5 Ways to Grow Your Wealth in Time for Retirement
Planning for retirement is often put off and delayed. Yet, the earlier you start saving, the more comfortable you’ll be when you do retire. If you are forward thinking and invest money wisely, then the interest that you will make over the years will increase your savings. This could potentially provide you with significantly more money when you eventually retire.
Unfortunately we live in a time where saving his hard, especially if your expendable income is low. The Washington Post reported that Americans are drowning in debt as the median amount of collections is at $1,450. Some of the debts that people have make it very hard to start saving early.
The good news is that it’s never too late to get started. There are ways to grow your wealth even if you’re over 40. All you need to do is be smart in allocating your extra cash.
If you’re 40 years old without savings for your retirement, don’t feel down. At this age, you can legally save $18,500 per year in a 401k retirement fund, and this money can go a long way if you don’t touch it.
If your 401k has a 7% rate of return, which is the average annualized rate of returns that Warren Buffet predicts for the next several decades, your 401k could potentially grow up to $1 million in 24 years. That means that by the age of 64, you could have at least $1 million in your retirement fund. While this figure won’t be achievable for everyone, it does show how being smart with your savings could leave you with a sizable sum when you retire.
Aside from emergency funds, everyone should consider buying insurance. Life can throw some unexpected curve balls at any time, and putting off insurance, could have financial consequences later in life.
If you’re living with dependents, you may want to consider getting life insurance that will cover them only during their dependency on you. This will save you money as your dependents, usually your children, will only be covered up to time they have their own jobs and insurance.
Make some investments
Having stock investments is a great way to earn money. If you find the right company, it is possible to invest your money and get a good rate of return when you retire. Try to invest a small percentage of your monthly earnings to well-performing stocks and you’ll be surprised how much your money could earn in 10 years. You can find a broker online that can help allocate your money to the stocks of your choice. Remember, before trusting a broker, check a company’s validity at the Central Registration Depository.
CNBC has a list of stocks that will likely continue their positive track record in 2018 and beyond.
Diversify your investments
While putting money in the stock market is the most popular way to invest, there are other ways to grow your cash. You can invest in mutual funds, which diversify your exposure to different asset classes. If you want, you can also invest in the futures market, which is just as good as investing in stocks.
To put it simply, a futures contract is an investment agreement between two parties to trade an asset at an agreed upon price on a specific date. FXCM states that there are four different components to a futures contract that investors take advantage of, namely the underlying asset, expiration date, pricing, and leverage. A lot of people invest in futures to shield themselves from inflation. For example, say that the price of oil per barrel today is $65. A buyer then chooses to purchase 10 barrels of oil at that price, but with a futures contract stating that he will get the barrels in 6 months. If the price of oil shoots up to $90 per barrel in 6 months, the seller has no choice but to sell the oil at the previous lower price. Investors make a lot of money from futures trading by buying low and then selling high.
Open an IRA
Apart from your 401k, you may also want to consider opening your own Individual Retirement Account (IRA) in order to give yourself more funds for your retirement. Contributions to your IRA may be tax-deductible. Your earnings will grow tax-deferred until you make withdrawals for your retirement. If you’re eligible to open another retirement fund, an IRA can work wonders for your retirement.