By
eHow Personal Finance Editor
Difficulty: Moderately challenging
Step1
Set goals. If you are saving for retirement, your strategy will be different from the strategy you might use to save for a house or a car.
Step2
Pay off high-interest debt. No matter what your goal is, limit credit-card debt as much as possible.
Step3
Maximize your 401(k) plan contributions, assuming your employer offers one and that your goal is retirement.
Step4
Invest in a tax-deductible Individual Retirement Account or Keogh plan, again assuming your goal is retirement.
Step5
Put part of the money - if your goal is nearer-term than retirement - into an aggressive-growth mutual fund. The investment will help you increase your savings for a car or home.
Step6
Put a part of the money in a money-market account, where you can earn interest but not be penalized for withdrawal.
Step7
Consider starting a business on the side. If you can create a steady source of income, you will have something to fall back on if you lose your job; meanwhile, you can invest the earnings from the second job.
Comments
Anonymous said
on 8/8/2006 If you are interested in long-term gains, take about 10-20% of your investment and place it in an index fund. These are managed funds which do not place their stake on a few stocks, but rather the whole market. An example is an index fund that follows the growth of the S & P 500. This way, you are guaranteed to make money in the long run. Despite the fact that the market may crash, historically it has always rebounded. If you placed money in an index fund in 1900, despite the Great Depression and Black Monday (in 1987), you still would have made 7% (inflation-adjusted) per year. Indexing is a safe bet. Make sure to choose a fund with low expenses. And, most importantly, once you put your money in the fund, do not touch it.
Anonymous said
on 11/22/2005 Invest 25 percent in a CD with an annual return between 6 and 7 percent. This is low risk and a low return.
Invest 5 percent in government-issued bonds with a 20 year maturity life. This is low risk and low return.
Invest 10 percent in a foreign markets mutual fund. Investing in foreign markets is very risky, but the return can be very appealing. I've seen returns as high as 90 percent annually.
Invest 30 percent in a growth mutual fund. This is a moderate risk with a moderate return (usually around 5 to 15 percent).
Invest the last 30 percent in mid or high cap stocks, through a stockbroker.
With this diverse portfolio, the chances of you losing money are very low, and the chances for making money are very good.
Anonymous said
on 11/22/2005 I had my company take the maximum allowed out of my pay to invest in a 401k. It seemed like more than I could stand at first, but I got used to it. It helps to see the investment growing.