If you share my perspective, you would agree that understanding past actions is always easier. This holds particularly true when considering financial decisions and actions we wish we had taken earlier. However, rather than feeling regret about past financial indiscretions, our focus should be on laying a secure foundation for our financial future. Hence, the adage “there’s no time like the present” stands very true, particularly for planning and investing in securing your financial future.
1. INVESTING IN THE FUTURE
When it comes to the concept of investing in oneself, the first inclination is towards securing the future financially. As we age, it becomes clear that time isn’t always on our side contrary to what we may have thought in our youth. The smarter and more experienced version of us understands this all too well.
Therefore, a logical step towards future security is by setting up proper investment accounts. The 3 prevalent types of accounts outside the organizational context include Roth IRA, Traditional IRA, and general Investment Accounts.
ROTH IRA
The choice of account will depend heavily on your specific circumstances. My choice was a Roth IRA with Betterment, a renowned robo-advisory service known for its low cost. Additionally, they handle the task of account rebalancing, which appealed to me as a beginner investor.
For self-employed individuals like me, a Roth IRA is a smart choice due to its post-tax investment policy, ensuring that the withdrawal at retirement isn’t taxed. I find it ideal to pay taxes on the invested money now, when I am earning, instead of during retirement when my sources of income might be limited. However, an annual contribution limit is present for a Roth IRA (for 2020 it’s set at $6,000 or $7,000 for those over 50 years of age).
ANOTHER INVESTMENT ACCOUNT
Along with the Roth IRA, I also chose to create a general investment account using Acorns. The platform rounds up your spendings, helping you save and invest. It proves to be ideal for those who struggle to set money aside consistently.
I started with Acorns Lite initially, which costs $1 per month as opposed to the Acorns Personal package that costs $3 per month. The decision was influenced by my existing Roth IRA and my preference for another investment account. Acorns, much like Betterment, handles portfolio diversification and rebalancing tasks efficiently.
2. KEEP A CHECK ON YOUR NET WORTH
Creating investment accounts is a good starting point, but it’s also important to keep tabs on your net worth to gauge your financial growth. A few years ago, while I was trying to become debt-free, I stumbled upon Personal Capital, a user-friendly platform which lets you keep a check on your net worth.
The initial setup might take a while as all accounts are to be connected within the platform. However, once done, it provides a clear overview of your finances and net worth. Not only is it satisfying to witness your net worth grow every month, but every positive movement towards increasing your total net worth also signals financial accomplishment.
3. LIFE INSURANCE
Life insurance, despite its perceived discomfort as a discussion topic, is something that cannot be neglected, especially in today’s precarious world. It’s been an ongoing conversation between my spouse and me for years. Recently, we’ve decided to act upon it.
The choice of life insurance policy will depend upon individual circumstances. A recommended starting point for those seeking a simple term policy would be Bestow Life Insurance. Their application process is quite simple and an approximate premium cost for your policy is provided within minutes.
Although life insurance isn’t a module of investing in your future directly, it’s a crucial step towards family security in case of any mishap.
SUMMARY: INVESTING IN SELF
In essence, you can kickstart your journey of self-investment today through various routes. Some essential methods I recommend include:
– Opening investment accounts
– Regularly tracking your net worth
– Investing in a robust life insurance policy
If you conscientiously follow these steps, your future self will be extremely grateful for your financial foresight and planning.
What are some unique ways you have discovered for self-investment?
