5 Tips for Retirement Investing

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Saving for retirement should be your #1 financial goal. Here are some time-tested tips from investment experts to help you turn your savings into successful income-producing testing for retirement.

  1. Make a plan and stick to it

What hurts many people when it comes to investment gains is jumping ship the first time the waters get choppy. Remember that you’re in it for the long haul. Your plan should be designed to withstand volatility. Ups and downs can often simply move on paper. Riding the peaks and valleys out can get you out of the red and into the black.

  1. Save early, invest early

Accumulating a nest egg, primarily through interest, is a long game. The sooner you start investing, the more compound interest you will be able to harness. For example, take two hypothetical investors who invest $5000 per year, with an average return of 8%, who keep investing until age 65. One starts at page 25 and the other at age 35. The one who started at 25 will have $1.3 million, while the one who started at 35 will have $566,400 – over twice as much money.

  1. Make a spending and savings plan

An increase in spending can obliterate the gains your portfolio generates. Obviously, how much you can invest is determined by what you can save. How much you can save is determined by how much you earn and spend. Without making any adjustments, look at what you can save now and commit to that as your bare minimum. From there, work to decrease your expenses to be able to save more. Even minor tweaks that allow you to save and invest a bit more will have big payoffs over time in gains. The whole goal is to minimize spending now to optimize how much money you will have in retirement.

  1. Take advantage of employer matching

When your employer offers plans that will match your investment or even contribute to your investment, that’s like getting free money. Some employers will match dollar for dollar (up to a certain limit). For example, if your employer matches up to 5% of your contributions, every 5% you save becomes 10% in total donations.

  1. Pay attention to the returns after fees and taxes

US News reports that investment fees and taxes can take a huge bite out of your portfolio. While on the surface, the reduction for fees and taxes ranging from 1.6% to 2.7% annually may not sound like a lot. But, this can equate to a reduction of 20% to 40% of your returns. Experts recommend things like placing corporate bonds and other less tax-efficient investments in tax-exempt accounts.