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The Ultimate in Financial Security

Guest post by: Pia Lord

Article Overview: When you have three baskets of funds that you fill, your first is for security ,the second is for retirement and the third is for your dreams, you can be pretty sure that you will have a comfortable retirement and provide well for yourself and for your family. In David Bach's book he emphasizes this three basket approach to achieving financial security. Basket No 2 is for retirement funding.

The Ultimate in Financial Security

BASKET TWO: RETIREMENT

Into this basket we put money that will be invested into various funds, stocks, bonds etc which will be done at a rate according to your age and risk comfort level. The general rule of thumb that is used is that you subtract your age from 110 and that is the percent that you put into stocks, the rest you put into bonds or more conservative tools and keep about 5 % as cash reserve. SO if you are 45, you put 65% into stocks or more aggressive growth investments, you put 30% into bonds, bond funds or capital preservation/income producing investments and keep 5% IN CASH in a money market fund or similar vehicle.

RESEARCH WELL YOUR INVESTMENT VEHICLES

With this in mind as a basic framework and taking into account what we discussed in Step 1 of your values, you can find investments with a good deal of research at any major investment house. If you go to the website of say Charles Schwab or Vanguard online, they have a stock/fund/bond research tool. That you can search on various investments. Be careful what you discuss with some brokers because their main interest is usually to make the commission. So they may steer you towards what gives them the best commission. If you sense this, go to a different investment house. There are so many around. And always check to see what the expense ratio of a fund is before you buy into it. The expense ratio is really the management fee the company takes in addition to other fees for marketing or advertising the fund.

TRY to put 12 to 20% of your income into this basket. A positive strategy also is to look into a USA ROTH account. This is an after tax investment vehicle. You do not get the benefit of writing off the amount you deposit into the fund, yet it will never be taxed according to current tax law when you withdraw the funds and you never actually have to withdraw them, even at age 70.5.

MAKE YOUR $$$ WORK HARD FOR YOU

A few guideline to keep in mind when investing.

One: Always invest this retirement basket for growth.

TWO: If your employer gives marching funds to your 401K always max out your contribution. Even if they don’t, still max out the amount you invest into the fund.

THREE: NEVER borrow from your retirement fund

FOUR: Keep your account under one roof, consolidated. Varying the vehicle that you choose within the whole portfolio.

FIVE: Be careful whom you list as beneficiary.

SIX: When you change employers take your retirement funds with you through doing an IRA rollover to an account that you set up at a bank or brokerage house or to a new employer 401(k) plan.

SEVEN:GIVE YOURSELF THE OPPORTUNITY of a GREAT RETIREMENT through making your money work hard for you. Invest as much as possible and be strategic and smart about it. Don’t let your money sit around not working hard for you!

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Article Tags: baskets, david bach, dreams, financial security, pia lord, pia lord show, retirement
Referred by: http://jaykubassek.com



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