If you want to start putting money aside, but you’re oblivious to the stock market and you have no idea how a mutual fund works, don’t feel embarrassed. Many people throughout the country suffer from the same problem, and unless you’re employed as a financial advisor (or just really love to study money), you’re in good company.
There are simple ways to invest without breaking a sweat, and if you follow a few simple guidelines, you’ll be on your way to a sweet investment portfolio before you know it. Let’s take a look at an example investment plan to get you started.
First, Max Out Retirement
The single best thing you can do for yourself investment-wise is to sink the most money into your retirement plan that’s allowed by law. If you have a 401k and you’re not investing the maximum amount to meet your company match, then you’re leaving a ton of free money on the table.
Conversely, if you don’t have a company plan or you are self-employed, then get a Roth IRA or UTMA accounts and start socking money away. Put in enough each month to meet your annual limit, and do it every year to ensure you get the maximum retirement savings that you can swing.
Next, Beef Up Your Mortgage Payments
Investing in your abode is a great way to add a safety net for your family. Most people consider retirement a tripod – Social Security, your retirement savings, and your home. We all know that Social Security may not be around when we get old, so we’re not holding our breath. That’s why investing in your home and retirement is the most important way to secure your future.
At the time of this writing, mortgage interest rates are the lowest they’ve been since long-term mortgages were first established in the 1950s. This means that now is the perfect time to refinance and lock in a fixed-rate mortgage at a historically low amount. Then, once you’ve adjusted that interest, add just one extra payment to the principal every year. This is a great investment that will save you boatloads of cash as years wear on.
Then, Save for College
If your kids are depending on you to fund their education, investing in their future is a fantastic way to help. Every US state has some form of college savings plan, and most offer tax savings as a perk for contributing to one. Open a plan for your little ones, and invest in their future regularly.
Finally, Invest in Other Stuff
Once you’ve locked down your three primary investment goals for your life, you can sink your leftover money into different investment vehicles. Diversification is still the name of the game, and spreading your eggs over many different baskets is your best bet for maximizing returns. Find out about CD laddering, look into mutual funds, and pad your portfolio with blue-chip stocks and other safe vehicles in which you can park your money.