Magazine for the professional nail industry.
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These three easy steps are all it takes to set up a lifetime
savings plan: you've made the commitment, formed a habit,
and allocated wisely. Once your plan is underway, you'll
need to decide where to invest these dollars. There are
many types of accounts. Here are a few points to consider.
> Convenience. Since you are trying to make this a habit,
set up your initial accounts where it is easy to make
deposits. Remember, it won't take much of an obstacle to
end a habit. Make it easy to stay committed.
> Fees. Because today's savings accounts only pay about 1%,
find accounts where monthly fees won't eat up the earnings.
Credit unions are often a great source for low fees.
> Risk tolerance. As your money grows, there are more
investment options for generating higher investment
returns (earnings). Higher returns generally mean
higher risk of loss. Don't be talked into investments that
keep you awake at night worrying. Find an investment
with whose risk you are comfortable.
> Investment horizon. This refers to the length of time
you expect your money to be invested. If you will use the
money within a year, use a savings-type account where
there is no risk for untimely fluctuations in value. But,
if you won't be using the money for a long time, you can
invest in something that has higher returns, more risk, and
consequently more fluctuations. With a longer investment
horizon, you can time the withdrawal of these dollars and
not worry about having to do it on a "bad" day.
> Mutual funds. With over 10,000 funds to choose from,
you have a wide variety of investments to match your
risk tolerance and investment horizon. Using mutual
funds gives you the option to not "put all your eggs in
one basket." So even with only a small amount to invest,
you can invest in small pieces of many stocks and bonds
allowing you to diversify and spread your risk.
> Retirement plans. For long-term investments, take
advantage of tax laws that allow you to defer and/or
eliminate tax consequences. By doing so, you're using
government dollars to contribute to your future. There are
many types of retirement plans to choose from. Consult
your tax professional to find the one that fits you best.
These are just some of the investment considerations
ahead of you. Before you know it, your savings will grow
into something to be proud of and you'll be on your way
to financial freedom. Regardless of your age — today is the
perfect day to begin a new conscious life with money.
Jane Honeck, CPA, PFS, specializes in tax
and financial planning for professionals,
small businesses, and individuals. She is
the author of The Problem With Money? It's
Not About the Money! To learn more, visit
www.janehoneck.com.
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