I am 51 years old and have nothing for retirement. I put 100.00 a week in my savings and have about $10k now. What can i do for more interest?
Answers | 7
Thanks for your question. Some type of a tax-deferred retirement account would likely be best in your situation in lieu of bank savings. If you have access to a 401(k) at work, that may be your best option. If not, an IRA (Individual Retirement Account) at a low-cost provider such as Vanguard may be a good choice. Make sure that the investment option that choose in the retirement account is comfortable for your risk tolerance. Most 401(k)s (as well as a Vanguard IRA) have "easy option" choices that you match up your risk tolerance or anticipated retirement age and the fund invests accordingly. The advantage of using a retirement account is that you can deduct the contribution for federal income tax purposes. The disadvantage is that you won't want to access the money prior to retirement or otherwise face possible penalties. You also won't be able to take the $10k from bank savings and put directly into the 401(k) - you'd have to contribute via payroll deductions. As for an IRA, you can contribute up to $6,500 per year. Definitely direct the $100/wk savings into either a 401(k) or IRA. All the best.
First, make sure that you have enough money in case of an emergency saved in that savings account. Then start to invest in a diversified fund at a company such iShares or Vanguard. This investment should be broadly diversified and include stocks and bonds. The ETF may be a good choice as your can set-up a recurring monthly purchases without incurring the recurring transaction cost (called commission free). Look to TD Ameritrade or Fidelity to establish this account and provide insight on investment options that fit this objective.
Most importantly, keep investing even when the market has a downturn. This will allow you to buy shares at a discount. In fact try to increase your savings during these times if possible. Your behavior during these downturns which will occur will be the key to your success. Think long term (your retirement years) and do not focus on the short term market conditions. Read my blog for encouragement to focus on the long term - www.RootsofWealth.com.
Saving account pays less than 1%, inflation is average 2.4% . You are losing money.
Have 3-6 months of expenses in savings, the rest in a retirement plan.
The secret to getting ahead is getting started --Mark Twain
There are two ways to get you more $$ in your retirement account
1) Cash flows
Both can get you a great interest rate. What is your MARR (Minimally Acceptable Rate of Return)?
Keep in mind that with cash flow investing, if you reinvest the cash back into the investment (rather than spending it), it will also grow at your MARR.
Here are some examples:
10K @ 15%/yr will double to 20k in ~4.8 yrs. There are some great passive investments that can do this for you. We use F &C's 9Floors & Ceilings). There are also many others. With only 10K, the fees will not move your needle much. we call this wealth redistribution. Our focus is on wealth creation.
It's not what you make, It's what you keep that determines your lifestyle.
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