I would like to know some good options on how to save my money for the future. Is it best to put all my money into a savings account or are there other options for me that would benefit me in the long run.
I think you should have a mixture of pre-tax and after-tax accounts, like a regular investment account and an IRA or 401(k) plan.
The IRA and 401(k) plans are great because of the tax benefits, but if you have a financial emergency, you pay a 10% penalty in many cases if you take money out of an IRA or a 401(k) plan before you are 59 1/2.
On the third hand ;-), if your employer allows a loan to be taken against the 401(k) plan, then you can just borrow the money and pay it back to yourself. But you can't borrow against an IRA. :(
Oh, whatever you do, don't have too much cash in a savings account...the interest rates are terrible!
I would agree that a mixture of pre-tax and post-tax accounts would be good to have.
If your employer has retirement accounts to participate in, that is a great place to start.
However, if also have to have accessible savings. Some very liquid (that you can reach in hours or a day or so), some maybe not so liquid. You should have emergency savings in case of loss of job, car breaks down or you have some other major repair or financial emergency. Having some savings to cover those things is great so that you don't have to borrow (or might not be even able to borrow) when the need arises.
After tax savings might be forms of mutual funds, interest bearing accounts, stocks, bonds, etc. etc. There are many choices to consider. Part of which is based on your knowledge and tolerance of risk.
But in any event, you have to start somewhere, and a savings account earning the highest rate of interest is a good place to start. Check banks, credit unions, and online banking (check web sites that show institutions paying the highest rates of returns and types of accounts.) Good luck
In addition to the above advice on pre tax and post tax accounts:
Before you invest, consider building a bank or money market savings account to include 6-12 months living expenses to cover any would be financial emergency.
Afterwards, you should also consider a risk tolerance test to determine your best mix of investments to include stocks, bonds. commodities, real estate , cash, ect. . You may be able to take this test through a local financial professional or from the larger mutual fund companies such as Fidelity or Vanguard. These investments may be available to you in a retirement account such as a 401(k) or and IRA depending on the choices available to you.
All of the contributions are excellent suggestions so far. I'll add my two cents 🙂 Just begin somewhere. The biggest obstacle to saving appropriately for the short-term or long-term is just beginning the process. Begin somewhere then you will figure it out and refine your methods as you go.
I favor automating the process. If you never see it in your paycheck (contributing to an employer plan) or it is automatically transferred from your checking to savings/investments, then you will never miss it. Set some beginning goal to automate a set amount/month. Live with that for awhile, then increase it over time.
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Agreed Paula M, pay yourself first, and let your living expenses automatically adjust.
They say what's good for the goose is good for the gander. That is, until you get home one day and find a dead gander in your living room. If you want insight into the best ideas that can work for you and your specific situation not only now, but five, ten and even 50 years from now, you really need to read Dave Ramsey's book, The Total Money Makeover. It's worked wonders for me, and for quite a fair number of my friends too. Just google that book title and you'll find it.
A lot of this depends on how old you are. If you’re just starting in your early 20’s get the apps like digit, this will help you save for different things but the money doesn’t yield any interest really. The app called Betterment let’s you open IRA accounts and you can set up automatic contributions. You can also decide which how your money is allocated depending on your risk profile, if you’re young you want to be more risky because you have a long time until retirement. If you’re older maybe less risky. But the key is to be consistent and keep up never stop contributing to your future.
Definitely if you have an employer that has a 401k use it! And if they have a match max it out and go beyond it just to help it grow. If you have access to an HSA account that is a really great way to help save for your health care needs now and for the future and you can use that when you retire. 401k’s and HSA’s through your employer are great because that money is tax free which means you’re keeping MORE of YOUR money. I did the math in my pre-tax contributions and found out I get to keep like $250 more each paycheck that would have gone to taxes by putting it into a 401k and HSA.