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Archive for the ‘Retirement’ Category

How to Create a Nest Egg

Brought to you by: The Frugal Buzz On December 20, 2010 No Comments

Everyone needs something set aside for the days when they will eventually stop work. Life doesn’t stop then and neither does your money if you plan right. It is never too late to put something aside and help it to grow until you need it.  Here are some tips for nurturing your future savings.4882451716_3ca82eecc6 flikr nest eggStart with a plan. All good ideas usually start with a plan. It gives you somewhere to go and something to strive for.

* Map out your future needs – This will be based on monthly bills (mortgage, utilities, car payments and insurance at least) and retirement plans. Do you want to travel or have a house at the beach? Maybe you want to start a farm or an online business. These things require money. Create a ballpark figure of how much money you will need each month to handle your dreams.

* Read about financial options – No one knows about financial things unless they take the initiative to learn about them. Read books, go online and talk with a financial advisor. It’s okay if you have a dozen questions. It is their job to answer each one of them to your satisfaction so you can make an informed decision. What are stocks and mutual funds? What is better: Roth IRA or traditional IRA? The only stupid question is the one you don’t ask.

* Use as many financial vehicles as you can – Now that you know about all of these options, consider which ones are best for you. The old proverb says that it is not good to put all your eggs in one basket, so spread your money around to help it grow. Make your decisions based on advice and also based on how far you are from retirement, your children, your age and your after retirement plans.

* Minimize your lifestyle – To invest you need money. If there are ways to cut costs, the extra money can be put to work for your future. Here are some suggestions: Stop smoking, cancel cable television (Netflix is cheaper and borrowing from the public library even cheaper), downsize your home, consolidate services, renegotiate insurance premiums, brown bag your lunch, stop gym memberships, and use utility equal payment plans.

* Check and recheck – This is important to keep an eye on your investments. Different circumstances can lead to changes in the portfolio, so check it regularly to stay on top of new developments.

Is your nest egg healthy? If not, here are some options to help you improve it before full maturity. It may not be easy to make all of these changes, but over time the benefits will hopefully outweigh present sacrifices.

Frugally yours, Mary

Picture Source: http://www.flickr.com/photos/rmgimages/4882451716/

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Take the Guesswork out of a Roth IRA

Brought to you by: The Frugal Buzz On September 29, 2010 No Comments

Roth IRA

Should you get a Roth IRA or not? It depends on your situation. For some people it would be wise, for others not so much. Here are two of the biggest reasons for considering this investment vehicle:

#1) Tax benefits

When you put in money to the Roth, you pay taxes immediately. With the standard IRA, you don’t pay until you take money out.

So if the taxes go up (and they probably will) then you will benefit from this arrangement. Since taxes seemingly always go up, this means you will likely save money down the road.

#2) Freedom

Unlike many investment vehicles, it’s up to you to pay into the Roth IRA. You aren’t forced to like you are with other investment options.

Also, you get to choose your own investments. Whether you want mutual funds or standard stocks, you have the potential for much higher earnings. With most investments, you simply have to accept whatever investment vehicle your company chooses for you.

Also, you aren’t forced to start withdrawing at a certain point, like you are with other vehicles. So you can let the money keep accumulating as long as you want.

So who qualifies for the Roth?

You have to meet certain criteria to be able to invest in it. For one thing, you have to have a job. And you have to choose a company to manage your investments for you.

You also can’t go over $5,000 in contributions if you are under fifty. If you are over fifty, you can put in as much as $6,000.

And you can only put money away if you make less than one hundred and ten thousand a year. Also, you cannot take out a dime until you’ve waited five years after you’ve put the money in.

What are the disadvantages of the Roth?

You can’t use the contributions to lower your income. This is because they are taxed just like you regular earnings. In other words, you can’t use your contributions to lower yourself into a different tax bracket and get savings. 

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