The economy is unstable and the stock market has been take us down memory lane back to the days of severe recession.
At this very moment the financial market is pretty vague and if you are banking on the stock prices changing you could end up in desperate tears over the losses, let alone any of the gains you have gathered in your portfolio, over the years.
Briefly there are 8 points you should take into account to enclose the strength of your familys finances and their hope and dreams. Oh by the way, please avoid the mistake of relying 100% on your 401K to assist you through a tough time:
1. You should try and save at least 30-35% of your income into interest bearing accounts akin to a savings account or credit union CD's. Heres the reason for my madness, you can get a rapid return over a shorter period at a elevated interest rate, without taking any more risk. When they the CDs matures or expired their interest bearding duration, simply move the money you have gathered into similar extremely high interest bearing CD and you want to invest the original amount as well as the interest you have earned. The goal is to grow the CD to a rather good size allowing you to divide the CD into 2 single portfolios and reinvesting the funds again. This will all you grow your funds rapidly due to the 8th wonder of the world, i.e. the power of compounding interest. The key is to grow your funds without exposing yourself to any more risk than you have to. Once you have grew your CDs you will have the ability to divert the CDs into the stock market when the time is right.
2. Take some of your 401K and roll it into an Roth IRA - and do not take all of your money out of the company sponsored 401K plan especially if they have company matching funds as this is free money for you to reinvest later when your 401K reaches a favorable size.
3. Speaking of bonds...your money is far safer in a bond than stocks and you don't have to worry about a stock falling and taking your investment with it.
4. Clear your debts before retirement. There is nothing worse than retiring and having to work at your local taco stand because you still have debt to pay off and can't enjoy your golden years. There you are standing next to some kid young enough to be your grandchild and having to call him/her boss. That is not a fun retirement.
5. Paying off your mortgage while you are young, will allow you to invest in other assets and grow your net worth rapidly. By using a mortgage accelerator strategy, you can become mortgage free 15 years faster, without changing your lifestyle or paying one cent extra towards your mortgage.
6. Ideally, you should be setting up an emergency reserve in a separate isolated account, away from your normal bank account or checking account. This will prevent you from depleting your emergency funds or your retirement income as it will be harder to continuously making withdrawals from your emergency savings.
7. Consider having your home insured at replacement value, not market value. The similar action for your autos. Do not insure your auto at state minimum if you live in an expensive neighborhood. It would be better to have a higher standard of insurance and invest in an umbrella coverage.
8. Health insurance coverage is an immediate necessity. The cost of having surgery is astronomical. For example if you where to injure your knee while climbing the stairs, the surgery could cost you well over $8,500 and the doctors appointments and follow could be any where in the region of $9000.
Just start working on the items in the checklist one at a time or set some goals to make sure that you are on your way to protecting you and your family in retirement.
At this very moment the financial market is pretty vague and if you are banking on the stock prices changing you could end up in desperate tears over the losses, let alone any of the gains you have gathered in your portfolio, over the years.
Briefly there are 8 points you should take into account to enclose the strength of your familys finances and their hope and dreams. Oh by the way, please avoid the mistake of relying 100% on your 401K to assist you through a tough time:
1. You should try and save at least 30-35% of your income into interest bearing accounts akin to a savings account or credit union CD's. Heres the reason for my madness, you can get a rapid return over a shorter period at a elevated interest rate, without taking any more risk. When they the CDs matures or expired their interest bearding duration, simply move the money you have gathered into similar extremely high interest bearing CD and you want to invest the original amount as well as the interest you have earned. The goal is to grow the CD to a rather good size allowing you to divide the CD into 2 single portfolios and reinvesting the funds again. This will all you grow your funds rapidly due to the 8th wonder of the world, i.e. the power of compounding interest. The key is to grow your funds without exposing yourself to any more risk than you have to. Once you have grew your CDs you will have the ability to divert the CDs into the stock market when the time is right.
2. Take some of your 401K and roll it into an Roth IRA - and do not take all of your money out of the company sponsored 401K plan especially if they have company matching funds as this is free money for you to reinvest later when your 401K reaches a favorable size.
3. Speaking of bonds...your money is far safer in a bond than stocks and you don't have to worry about a stock falling and taking your investment with it.
4. Clear your debts before retirement. There is nothing worse than retiring and having to work at your local taco stand because you still have debt to pay off and can't enjoy your golden years. There you are standing next to some kid young enough to be your grandchild and having to call him/her boss. That is not a fun retirement.
5. Paying off your mortgage while you are young, will allow you to invest in other assets and grow your net worth rapidly. By using a mortgage accelerator strategy, you can become mortgage free 15 years faster, without changing your lifestyle or paying one cent extra towards your mortgage.
6. Ideally, you should be setting up an emergency reserve in a separate isolated account, away from your normal bank account or checking account. This will prevent you from depleting your emergency funds or your retirement income as it will be harder to continuously making withdrawals from your emergency savings.
7. Consider having your home insured at replacement value, not market value. The similar action for your autos. Do not insure your auto at state minimum if you live in an expensive neighborhood. It would be better to have a higher standard of insurance and invest in an umbrella coverage.
8. Health insurance coverage is an immediate necessity. The cost of having surgery is astronomical. For example if you where to injure your knee while climbing the stairs, the surgery could cost you well over $8,500 and the doctors appointments and follow could be any where in the region of $9000.
Just start working on the items in the checklist one at a time or set some goals to make sure that you are on your way to protecting you and your family in retirement.
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