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Investing for retirement is one of the most important things you can do to become self-sufficient once your working years are behind you. Despite this fact, many people reach middle age having done little or no investing for their retirement years. If you’re in this situation, it is still very possible to catch up and create a substantial nest egg for your retirement. Here are some of the best ways to make up for lost time when it comes to retirement investing.
If you didn’t start investing for retirement early, maximizing the amount of money you allocate to it now is critical for catching up. Contribute as much as you are allowed to your 401(k) and IRA plans, since these will give you a solid and tax-friendly foundation for your retirement. This step is especially important if your employer will match your 401(k) contributions.
If you are burdened with debts in the form of unpaid credit card balances, a mortgage or students loans, a key part of your strategy for catching up in your retirement investing should be paying off these financial obligations. Once you’ve paid your debts off, however, you shouldn’t treat the money you’ll no longer be spending to service them as disposable income. Instead, keep setting most or all of it aside each month for investment purposes.
In today’s tech-driven world, there are any number of great investment apps that can be used to make the process of investing easier for beginners. Apps like Wealthfront and Betterment provide easy-to-use platforms for investing in index funds, which have become one of the most popular forms of consumer investment in recent years. Another popular app, called Robinhood, allows users to invest in individual stocks in a more traditional way. All of these apps make investing easy while cutting down on the administrative costs charged by traditional funds, brokers and advisors. By saving on these fees, you can maximize the returns you’ll see from your investments, which is especially important if you’re trying to make up for lost time.
When you’re trying to build your investments on a short time scale, high-return opportunities can look very appealing. The catch, though, is that these investments also carry higher risk levels. For most people investing later in life, high-risk investments don’t make a great deal of sense. Unless you are very comfortable with risk as an investor and have an investment strategy in which high-risk assets make sense, it’s usually a better idea to stick with more conservative investments.