Friday, May 16, 2014
It can be surprisingly easy and inexpensive to build your own retirement savings plan. Follow these few simple rules to get started:
- Automate. Set a weekly, biweekly, or monthly number to save and remove from your check before you make the deposit. Although your workplace 401(k) may be set up to do this, the default option might be too low for your goals. Try for double-digits. If you do not have a 401(k), you can create your own.
- Delegate. Initially, you will not have a large balance to invest and will likely keep it in cash. Instead, open a target-date fund or a low-cost balanced fund and direct incoming cash to that account. When your balance grows, refrain from “playing the market.” You are better off managing your retirement using a tested, well-designed portfolio, or owning a target-date fund.
- Generate. Reinvest dividends and interest by rebalancing periodically. The more money you keep and reinvest, the faster your retirement plan will grow.
See Mitch Tuchman, 3 Ways to Kickstart Your Retirement Plan, Forbes, May 15, 2014.