Dusting Off the Piggy Bank
Dusting Off the Piggy Bank
Long-term investing is your best hedge against inflation, but you need to save in order to invest. This can be tough to do. Have you ever noticed that after you pay your monthly bills, buy groceries and cover your other expenses, you have little left in your paycheck? Consider contributing to your savings plan first—not last—each month.
A Three- Part Strategy
Saving money is hard work. And the hardest part is simply getting started. If you’re beginning from scratch, consider this three-part strategy:
1. Save for the unexpected—three to six month’s worth of living expenses. In case you lose a job or find yourself with no steady income, this rainy-day fund will become necessary. Take no chances with this money. Keep it readily available, in a bank account or a money-market mutual fund.
2. Save for long-range expenses—a new home or college for the kids. Be more flexible with this money. Keep it in long-term certificates of deposit or in Series EE Savings Bonds. You’ll earn more interest than in a conventional bank account and you can time your investment so the money is available when you need it.
3. Save for retirement. That can mean an Individual Retirement Account, a company retirement plan, or other solid financial investments. A conservative mutual fund that invests only in top-quality stocks is one possibility. Or you might risk a little more for a greater reward by investing in a mutual fund that buys growth stocks.
Your thoughts on this subject? Your comments appreciated!
Content © Rich Brott, 2011
