Some people wait until they are in their 40s or 50s before they get concerned about their financial future. Although it is never too late to prepare for your retirement, you should start early. If you are in your 20s, this is the perfect time to start building for your financial future.
Below are five interesting ways where you can start building your nest egg:
Stock Up Now and Reap in the Rewards Later
If you don’t know anything about the stock market, that’s OK. You can call any other the major investment banks and they will guide you on how to start investing. However, some people like to do it themselves. Some of the benefits of self investing are that you are the one in control and you decide when and what companies to invest with. Many companies on the New York Stock Exchange have Dividend Reinvestment Plans (DRIPS). This is where you buy stocks directly from the corporation and bypass the middle man. The idea behind DRIPS is that each time they distribute a dividend, the money goes right back into your investment.
It can also be fun and a learning experience, but you must research the companies you would like to invest with before your buy.
Growth vs. Income Stocks
For our young audience, you are in this for the long haul, so the experts advise to research growth stocks (stocks that have opportunities for their prices to increase over time) and don’t spend as much time researching income stocks (stocks that have high dividends with respect to low growth). When you get older, you may want to review your portfolio and make some changes, but over time, you can build a nice portfolio of stock investments; however, make sure that you always review the company’s performance before you purchase any stocks.
If you are young, you should focus most of your attention on stocks; however, diversifying with bonds can help cushion your portfolio if stocks start to fall. Municipalities have opportunities to purchase bonds, but a more simpler way is to buy directly from the U.S. Treasury, Here you can acquire different denominations of U.S. Savings Bonds. Currently, the maturity date is 18 years, but don’t let that scare you. Remember, you are investing for many years into the future. Younger people could divest a smaller portion of their income to bonds and as you get older, you can increase this percentage.
Diversify with Precious Metals
One interesting phenomena in finance is that when a catastrophe hits the economy, stock prices fall, but gold prices rise. There are numerous companies where you can purchase gold from and they will hold it for you in certificate form, but if you like to have the metals in your possession or you would just like collecting them, you can purchase gold directly from a number of reputable companies. To diversify even further, you can purchase silver and then try adding some platinum to the mix. You will then have a nice balanced portfolio in case of any stock market downturns.
Corporate Retirement Plans
Does your job have retirement plans? If so and if you can afford it, it is highly recommended that you set aside a percentage of your salary to be invested in these plans. Some companies have 401K or 401B plans and/or pension plans. Speak to your human resources representatives and they will help you to build your corporate retirement.
If your place of business doesn’t have a retirement plan or if you work part time or you are an entrepreneur and have your own business, there are many companies that would be more than happy to start a retirement plan with you. You can start one at your local bank and speak to a financial representative.
Remember, retirement plans are just that! If you withdraw any money from these plans before you reach age 59 1/2, you will incur substantial fees from the IRS.
Hobbies Can Be a Hidden Treasure
There are numerous hobbies that could be an unexpected collector’s financial paradise. There are markets for such items as baseball cards, electric trains, old coins, stamps, as well as Chinese crockery, ceramics, antique furniture, jewelry, minerals and (if you can afford it) classic cars. All of these are very popular in the collector’s market and it can be a win-win for some who happen to have these items that are very desirable for collectors who are looking to buy. Take a look at the hobbies you have. You might just have a fortune in your basement and not even know it. And if you do, keep enjoying your hobby, while also enjoying the fortune you may be accumulating.
Have Some Cash Available
Having some liquid capital is never a bad idea, although, probably the least asset that will grow your money. However, if you have some extra cash to invest with, you can put a small portion into a CD or just hold in the bank for a rainy day and periodically add to it. If you don’t have to ever use it, you can then hold it for your retirement day!
The Earlier, the Better to Build Your Nest Egg
Start investing NOW! This is for the long term and diversify through asset allocation. You should not withdraw any money from your investment and instead, let it grow. Even if you are not in your 20s, it is never too late to start. You will be pleasantly surprised as to what you financial nest egg will look like when you are ready to retire – but remember – Always research before you buy!
*Disclaimer. This article is for information purposes only. Investor is advised that he/she is solely responsible for any investment purchased and holds Rich Feinsilver, Esq. and feinlawny.com harmless from any liability.