. If you have been wondering when to take that step and invest, know that now is the best time to invest in real estate.
Investing in bonds is considered one of the safest ways to invest. When you buy a bond, you are essentially making a loan to that entity. You purchase a bond for a set amount of time at a set interest rate. You will receive the interest as income each year until the maturity term is up, at which date you receive back the original principal. If you have to sell the bond before maturity, then you can have either a gain or a loss for the bond, depending on the market.
The safest bonds to purchase are typically US-backed securities, mortgage-backed securities, rated corporate bonds and rated municipal securities. Because high interest rates usually mean lower bond rates, it is best to treat bonds as a long-term investment not to be used for cashing out early.
No matter what type of investments you have, you can use them in any combination to meet your particular financial needs. Everyone’s situation is different, and you should carefully plan your goals and get financial advice. Today is the time to consider investing for the future. Contact us and schedule an appointment to talk about your finances today!