How to save for retirement without getting ripped off by Wall Street
Retirement planning is a topic that fills many people with dread. Not just because saving is difficult, but because advice on how to do it well is complex, confusing, and often contradictory.
Vox is here to help. While saving for retirement seems complicated, there are four simple rules that — if followed — will get you on the path to a comfortable retirement:
- Save 12 to 15 percent of your income each year beginning in your 20s. If you're over 30 and haven't started saving yet, begin as soon as possible.
- Diversify. Invest in mutual funds that give you exposure to a wide variety of stocks and bonds,
both in the US and overseas.
- Take a long-term perspective. Younger investors should invest mostly in stocks. Resist the urge to panic sell when the market falls. As you get older, gradually shift your investments into bonds.
- Don't let mutual fund companies rip you off with high fees. Choose the most affordable mutual funds you can find, and don't be fooled by funds that claim they can beat the market. For novice investors, a Vanguard Target Retirement fund is a good option, though not all employers offer it in their 401(k) plans.
That's it. If you follow these four rules, you have a high probability of enjoying a comfortable retirement. Read on for more details.
Use this calculator to figure out how much to save
Category: Personal Finance