Retirement Investing
Investing for retirement is important for securing your long-term health and happiness and also for making sure you are able to sustain yourself once you are ready to stop working. Most of us will need to make saving for retirement a non-negotiable part of our financial plans.
How to Invest for Retirement
Many people start investing for their retirement through a workplace-sponsored investing vehicle, like a 401k or a 403b, or by contributing to a deferred compensation plan like a pension. If you do not have a retirement plan with your employer, or if you want to invest more than you are legally able to through your employer-sponsored plan, you have the option to invest in either a Traditional or Roth IRA, which are self-directed but have lower limits than a 401k or 403b.
IRAs
An individual retirement account (IRA) is used to set funds aside and invest savings for retirement later down the road. The account functions as a holding tool for a variety of assets, from stocks and bonds to certificates of deposits and money markets. There are two primary types of IRAs to choose from: traditional and Roth.
Traditional IRAs
A traditional IRA is a retirement savings and investment account. The biggest advantage of choosing a traditional IRA is your ability to deduct contributions from the current year’s taxable income. Thereby, giving you a form of a tax break. There are certain requirements you must meet to deduct your full IRA contribution amount. Determining factors include your tax filing status, whether you have access to an employer retirement plan, and your household income.
Roth IRAs
A Roth IRA is a popular alternative retirement savings and investment tool. While it has many similar characteristics as a traditional IRA, a Roth IRA offers more flexibility in terms of when you can make distributions. With a Roth IRA, you won’t incur any early distribution penalties if you choose to make a withdrawal of your past principal contributions. There’s also no mandatory distribution age, which means you’re able to decide when distributions are made based on your financial standing.
Rollover IRAs
Rollover IRAs are self-directed retirement accounts that allow you to roll over retirement accounts from previous employers into your own self-managed retirement accounts. This can help you stay organized by consolidating accounts into one brokerage and can also save you money by eliminating the fees associated with being part of a group plan.
B.F.F. Approved Companies
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Betterment is best for people who don't want to actively manage their investments and would rather have investing decisions made for them. It's a good option for people building wealth for multiple goals at the same time and people who value intuitive graphics and ease-of-use. It has SRI options and offers checking and savings accounts. No minimum amount is required to get on board!
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Capitalize offers a service that manages your 401(k) rollover from start to finish, for free. They’ll help you find your 401(k)s, choose an IRA if you don’t already have one, and move your money to your new account through their online process and white glove service.
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Beagle offers a subscription based service that helps you locate your old 401ks, investigate the hidden fees your old 401ks are charging you, and rollover your 401ks into an IRA.
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Public.com is a mobile-only investing platform that integrates the ability to invest in individual stocks and ETFs as well as in “themes”. These “themes” were created to spotlight stocks that play a part in a particular area of industry such as “Women in Charge.” It also incorporates a social aspect not seen in any other platform - users can “follow” other people of interest, both friends and celebrities (such as Shaq, Tony Hawk & Michael Bolton) to see how they invest and why.
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M1 Finance is different from other robo-advisors in that you do not simply set up automatic transfers to M1 and have an algorithm choose your investments. Instead M1 features their unique “Finance Pie” system. In this, you can either choose one of their previously created investment pies or create your own (which you can combine with individual stocks and ETFs) and decide the exact percentage of each contribution you want going to each investment in the pie. Once you are comfortable with the pie, you can set up their “auto-invest” feature which will make consistent contributions on a schedule you dictate towards those investments.
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