Basics
Investments
This might not sound as fun as the strategy to attract that really good looking guy you’ve had your eye on, but the money you save will probably last a lot longer than your interest in him!
We’ll review the basic types of investments as well as different types of accounts and why you would use them.
Stock Market
Before we get started trading stock, let’s make sure you understand the components of a stock. Sorry if this seems elementary, but I want to make sure you understand the basics first. Of course, buying stock means you’re buying a piece of ownership in a publicly traded company. Wouldn’t it be great to tell your friends that you own part of the Moet Hennessy Louis Vuitton company?! Champagne and handbags, what more do you need?!
A couple of months after I started at Fidelity Investments in the year 2000, our country suffered from the .com bubble crash. By the way, this is right after we survived the Y2k scare! Not only did we survive, but we figured out which technology companies were sustainable and which ones weren’t. Many of us have invested in those companies and have done quite well. Only 8 years later, our country suffered from the housing collapse. This collapse was systemic and even more severe.
As a general rule, it’s better to take more risk with long term investments versus money you need to use in the next couple of years.
Retirement
Everyone always asks how much they need to retire as if there’s one simple number that applies to everyone. It’s like the stretchy one size fits all pants. Do they really fit everyone? No.
Retirement savings looks absolutely dismal. Take a look at the average retirement savings rates for different age groups. Where do you fit in?
Most popular
My Dad’s generation use to work for one company their entire career, retire and collect a pension. It’s not the same now a days as people change employers and location on a regular basis. Not too many companies have a pension anymore either, most of them offer 401k plans instead. The good thing is you can contribute $18,500 and even an additional $6,000 if you’re over the age of 50 to a 401k. The bad thing is how much easier you can access this money and so many people do!
You don’t have to be a geeky numbers person, but knowing your numbers is essential to just about everything. When you go on a diet, are you incredibly vague about it? “I’m going to lose some weight.” How much weight? How long will it take you? How are you going to do it? Reduce calories? How many? Reduce fat? How much? You get the picture.
With so many types of retirement accounts out there, what are the reasons people choose Roth IRAs if they qualify? And what does it mean to qualify for a Roth?
Do you continue to spend even though you’re on the verge of financial ruin?!