Saving for Retirement
In today's world, saving for the future is a must. There are many ways to save depending on your personal circumstances: 401(k)s, Traditional and ROTH IRAs, SEP-IRAs (if you are self-employed), etc. Each has their benefits, so make sure you read the fine print.
If you do have a 401k available to you through your employer (if not open an IRA) then it is usually best to put in as much as you can and maximize the yearly contribution. This reduces your taxable income (meaning you keep more of your hard-earned money in your pocket) as well as allows your money to grow tax-deferred (meaning your money will grow faster so you have more in retirement).
If you are an employee and have a 401(k) plan available to you, don't always assume it is the best fit for your future savings. Make sure to know what the fees are of the mutual funds within your 401(k), whether or not your company has matching and at what point you are fully vested. If you worked for years and have a 401(k) established from a previous employer, consider rolling those funds over to an IRA. It is likely you will have better mutual fund choices (e.g. lower fees) than you would within the limited basket of funds available in your 401(k). This may take a little bit of elbow grease now, but you will be patting yourself on the back for how smart you are.
With the dizzying array of investment choices available, feeling overwhelmed is completely natural. Fortunately, there are excellent options available for novice investors and especially over-burdened moms that take out the guesswork, do so at modest cost and diversify your risk. A great place to start is with Target Retirement Funds. These funds handle everything for you and do so at rock-bottom prices. Just pick a date you want to retire and put your money in. BAM, that's it! An excellent choice of these funds are through Vanguard.
No matter what type of accounts you have (or will be opening soon), highly consider buying no-load mutual funds with low-fees (namely index funds) and make them broadly diversified (domestic and international stocks, bonds and real estate [REITS]).
As has been true in the past, today and into the future there is no reliable method for predicting what market segments will do well and what will do poorly. As a result, the prudent and intelligent investor builds a diversified portfolio that does not "gamble" on any one segment (remember the dot-com bubble) or does not run toward the latest hot stock picks or fashionable funds. Doing so imperils your hard-earned savings.
Lastly, take a little bit of time here and there and invest in your financial education. These days this is very easy (and if you can believe quite fun!). For example Vanguard has wonderful podcasts that you can listen to when on the go on your favorite mp3 player.
Note: We are mothers who have taken charge of our finances and want to pass on this information to you. We are providing general information. You should consult with your own financial advisor before making major financial decisions. ceoMom, LLC is not responsible for any losses, damages or claims that may result from any and all of your financial decisions.
