Finding the Money to Invest

Want to retire comfortably? The formula is simple: Pay yourself first and live within your means.

You may not retire a millionaire, but you may not be able to afford the lifestyle you want unless you find money to invest for retirement.


Fortunately, there are easy ways to pay yourself first.

Many employers have automatic payroll deductions for 401(k) plans and other retirement plans. Investing in a 401(k) plan is a no-brainer, because companies may match some or all of your contributions. That's like buying money on sale.

And because you pay in pre-tax dollars, you'll pay less in income taxes. Payroll deductions are also great because the money can be directly invested instead of put into your checking account, that tempting pool of quick cash. Another avenue is to have money automatically deducted from your checking account and put into an investment account on a systematic basis.

Your goal should be to maximize your contribution to an employer-sponsored retirement plan, or invest for retirement through IRAs and other tax-deferred retirement plans.

So where do you find the money to invest for retirement?

Examine your spending habits. Keep a spending log for at least a month that details every penny that flows out of your household. Then, identify and cut out unneeded expenses. The money you set aside becomes your investment cash.

Here are some ideas:

  • Take high-interest credit card debt and consolidate it on a low-interest card. Pay off the card and use it only for purchases you can pay for that month.
  • Refinance your mortgage at a lower interest rate.
  • Buy a used car instead of a new one.
  • Buy items on sale, not on impulse. Shop with a list and stick to it. Wait 24 hours before making a "must have" purchase to see if you still want it.
  • Shop for lower prices on groceries, dry cleaning, and insurance. Find a bank that offers free checking or lower fees. Raise your insurance deductible.
  • Bring a lunch from home instead of buying it from somewhere else.
  • Invest your year-end bonus instead of buying something with it.

Money you invest now will compound, giving you a return on not only your contributions, but on any earnings your contribution generates. Over time, small investments can grow into large nest eggs.

But they can't grow if you don't start investing.

A program of regular investment cannot assure a profit or protect against a loss in a declining market.
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