A Quiet Fortune: A few things to do with some cash
“You can make saving and investing as natural as breathing.” I hope you’ll take this idea to heart. The act of steadily saving a little money, then investing it wisely, can give us power over many of life’s ups and downs.
If you are onboard with this idea, you’ll be saving something from your paycheck, or you’ll find a mini-job that brings in extra money to put aside. What can you do with your new savings?
The answer, of course, is invest. But how? What do we invest in? How do we start? The world of finance can feel like a jungle if it’s new to us. A list of investing categories, beginning with the least complicated, might help. Here’s one:
Investing Ideas for Beginners
• Savings accounts: The first place for your soon-to-be-investment money. If you don’t have a bank or credit union savings account dedicated specifically to stashing investment money, you’ll want to start one. It costs nothing.
• CDs: Certificates of deposit once paid great interest rates and were very safe. They are still safe — you won’t lose your money — but the interest rates right now are fairly abysmal.
• Money market accounts and money market funds: Like CDs, these are relatively safe but don’t pay much in interest. Unlike CDs, you can pull the money out at any time without tax penalties.
• Employer-sponsored retirement plans: If your employer offers these, sign up today. Don’t wait. They are one of the best ways to save and invest part of your paycheck. Within a few years you’ll feel good about your finances.
• Matching fund 401(k)s: Your contribution is matched by employer — incredible deal.
• Regular 401(k)s: Not matched, but your employer helps set them up so you can invest automatically from your wages.
• IRAs: Individual Retirement Accounts are packages that you design, sort of like a big box that can hold the stocks, bonds, mutual funds and other investments you own. The important advantage is that you pay much less in taxes if your investments are designated to be for retirement. These include regular IRAs, Roth IRAs and MyRAs, which are new for people who don’t have a big salary.
• Individual Stocks
• DRIPS: Dividend reinvestment programs, which are not very common these days.
• Mutual funds: Combinations of stocks, bonds, and/or other investments. Recommended for most of us by the experts. They can provide good diversification for less risk.
• Target date retirement funds
• ETFs: Exchange-traded funds are mutual funds that are traded on the stock market.
You also can invest in bonds, which usually are very safe, but not a high return these days. Can be a steady, safe income provider, especially as people get older.
• REITs: Real estate investment trusts are a form of mutual fund.
• Housing: Your personal home, houses to flip, or short- or long-term rentals.
• Commercial property
• Other: foreign assets, options, commodities, hedge funds, and other things you should know a lot more about if you want to invest in them.
This is a very basic list and it leaves out all the essential details, but it’s a start. How to begin investing in these? Ask experts who know; they will help you with every step. Get answers and advice from: your employer (the person in human resources), bank employees, financial advisers, phone calls to investment companies, books or reputable sites on the web.
If you have no desire at all to learn this, a trustworthy financial adviser might be your best friend. He or she can get you on the way to your own quiet fortune.
Be smart: Don’t ask advice from people who have invested dangerously or who are investment naysayers. They won’t help you build a financial future, even if you respect their advice about all of the other big things in life.
Terrie Drake is the author of the book “A Quiet Fortune,” and a retired teacher and librarian. She and her husband have lived in Glenwood Springs since 1974. She is not a financial adviser; consult a competent professional for your personal financial solutions. She can be reached at email@example.com.
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A refunding of about $27.7 million in Roaring Fork School District bonds issued in 2011 and 2012 is currently projected to save taxpayers about $1.6 million over six years.