Image by: By Pictures of Money
By Richard K. Noots
We all want to be rich. Well, maybe not rich, but we definitely want stability as we get older. Job security isn’t exactly what it used to be and the news only gets scarier. Worse off, as you get older your body tends to just … Fall apart. Maybe if you’re lucky and have kids you can milk them when you get old, but how reliable is that? Plus, no parent wants to be a burden. In fact, I bet if you are a parent, you’d rather be able to help your kid through college and any other hurdles he may go through.
Most people will tell you the easiest solution is to invest, but what does that even mean? Moreover, if you’re living paycheck-to-paycheck, investing money you don’t have seems like a laughable proposition. Today, that changes. It won’t be easy, but follow this advice and things may just get better.
#1) You Will Have to Save
I know what you’re thinking: Excuse me, I have to save? Don’t you think if it was that easy I’d already be doing it? Well, yes. However, sometimes we get overwhelmed and we don’t realize just how much we’re spending. Do you unwind at the bar for after a long, hard week? Do you eat fast food every now and then? Take a look at where little parts of your paycheck goes throughout the week.
If you can save 50 bucks a month, which adds up to 600 dollars a year, and invested that over twenty years, you could potentially end up with over $20,000 ready for your retirement. Sure, that may not seem like too much, but we’re talking an extra 8,000 dollars for saving money and putting it in the right place, instead of just putting it in your bank account.
It’s not easy, but if you don’t save money, who else will?
#2) 401K Options: Do you have them?
Do you work for a company that offers a 401K? If not, well … you may want to consider switching jobs. That may not be completely possible right now, but it’s something you should seriously consider. 401K’s give you the chance to not only put a part of your money away in a decent investment, but to even have your deposits matched. That means everything you put in, your company puts in the same amount.
Now generally, this money is only available after a set time, which is exactly what you want. Having money that you can touch, trade or otherwise lose, isn’t the greatest for saving. As long as your company doesn’t go under (Which you should be able to tell …), this is by far the best way to invest your hard earned cash for an easier future.
#3) Get Yourself Some DRIPS
Otherwise known as a Dividend Reinvestment Plan, DRIPS allows you to essentially buy smaller versions of multiple stocks from various companies. Though the return is smaller, so is your investment. If you’re eager to get into the game of trading with little money, this is a fantastic start. You can get stocks for as low as ten dollars, which isn’t too shabby.
There’s also Exchange-Traded Funds, which allow you to have a index fund which you can sell short. If this all sounds too complicated, make sure to read more before you buy anything. The quickest way to lose your money is to make an uninformed decision.
#4) As always, Buyer Beware!
The unfortunate truth of the stock market is that the grass is greener on the other side. Sure, it make look easy and lucrative from here, but it can take an incredible amount of work that can be ruined in less than an instant. This lovely article demonstrates just why the market isn’t as safe as the man calling you every day swears it is. Who knew that people who wanted your money would lie?
The average consensus of the market is that you will receive about a 12% return on all your investments. This is demonstrably not true. The reality is that it’s closer to around 7 or 8%, even with the market’s fluctuations. Furthermore, receiving an average return of 12% is not the same as receiving a 12% return. If you were to do the math, you’d find that you’d actually lose around 3,000 dollars.
So, what’s the bottom line? Investing is not easy, but there are options. Not everything is as lucrative as people promise however, and the first three areas are going to be your best bet if you’re trying to enter this world. Don’t be afraid, it’s worth it. Or at least, it’ll be worth it when you can retire and not have to worry about Social Security.
Have you invested before? Do you have any advice for our fellow readers? What problems and solutions did you find in your trial run? Don’t be afraid to share for the class!