Most people are under the illusion that as long as you save some money from every paycheck that you will one day be able to comfortable retire. That really couldn’t be further from the truth. Now I’m not advocating that you go out and spend, spend, spend…rather, I’m saying that simply stuffing your mattress full of cash isn’t doing much to prepare you for the future. The more money that gets pumped into the economy, and the increasing effects of globalization are pushing inflation sky high with plenty of room left to grow. The typical savings account has very few benefits other than a relatively stable place to put your money. There is a lot to be said for stability, but one thing is for sure, it doesn’t earn you much interest! Interest, especially of the compound variety, is our best friend and biggest weapon against inflation.
It is important to actively manage and grow your wealth by any means possible. I’m not saying that one needs to speculate in complex financial derivatives, you just need to be slightly more aggressive than the typical bank accounts that pay a fraction of a point in interest each year. I have several different means of investing my money, and there are many more ways that I don’t have the time to mention right now.
Consider ETF’s and dividend paying stocks! These are both a way to earn interest, cash in the form of dividends, and still diversify your portfolio. Diversification is an investors best friend as it allows you to put money into riskier investments, while at the same time spreading the money out over several different areas just in case.
Investment accounts that are specifically used as vehicles for retirement savings are the way to go. My employer offers a great 401k plan and matching investment to boot. If you’re employer offers one of these, and offers a match to go along with it, then I don’t care if you are swimming in debt you still need to contribute up to the plan match at the very least. Additionally, IRA’s are great account from both an investment and tax perspective, and they will help you achieve your savings goals above and beyond that of a simple 401k.
I know many people will complain that they don’t have the time to meet with an investment broker, or price compare their fees structures, or even worse, understand their lingo. That’s what the internet was invented for. Search out companies that provide a list of their offerings, as well as fee structures. You will find that many investment brokerages offer virtual portals so that you can manage your own investments.