Posted by JRSutton on February 17, 2012 at 15:44:25 from (75.130.109.233):
In Reply to: What to invest in????? posted by wilson ind on February 17, 2012 at 06:58:47:
One thing MANY people overlook when thinking of investing is the elimination of existing debt.
Any interest you may be paying on credit cards, mortgage, car loans, etc, etc is probably high enough to make a reduction in that debt a very wise investment.
It's one of the few places you can actually guarantee a good return.
You may not have any debt at all - but figured I'd throw it out there as most people do.
Also consider hidden interest payments - like charges for making installment payments on auto and homeowners insurance etc etc. vs. paying them up front in total.
Again, not very exciting as an investment, but hard to beat the "return" on the investment.
A hidden bonus is that by paying these things down, you reduce the chance of missing a payment and being hit with late charges. For the average american, that alone can make it a good investment.
After you nail all your debt down - the next best investment (and one COULD argue this should actually be first) is to make sure you're maxed out on a company 401k plan if you work for a company that matches.
That's often a guaranteed 50% return or more - but many people just don't like to take advantage of it, worried about tying their money up till retirement. Ignore that concern - max it out.
If you don't have a 401k plan - consider an IRA. That gets into figuring income and tax brackets to establish how much sense it actually makes for you personally - but in most cases, you should be putting in the max allowed every year.
After that - if your goal is to pass money onto your family - definitely look into a good life insurance policy. It's a cold hard fact that everybody dies, and usually before they want to.
In most cases, it's a heck of a lot easier to pass on a million dollars to your family that way, than trying to build even half of that in the bank.
Once you get those loose ends tied down (and you may have already, I don't mean to presume you don't) - And you have a good safety cushion socked away in the bank for emergencies - only THEN should you consider doing something "more" with your money.
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