Getting started with investing for retirement might seem daunting, but it is never too early or too late to better manage your finances and plan for the future. The easiest way to save for retirement is to establish an individual retirement account (IRA) and start putting money away for when you are retired.

Educate Yourself 

Investing is not complicated, but many people procrastinate and, through inaction, lose opportunities to grow their wealth. The first thing is to educate yourself about what kinds of accounts are available and how factors such as your age, income, and risk tolerance affect your investment decisions. The more you know, the easier it is to simply direct money towards your funds without stress or indecision.

Which IRA is Right for You? 

One key feature of an IRA is tax savings. With what is called a “traditional IRA”, the earnings within your account are tax-deferred meaning you only pay taxes on those funds when you withdraw the money in retirement. Additionally, your contributions to the account are pre-tax so you may qualify for immediate tax deductions when you file your taxes.

In contrast, a newer vehicle, called a “Roth IRA,” offers investors the opportunity to invest money post-tax, but all the money in the account grows tax-free even upon withdrawal. Determining which type of IRA is right for you may seem overwhelming, but again the important step is to get started with some account.

Can You Take a Risk? 

Before you enter the world of actual investing, be sure to assess your own tolerance for risk. You need to make investments that fit your comfort zone. Nothing is guaranteed, but how will you feel if your balance suddenly plunges 40-50%? Stocks are more volatile than bonds, but offer better growth over the long term.

Diversification 

Your portfolio asset allocation should also be considered. You may want to mix stocks and bonds. More advanced investors use self-directed IRAs to diversify into non-traditional investments including physical gold bullion. Your asset allocation will be primarily dictated by your age and time horizon until retirement.

The further away your retirement is, then the more risk you can afford. As retirement becomes close, many experts advise towards a more conservative approach in order to preserve what you have earned.

Do Your Research 

Again, the critical step is to avoid indecision and procrastination. Research indicates that even after establishing accounts, investors put their money into a low-yield money market account and just let it sit. A better approach is to do your research and park your money in an indexed fund; these funds are low-cost and track certain market indices. They provide you a solid entree into the world of investing and making a decision such as this can actually reduce the level of investment stress you carry.

Getting started with your retirement planning is as easy as setting up an IRA and started to put money into the account. As we have outlined, the key is to take action. You need the power of time to help your assets grow and procrastination just delays your ability to grow wealth. Take action today and start making your retirement a reality.

Jeremy Davis was a councilor for financial expenses for years. He now enjoy his retirement by writing blogs to help with the difficulties of financial issues and retirement. Aside from writing blogs Jeremy enjoys walks with his wife, gardening and tutoring young children in math and history as part of his retirement routines.

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