The first step to retirement planning is to jump on board with one of your employers IRA or 401K account. If you don’t know if it’s available, now’s the time to find out. If you’re looking for a job select one that offers these as they are well worth it.They’re free and many times an employer will contribute the the account to make your savings really grow.
With each account type you can select some investment options. Some that re invest dividends (profits from the stocks), and some that invest in different industries. In the long term many of the options will yield the same growth, as most of the fund in the accounts get traded across many stocks that will move up and down in value creating a long term growth as the individual stocks in each account rise. It’s more complicated than that but at the end of the day all we care about is if our retirement savings account is increasing. Wouldn’t you agree?
A growth account is needed for retirement savings because a regular savings account that grows at a rate of 2% (or whatever the current rate is) is a rate that is less than inflation. What that means is that down the road, your savings at a 2% growth is actually worth less in the future. So one of the most important aspects of retirement savings is to look for a growth rate of at least 10% to keep up with the rate of inflation. Inflation at 10% means for example the buying power of your money decreases 10% each year. In simple terms, a loaf of bread is 10% more, or rent is 10% more and so on. That is how inflation calculates into your retirement.
It has been said that the safest of all investments is a mutual fund retirement account because the growth is steady.… Read the rest