In
a recent Gallup poll, 60% of those surveyed said they worried about their
financial future. There are a few simple steps you can take to help
reduce your worries:
 |
Put aside
some amount regularly in savings or other investments. The
compounding of earnings can be substantial. The longer your
investment period, the greater the beneficial effect of compounding. |
|
|
|
Invest in
what you know. The better informed you are, the better your
investment decisions will be. If you don't want to learn about
investments, consider hiring a money manager and paying him or her
to do your investing for you. |
|
|
|
Diversify
your investments. Have some of your money in an investment that is
easily converted to cash in case of emergencies. The old adage
"don't put all your eggs in one basket" is good advice when it comes
to your investments. |
|
|
|
Prepare an
annual balance sheet (a list of all your assets minus all your
debts) to determine your net worth. A comparison of your annual
balance sheets will reveal your success at growing your retirement
funds. |
|
|
|
Plan where
you want to be financially by retirement age. Once you know how much
you need to save, put your plan into action. Over 90% of Americans
must rely on the government or others for assistance during
retirement. With proper planning and diligence, you can be among
those who can retire in comfort. |
|
|
|
Don't use
credit to purchase consumption items. Wait until you can pay cash
for things which decrease in value. Borrowing money to purchase a
home is usually a sound idea. Using credit to purchase household
furnishings is not. |
|
|
|
Pay off
your credit card balance every month. Your credit card should be for
the convenience of purchasing, not a source of permanent finance.
The interest rates are much too high. |
|
|
|
Monitor
your investments to maximize your after-tax return. Use the
calculator below to compare the long-term results of different
interest rates. The difference that a 2% greater return can make in
the growth of your investments is dramatic. |
|
|
|
Have your
insurance agent do at least an annual review of your insurance needs
to determine that you are neither under- nor over-insured. Be sure
to contact your agent when you buy or sell any property. |
|
The
Magic of Compounding! - If you could have one of the following
as your pay for thirty days' work, which would you choose? (A) $10,000, or
(B) a penny the first day, two cents the second day, four cents the third
day, eight cents the fourth day, and so on, with each day doubling on out to
thirty days.
The
$10,000 sounds very attractive, but the fact is that the penny doubled each
day for thirty days adds up to over five million dollars. Of course, that is
100% interest compounded daily, a rate not available to most of us working
folk. Nevertheless, this example shows you the power of compounding on your
investment earnings.
Back
to Articles |
