Think of Investing in Retirement As a Gradual, Four-Step Process
Investing isn’t just for the super-rich. This is for all of us, and it is important if you want to accumulate your own capital for retirement. However, this can be intimidating. This is a lot of information that needs to be learned right away. In practice, accumulation of retirement savings usually occurs gradually. Financial expert Michael Kitses breaks the process down into four steps.
Traditional investment advice suggests that you suddenly have $ 10,000 to invest immediately, but in practice this is not always the case. I recently wrote about my investing relationship . I went from not knowing 401 (k) to managing my own diversified portfolio with several different accounts. However, this did not happen overnight, it took years of studying and understanding it.
Kitses, a Certified Financial Planner, says:
A caveat to the traditional view of saving for retirement is that in reality, income, spending, and a person’s ability to save varies greatly throughout life. From promotions and promotions (especially significant in the early years of a career) to starting a family (and then transitioning to the empty nest phase later), stable savings for retirement are not necessarily as feasible as they would be under the traditional approach. offer…..
He says that ordinary people who want to invest usually go through four stages with clear problems:
- Make more money
- Saving money
- Increasing your savings
- Keeping your nest egg
I think this is true for most people. For example, I didn’t care about my 401 (k) because I didn’t make enough money to take it seriously. I stuck to my full employer match, but I was more focused on increasing my income than keeping my portfolio diversified. It’s hard to think about how to save more money or multiply your savings when you don’t have much money to start with.
These priorities make sense, and thinking about investing in this way can make it less intimidating. You have a better understanding of what to focus on at each stage. He goes into much more detail in his full post, so be sure to check it out at the link below.
Four Steps to Saving and Investing for Retirement Through Rockstar Finance