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Paisley
@pai291
Saving up For Retirement, Together
- Firstly, save up for the emergency fund, which is three to six months of expenses, and set it aside. After that, least 15% of your combined gross household income should go towards your retirement, once all debt is cleared.
- If only one of the partner works, you still can save up for retirement using a Spousal IRA, provided a joint tax return is filed. For details, you can consult an investing professional.
- It is also a good idea to clear up the old 401(k) accounts which are hanging around from the old jobs and put one's investments in order.
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Lola F.
@lolaf237
Investing for Beginners
Investing defined
Investing is about laying out cash or assets now, in the hope of more cash or assets returning to you tomorrow, or next year, or next decade.
Most of the time, this is best achieved th...
Productive assets explained
- Productive assets are investments that internally throw off surplus money from some sort of activity.
- Each type of productive asset has its own pros and cons, unique quirks, legal traditions, tax rules, and other relevant details.
- The three most common kinds of investments from productive assets are stocks, bonds, and real estate.
Investing in Stocks
- It means investing in common stock, which is another way to describe business ownership or business equity.
- When you own equity (the value of the shares issued by a company) in a business, you are entitled to a share of the profit or losses generated by that company's operating activity.
- Equities are the most rewarding asset class for investors seeking to build wealth over time without using large amounts of leverage.
Vera
@vera_18
Planning for Retirement as a Single Person
Build a team
Growing older without a spouse or adult children means you'll need to build support who can help with your finances, make medical decisions and prevent you from becoming isolated as you grow ol...
Create an income safety net
Many singles don't have a strong enough backup plan to cover the costs of a major illness or other problems.
Ensure you have enough cash on hand to cover emergencies. For singles, the aim is between nine and twelve months of living expenses in a savings account. As you near retirement, consider bulking up to at least two years of living expenses.
Long-term disability policies
Group long-term disability policies offered by employers typically replace up to 60% of your income.
To ensure you have enough coverage, aim to bring your total coverage up to 80% o 90% of your take-home pay, including bonuses and commissions.
Lucy
@lucy_d72
How much you should save every month
The popular 50/30/20 rule states that you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and 20 percent for savings.
But ...
Why 20 percent is recommended
Assuming you're in your 20s or 30s and can earn an average investment return of five percent a year, you'll need to save about 20 percent of your income so you can reach financial independence when you're older.
Financial independence means that you can maintain your chosen lifestyle entirely from the interest of your investments and dividends.
The four percent rule
The four percent rule states that you could withdraw four percent of your principal balance every year and live on this indefinitely. That means you need to save 25 times your annual expenses to become financially independent.
The four percent rule is not perfect. There is no risk-free investment that yields that much today. Sudden inflation could also cause a problem.
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