Step Five: Investing
This is the final part of our five-part series on building your financial empire
So you’ve learned how to manage your debt, save money , choose the right insurance for you and your family, and draft a Will to pass down your assets. The next and final step of is concentrate on growing your money.
What type of Investments should I choose?
If you’re not already enrolled in your 401k plan at work now is the time to start educating yourself on investing. If you do not have the time and skill set to educate yourself on picking individual stock. You may want to invest in a Index fund.
Very few mutual funds (about 10%) actually outperform the S&P 500. So if you want to at least remain average in your investing, picking an index fund that track the stock market maybe best for you.
An S&P 500 index fund tracks 500 American companies. You can start with a Vanguard index fund or a Vanguard Total Market Index Fund. Their expenses ratios are very low both are under 0.50% which is less than a half of a percentage.
If index funds are not available in your 401k choices, you may want to start looking at funds expense ratios that are under 0.50% and reputable fund families such as Fidelity, Vanguard, TIAA-CREF and T. Rowe Price.
Maxing out your 401k is probably not the best move, maxing out your 401k up until the match is more appropriate and putting some into a Roth IRA can be a better move. I say that because with a ROTH IRA you are in control of your choices. 401k’s accounts have limited mutual fund options and fund families.
Investing vehicles may include:
Retirement accounts (401k, IRA)
College savings (529, ESA and UGMA accounts)
It can also include saving for a home remodeling project such as a new kitchen or saving for a new car.
Long Term investing is always five years or longer. Anything under five years is considered savings.
Where can I find these investments?
Visit the website and contact a specialist on setting up a Retirement Account, College Savings account or a Regular Mutual Fund Account. Don’t be afraid to ask questions. Let them know how much you would like to invest each month and make it automatic. You can have them set the day of the month you would like the funds deducted out of your checking account. Easy as pie!
This concludes the five-part series on creating and building your financial empire!
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December 6th, 2009 at 5:00 pm
Great focus on the financial empire building posts! I also think index funds are a great performer and would opt for those with a strong ten-year track record. Also a big fan of the Roth IRAs as they tax you at the seed and not the growth. If one gets a proper grasp at investing and manages the other four areas that you suggested in your finance series, they'll be well on their way!
June 25th, 2010 at 12:08 pm
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