by | Jul 20, 2020 | Money | 0 comments

Investing can be confusing and a little scary, but it’s the best way to grow your savings over time. If you have a job with decent retirement benefits you are probably already investing through your 401k or 403b accounts. You probably make a contribution through a paycheck deduction and your employer probably matches the contribution up to a certain percentage. Over the decades these contributions grow in the market until you have enough enough to live off in retirement (combined with Social Security and any other savings/benefits you might have).

However, if you don’t have a job with these kinds of benefits then you’re on your own for saving for retirement. In that case you need a Traditional IRA or a Roth IRA. With a Traditional IRA you can contribute up to a set annual limit, and deduct that amount from your taxes. You pay taxes hen you retire and withdraw those contributions and earnings. If you contribute to a Roth those are considered after tax dollars. You don’t get a deduction when you contribute but both withdrawals and earnings are tax free when you hit retirement age.

You can get one of these accounts through all kinds of financial product providers. My favorite is Betterment.

Betterment uses ETF funds (a “basket” of stocks and bonds) over individual stocks and mutual funds. These funds track with the performance of the market and can adjust with your risk tolerance. What I love about this model is I don’t have to stress about what stocks or funds to pick. I just put in info about when I want to retire, how much I want to contribute each month, then set it and forget it.

You can also use Betterment for taxable investment accounts. We have one of these to put some of our savings in to get a better return. However, this is a last resort fund we’d touch in an emergency as we want to avoid high taxes, but also don’t want to lose out on the long-term compounding returns of the stock market.

The other thing you want to pay attention to is fees, because they may seem small now, but add up over time. Since Betterment is a relatively simple investing product their fees are very low. You could do better if you wanted to be more hands on with low cost funds through Fidelity, Vanguard, or the institution of your choice, so it’s up to you. Here’s a post if you want to learn more, but I’m no help here.

Sign up for Betterment using this link and we’ll both get discounts on management fees for a period of time.


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