If you are already excellent at managing money—a natural spendthrift who diligently tracks purchases, savings, and investments – we applaud and envy you; really, we do. But, if you need a little help, we’ve found you some real helpful, cut-to the-chase financial advice. From tips to diversifying your portfolio, to minimizing your investment fees, to investing idle cash, these tips will leave you in a better financial place than you started.
We gleaned some beneficial advice for you.
1. Diversify your portfolio to help minimize risk and maximize returns
There’s no need to throw up your hands and assume that diversifying investment is too complicated to be worth it. Diversifying your portfolio by holding investments comprised of a wide range of companies and geographies will help you smooth out your returns over time, go a long way toward matching the markets’ performance, and maybe even outperform some of your fellow investors.
Here’s the catch, when planning your retirement portfolio, aim to diversify based on your asset class and geography while keeping your investing fees low.
2. Minimize your investment fees
You get what you pay for, right? Actually… it turns out that this isn’t really the case when it comes to investments. A growing body of evidence shows that funds with higher expenses do not, on average, perform better than lower-expense funds.
In fact, research indicates the average actively-managed fund performs worse than a low-cost index fund.
3. Invest Idle Cash
Investing on your own can feel overwhelming. When you’re not sure of the best path forward, it may feel like the safest thing to do with your cash is simply nothing, at least until you come across something you feel confident about investing in.
Unfortunately, research has shown that trying to time the market doesn’t work. Instead, make regular contributions to your investment accounts, over time, and as you have excess cash to put to work for you.
4. Save 10-20% of your income
How much is the right amount to save for retirement? The answer depends somewhat based on factors like your income, household finances, time to retirement, and current assets. However, broadly speaking, saving more today is doubly beneficial as it reduces the level of income you’re used to living on, and allows you to look forward to a higher income in the future.
If you’re under 30, then saving 10% of your income, if you invest it appropriately, should enable you maintain a similar standard of living through your retirement as you experience when you are working.
If you start later in life, then you may need to save more. Saving early and often can have a large impact on the size of your portfolio at retirement.
Source: FutureAdvisor
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