How to Save & Invest Money Wisely

Saving money now will reap a good return later.

Whether you are just getting started in your career or dreaming about retirement, it is important to put aside as much money as you can. When you do stop working, you will need those funds to supplement any pension or Social Security income you might receive. Learning to save and invest your money wisely when you are young is one of the best ways to build a substantial nest egg over time. The sooner you get started, the better off you can be.

Things You'll Need

• Savings account
• Mutual fund account
• 401k

Instructions

1. Pay yourself first by treating your savings and investments as just another monthly bill. Set up an automatic transfer from your checking account to a savings account, money market account, or mutual fund. Don't miss any payments: be as firm as your own creditors will be.

2. Ramp up your savings as your income increases. When you are making little money, it can be hard to put funds aside, although it is still a good idea to rake at least 5% off the top and send it to a savings account. When you do begin to earn more, allocate that extra money to your savings or investment account.

3. Sign up for your company's 401k plan as soon as you become eligible, and contribute at least enough to qualify for what the company will match. Consider that if you earn $30,000 and your company matches 50 cents of every dollar up to 6%, you will be giving up $900 a year in free money by not participating.

4. Take an unemotional stance while investing; do not be rattled by the short-term gyrations of the stock market. Avoid watching the market day to day. Instead, simply invest your money consistently over time. Emotions are your enemy when it comes to investing, and reacting emotionally can cause you to sell at the bottom of the market and buy back in at the top.

References

• Investopedia: Pay Yourself First