We all want to save more money. But wouldn’t it be nice if we could let the money we DO earn work for us so we don’t have to bust our humps to work for every single dollar? It’s possible, with a little discipline and research. After all, your goal should be to retire comfortably while still enjoying life now. Here are some tips on how to get your assets to work harder for you:
Save, save, save: Save a bit of every paycheck you get and put it into a savings or investment account. Once you have looked at your budget, you will know just how much you can afford weekly to set aside. This is the first step. You can’t expect your money to work for you if you don’t save some of it.
Snowball the returns: Your money will generate returns soon, and if you don’t spend those returns, your accounts will keep growing. Don’t stay complacent with just your paycheck contributions, though. Throw in any windfalls, tax refunds or bonuses you may come into to speed up the process.
Leave it alone: If investing in the stock market or mutual funds, leave them alone. By panicking and taking your money out every time the market falters, you’re robbing yourself of future earnings, not to mention you’re paying a lot of fees and taking hits on that money. Yes, equity valuations can get volatile and scary, but history shows the long-term trajectory is always growing. Take a “set it and forget it” attitude, and try not to micro-manage too much. While you do want to be aware of your investments and what’s happening with your accounts, remember to take a step back and see the big picture when times get rough. Also, keep a securities fraud attorney on speed dial if you notice anything suspicious with your broker.
Minimize your fees: It costs money to manage all those accounts. You may have to hire a financial planner or stock broker to invest for you, and that can cost money. You can decrease the fees you pay by investing in your own with index funds which are more affordable. Just be careful to notice the expense ratio and associated fees with every investment you select.
Build passive income:As you make more and more investments and contribute to your savings, there could come a time when your returns could replace your income from working. Think about building passive income, either through selling a timeless product online or through blogging, and add that to your retirement account. You could even use it to live off of once you make enough.
The bottom line is, saving money and investing it on a consistent basis can make your money work harder for you through generated returns.