Investing and saving for retirement in Wausau WI isn’t just for the wealthy. A U.S. News and World Report article, How to Start Investing and Saving for Retirement With Little Money is packed with good info.
Many Americans have long assumed that investing in stocks, bonds, and mutual funds requires a substantial bank account. While that may hold true for high-priced stocks at the top of the S&P 500, it doesn’t mean investing is out of reach for those with limited funds.
Start Small
When investing, start small and build momentum.
If you’re living paycheck to paycheck or struggling to save, don’t stretch yourself too thin when starting your investment journey.
Even if setting aside money seems difficult, consistency is key — small contributions can grow significantly over time. While the general rule of thumb is to save 20% of your income, that may not be realistic for everyone. If 20% feels overwhelming, start with 10%, $20 dollars a week, or whatever amount fits your budget.
To begin, consider opening a high-yield savings account that offers four to five percent interest, rather than a traditional savings account with less than one percent annual percentage yield, or APY.
And remember, investing comes with both rewards and risks. If it’s part of your financial strategy, it’s wise to consult a financial services professional to ensure you’re making informed decisions that align with your goals.
Review Your Finances
Before setting investment goals, it’s wise to start by assessing your current financial situation. Take a close look at how much of your income goes toward fixed expenses like rent, taxes, car payments, and student loans, versus discretionary spending on food, entertainment, and shopping.
Once you have a clear picture, outline a rough plan for how much you’d like to invest over the next year. Establish a household budget, prioritize essential expenses, and set up automatic contributions to your savings and investment accounts to stay on track.
Maximize Contributions
Prioritizing tax-advantaged accounts is crucial because they offer significant benefits, though early withdrawals come with restrictions. Additionally, investing in taxable investment accounts can provide more flexibility for accessing funds when needed.
If your employer offers a 401(k) match, take full advantage of it. Matching policies vary, but many companies match one dollar for every one dollar contributed up to three percent of your salary, then 50 cents on the dollar for the next two percent. This is essentially free money that can significantly boost your retirement savings.
Dollar-Cost Averaging
The article next recommends leveraging dollar-cost averaging, a strategy that makes investing more accessible through small, consistent contributions.
With dollar-cost averaging, you invest a set amount at regular intervals — whether weekly, monthly, or even daily — regardless of market fluctuations. Many investment platforms now support this approach, allowing you to purchase fractional shares of stocks, mutual funds, or other assets with ease.
The most challenging step is simply getting started, but once you do, those steady contributions can grow into substantial wealth over time.
Understand The Market
Educating yourself is just as important — stay informed by reading financial news, listening to podcasts, and following market trends that could impact your investments. The stock market is a complex ecosystem, and having a clear strategy is essential.
And be mindful of common investing pitfalls — the biggest being emotional decision-making. Avoid buying or selling stocks impulsively. For example, don’t invest in an obscure cryptocurrency just because a friend saw quick gains, and don’t panic-sell a stock just because its price drops — especially if your overall strategy hasn’t changed.
SOURCES
Disclosure: All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions.