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How To Invest Wisely For The Future, In A World That Only Wants You To Spend

How To Invest Wisely For The Future, In A World That Only Wants You To Spend

How To Invest Wisely For The Future, In A World That Only Wants You To Spend

Let’s talk about retirement. It is the time you will have all to yourself to pursue the things you love. Travel the world, write a book, or spend time with the future generations of your family – the possibilities are endless. But to make all of this happen, you have to take some action now. A wonderful post-retirement life is not just about how much you have saved today, it is more to do with where you have put your money.

How to prepare for a future of higher costs and limited income?

Inflation is the great leveler. No matter how comfortable you may feel today, remember that post-retirement will equate with limited income and higher costs of living. Americans for generations have relied on two integral retirement savings tools – IRAs and 401Ks.

The economy is always moving in cycles. There are dips and there are peaks and your investment is a speck in this larger picture. There are a few ways you can have an indication of where the economy is headed in the next few years. The most accessible and easy-to-understand concept is the yield curve, which looks at the bond market. As this financial advisor explains, the nuances of the yield curve has historically been used as a pointer to the macro-economic health.

Experts suggest that you diversify your investments in IRAs because these provide the most diversity – from stocks and ETFs to mutual funds, bonds, and much more. Employees with the 401K option should also take it up along with the afore-mentioned IRAs.

Why aren’t Americans saving enough?

Americans are not saving enough. A significant section of the older population is living with debt like mortgages and many have to depend on welfare too. The golden years should not turn into a struggle to keep things together but unfortunately, the trends are alarming. A survey by the US Federal Reserve showed that a quarter of Americans do not have savings for retirement. Before dwelling on the important technicalities and options for retirement savings, it is important to dig into the wrong financial habits that many Americans have succumbed to.

Studies have revealed that many Americans who have savings accounts are aware of the interest rates they are getting. In the long run, this could mean missing out on better investments and will cost individuals and families thousands of lost dollars – money which could have been a perfect seed for post-retirement expenses. Another survey revealed that a large chunk of respondents was earning negligible interest in their short-term savings.

Having too much money in your checking account is another bad financial habit that can cost you a significant amount down the years. Many people keep thousands of dollars in their digital wallets or checking account, earning very low interest.

Are you avoiding smart savings methods? Having a savings habit can be difficult, especially if you are prone to spend your money rather easily. But that does not mean that you brush it off. Instead, consider automated ways in which you can deposit money in a savings plan. These scheduled deposits can help change the direction of your financial habits and you do not have to battle with your own urges to spend.

A Cultural Shift

If you want to take control of your financial future, know your place in the larger picture. We are all participants of a major cultural shift when it comes to money. The focus used to be on savings but now everywhere you look there are advertisements and messaging about financing your next acquisition. Do you want to upgrade your car? You don’t need to have money – dig around and you will find a financing option. Remember the 2008 financial crisis? One of the factors there was loans being given freely to individuals who wouldn’t have otherwise qualified with more stringent and prudent parameters. It has gotten really easy to fall into debt in the USA, and you would not even feel it in the beginning.

We do not say that you should not be spending – but spending wisely now takes a deeper meaning. Maintain your lifestyle with an eye on the future – a future when you will be older and your income streams will narrow down. An IRA or a 401K is the right way to start – but to be able to maintain a strong and regular retirement strategy you will have to be disciplined. The tools to make a bright and enjoyable post-retirement future are all there in place – it is all up to you. Start early, reap the benefits.

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