- Also known as “how to make your money work for you”…
How can working adults leverage their basic knowledge of current economic and financial events to make a solid financial plan? There’s no easy answer, but millions have made specific efforts to not only make plans for long-term security but to make those plans a reality. A person doesn’t have to be an economist to stay informed about important issues and market news. All it takes is a few minutes each day to check the top media outlets to get a feel for the overall direction of the global economy and major securities exchanges.
How can serious adults educate themselves and develop essential skills at the same time? One way to begin is to study the economy, learn basic tenets about how markets work, pick up fundamental trading skills, know where to look for professional advice, use retirement accounts wisely, and read a few of the classic publications about trading, investing, and finance. Here’s how to get started on the road to financial security through careful, diligent planning.
Study the Economy
The global and national economy can appear to be nothing more than a giant, illogical quagmire for those who are studying it for the first time. But there is a decent amount of logic and precision in the inner workings of the financial markets, government economic pronouncements, and other money-related affairs. Luckily, it doesn’t take newcomers too long to gain a working knowledge of economic principles.
If you want to protect your savings from inflation and ultimately grow wealth you need to understand the bigger picture. In addition to studying the classic textbooks on the subject, explore free online tutorials that walk users through all the basics, giving real-life examples along the way. Once you acquire a solid foundation of core knowledge on the subject, it’s much easier to make decisions about your personal finances. Large numbers of working adults who are nearing retirement purchase stocks that appear more likely to survive the coming ups and downs of the global and US economy.
Learn About the Markets
Those who are interested in learning how to trade are on the right track. Why? Because a general familiarity with the markets is an ideal first step on the road to gaining an understanding of the global economy and the worldwide securities marketplace. It’s a form of self-education that usually opens a person’s eyes about how to structure a retirement or other kind of portfolio for maximum profit potential.
Know When to Get Professional Advice
Never assume you can go it alone. Getting outside help is a major part of the learning process for amassing enough wealth to sustain your lifestyle in early and later retirement years. Who are the experts in the field? In addition to CPAs (certified public accountants), you might want to think about consulting tax attorneys, financial planners, retirement specialists, and investment advisors. Sometimes, all it takes to get on the right track is to meet with a CPA or financial planner for a couple of one-hour consulting sessions. Shop around for local and online professionals who specialize in retirement planning and long-term portfolios for individuals.
Use Tax-Shielded Savings Accounts
IRAs and employer-sponsored 401(k) plans can be the perfect way to bolster retirement wealth. Keep in mind that even though there are limits on contributions to both types of accounts, IRAs (individual retirement accounts/arrangements) are much more common. They come in two basic versions. One uses pre-tax income, and the other uses after-tax dollars. The latter, called a Roth IRA, gives investors a chance to earn income on the savings tax-free and take post-retirement distributions also without taxation.
In most situations, a Roth is the better choice, but it’s wise to check with your own tax advisor to get an idea of which one is more advantageous for your case. As for 401(k) plans, they come with high contribution limits, but not all employers offer them. If you don’t have access to a 401(k) through work, open an IRA through any bank or broker.
Read Books About Finance, Investing, & Trading
There are dozens of excellent books and websites whose mission is to inform readers who want information. Most are either free or low-cost resources. The good news is you don’t need to be wealthy to learn how to generate wealth. Consider checking out a few of the top brokerage and banking websites.
The sites typically have excellent educational sections that include free book downloads, informative articles, video tutorials on multiple topics, and live webinars. If the whole topic is new to you, explore classic books about securities trading, long-term investing, and personal finance. Those three topics should give you a solid grounding in how to plan your financial future.
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