This series was inspired by the recent marriage in the family. I organized some information with my brother in law and new sister in law in mind, though the information can apply to others looking at their finances. If you find these tips to be useful, please share them.
Seeing how finances can have an impact on marriage, here are tips and stories to help you avoid common financial pitfalls of married couples.
Retirement planning can seem like a far away goal for some, but it can be one of the smartest moves you make. How you two sat down and discussed some of your financial goals, like when how you’d like to retire?
Remember your marriage is more important than money.
Invest While You’re Young
Investing young for retirement brings compound interest on your side. Compound interest speeds up your savings without you doing anything, but automatic deposits in sensible investments. here’s a snippet from previous post on how compound interest works:
The concept starts with the principle that you have some money ($1,000) which is earning interest (10%) each year. So the first year, you earn $100 in interest. However, the next year, you do not earn another $100—you earn $110.
This is because your 10% interest is applied to both your initial principle and the interest you received. Thus, as time continues, your interest each year grows larger and larger because it is compounding on top of itself.
Have Your 401(k)s Working For You
Looking at the chart below, you can see if you are consistent with your contributions, you can have compound interest help you increase your retirement fund even more.
Early starts with retirement contributions lead to big finishes aka. more money.
What’s more amazing is some employers offer a match for a percentage of money you put in. That’s free money you’re throwing away if you’re not contributing.
Check with your human resource department to see if you company offers a match and how much is it. an added bonus with 401ks is that the money is taken pre-tax, which can reduce your taxable income.
Open and Fund an IRA
Where can you open an IRA?
Many banks, brokerages, and credit unions offer both traditional and Roth IRAs. Compare your options to keep your fees as low as possible and get the best performance.
Some online options for opening an IRA (Traditional or Roth):
- E-Trade (Annual fee and minimum are waived when you sign up for electronic statements)
- Vanguard (Some funds require $3,000 minimum)
- T. Rowe Price
- Charles Schwab ($1,000 minimum is waived if you direct deposit $100/month)
- Sharebuilder (No minimum to open; no admin annual fee)
- Zecco( No minimum to open; $30 annual fee)
Each time you invest, you’re buying a bit at a time. Many choose to automate their investments at a fixed rate. The same amount is spent but the amount of shares you buy changes. I like index funds and when the price is low, I can get more shares for the same price I’ve been putting in.
While 40 years is a long time, the best time to start saving and investing is now in order to let compound interest work for you. Over time, you can make compound interest work for you.
Photo Credit: catlovers
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