First Time Retirement Investor

It happened, a job, a good job, a good job with benefits, a good job with retirement benefits. Now what? I think that it is incumbent on each and everyone to contribute as much as they can to their retirement account and it is never too early to start contributing. There are things to consider.

Start by identifying other life goals besides saving for retirement. Taking full advantage of your employer’s retirement plan can take care of that. If you still have discretionary income available for investing, then I’d suggest that you open a taxable investment account. Your choices are between holding the account with a brokerage firm, a bank, or a mutual fund family. The lines are a little fuzzy, meaning a brokerage firm can have a banking arm as easily as a bank can have a brokerage arm.

What’s key is the availability of the investment products you want to invest in, and being able to keep the annual fees and expenses low. You’re choosing between investing in bank accounts; individual stocks; individual bonds; or mutual funds and exchange-traded funds, or ETFs, which invest in stocks, bonds or other products such as commodities.

The typical retirement account has you investing in mutual funds that invest in stocks and bonds. You should have an emergency fund of three to six months’ worth of expenses invested in a liquid bank account, such as a money market account. That leaves me suggesting a taxable brokerage account for your non-tax-advantaged investments. I’d lean toward a low-cost discount brokerage firm with a Web presence. Many of these sites allow you to set up tracking systems to test out your investing prowess.

If you’re not comfortable making investing choices on a do-it-yourself basis, then I’d suggest that you work with a financial planning professional.

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