Learn How To Invest & Live Frugally

Learn How To Invest & Live Frugally To Build That Nest Egg

When people think of investing, they sometimes dismiss the idea because they don’t feel as though they fit the mold at the time. Indeed in years past, if you didn’t have a significant amount of money, it was not always the best idea to put it into the stock market. This was for many reasons, but you could chiefly point to commission and that your money would be better off elsewhere until you had a nest egg. Discount brokerages changed the game over the past decade or so, and small investors have been waking up to the idea that investing is quite simple in today’s world.

Here’s some quick tips for living frugally.   Silly but it works: http://money.usnews.com/money/personal-finance/articles/2012/09/11/15-ultra-frugal-money-saving-tips 

Of course, investing still requires that you make sound financial decisions. You also have to be disciplined, and it’s always good to be frugal so that you keep your money in your investment account and continue adding funds. You don’t want to treat it as an emergency fund. Of course, for the small investor, that can be a difficult task because they might not have huge liquid savings they can get to at the time.

If you don’t have liquid savings, then it’s not a good idea to start investing. There is always the chance that you will have to liquidate your investments. It will take some time, and what if you need that cash for a real emergency, meaning you need the funds right away? Plus, it will thwart your investment attempt, which can be quite discouraging.

When you do have an emergency fund saved up, you can quickly get started investing and be frugal about it at the same time. There is an app out right now that saves your spare change for you and invests it in ETF funds. It pulls out five bucks at a time, and I’d say that is quite frugal for sure. As for the commission costs, you’ve got to pay a dollar a month, and that is all.

There are other investment brokers out there that are ideal for small investors who don’t want to pay 10 dollars for buying and selling stocks. You can invest in partial shares, or you can save up to where you’re throwing a nice chunk of change at your investments to where you only pay the commission one time. It’s up to you how you want to do it, but there are ways to get you started on the road to investing while still being frugal.

If you spend little bits of your money at a time, you will soon be building a nice big nest egg. Plus, it will make you think about other areas of your life in which you can be frugal. Some of the greatest investors out there know how important it is to be frugal, so it seems like a good lesson for everyone to learn. Things cost money, and sometimes telling yourself no a few times can be the difference between investing and failing to save any money at all for your future.

Why Is A 401K Plan A Great Personal Finance Move?

Not everyone has a 401k plan available to them. Moreover, all of them are not created equal by any means. Some of the 401k plans out there limit employees as to what they can invest in, perhaps in some cases too strictly. Then there is the amount the employer is going to match. You already get to invest tax-free, meaning out of your gross wages, but the matching is what really sets this financial vehicle apart from others when planning for your retirement.  Check out Dave Ramsey for a starter if you want to follow fairly conservative, yet successful strategy to get out debt and build savings fast.

If you think about it, what the employer matches means you already have gained. Say you have a 401k account with your employer, and they match anything up to four percent. You decide that you want to put in four percent because you want the 100 percent automatic return that comes with that type of investment. Of course, depending on your salary and retirement goals, four percent might not be enough. Of course, you’re putting in eight percent of your income at this point with the employer matching benefit.

If you need more, you would have to go over the top of the four percent to say six or eight percent. The employer would still only match the original four percent of course. A 401k account is how my mom met her personal financial goals to save for retirement. In her early 40’s, she started working at a company that offered a great 401k plan and matching contributions of course.

I am self-employed, and while there are options available, you don’t get the matching part of course. Still, you can set up an IRA as well, and some people do both an IRA and a 401k plan. This way they maximize their retirement savings through accounts that get tax breaks. IRA accounts have annual contribution limits, and your 401k will have a contribution limit. However, a 401k plan contribution limit is usually a much larger percentage of your income

.Personal Finance Guru

For example, you might be able to max your 401k plan at 25 percent of your income. An IRA plan would have much lower annual limits than that. If you have a 401k plan available to you and you’re not putting money away, it’s like you’re throwing money away, free money. If your employer doesn’t match contributions, then that’s unfortunate, but you still need to be saving for retirement. Remember, a 401k account provides you with tax advantages.

Right now, I am saving back money in my checking account and in other creative hidden ways because I need to have my emergency fund completely built up first. An emergency fund means something different to everyone, but to me, it means what I heard from one expert as three to six months’ worth of living. Then I am going to start funding an IRA or a brokerage account with mutual funds or ETF funds. I have invested before, but the 401k plan won’t be available to me. While I do have other nice options, if you have a 401k plan, count your blessings!