For many people living on a budget, investing in their retirement is something they think of as being out of their reach. Saving for retirement is an abstract concept relegated to some fuzzy future point when you have enough excess income that you can afford it. After all, there’s always more time down the road, right? Unfortunately, the end of that road can approach a lot faster than we expect.
The good news? Even on a budget, there are small, concrete steps you can take to invest in your future. Here’s five of the best proven strategies for building a solid retirement plan.
The first step to investing in your retirement is to pay off any credit card debt you have. There’s no point in investing in 401Ks, stocks, or retirement plans when the debt on your credit cards is still growing. The interest rate will almost invariably be higher than any return your investment would earn, making investing before paying off your credit cards pointless and counterproductive.
One of the biggest contributors to credit card balances and debt in general are one-time emergency purchases or unexpected expenses. Maybe your car breaks (or the washer, or your foot). Any of these can easily put you into the red, breaking the budget you’ve set up and forcing you to use a credit card. And, as mentioned above, those are the bane of any good retirement strategy.
To keep emergencies from bleeding you dry, start an emergency fund so that you can use cash instead of credit to deal with unexpected expenses when they come up. Ideally, your emergency fund should be equivalent to approximately 2 to 3 months of your net salary. Another option for sudden and unexpected expenses is payday loans, one of the fastest ways to secure extra cash between.
This is probably the single best way of investing for those on a budget. Unlike a couple of other types of investments, 401Ks have low contribution minimums, meaning you don’t have to already be rich to put money into it. You can put in as much or as little as you’re able to on a monthly basis.
On top of that, many employers who offer 401K plans are willing to match a portion of your contributions. This means when you invest in your 401K, you’re essentially getting free money. If your employer offers 401K matching, you should always take advantage of it by investing up to their match point.
A mutual fund is an investment program where groups of people pool their money together to invest in a variety of stocks and bonds. Because mutual funds don’t just invest in one stock or type of asset and instead diversify their portfolio, they’re able to ride the economic waves of the stock market and still emerge with a net profit. Mutual funds are ideal for retirement investing and keeping your money safe for the future.
In the app age, the options for personal investing have exploded. While not all apps are worth your time, many are worth exploring and experimenting with to see which strategy works best for you. By far the most popular is Robinhood, which offers free stock trading in a polished and easy to use interface.
Another popular app is Acorn, which rounds up the change to the nearest dollar each time you make an online purchase and puts it towards an online stock portfolio. This lets you save without thinking about it, and can add up quickly if you shop online frequently. Finally, Mint is an app that doesn’t invest for you, but does make it easy to keep track of how your retirement plan is unfolding and chart out your expenses and income.
There you have it: 5 ways you can invest in your retirement if you’re on a budget. If you’re working hard to stay on track financially and find yourself hit with a cash emergency, consider the option of taking out a payday loan with Texas Car Title and Payday Loan Services, Inc. Their services are fast, discreet, and you can start by filling out a simple online request form.