Bigg Challenge
We recently discussed how to turn your $2,300 refund check into over $723,000. Well, that prompted a question from Stan. He says he’d love to take our advice but he knows that, if he got extra money in his paycheck, he wouldn’t be disciplined enough to invest it. His bigg challenge to us – is there anything he can do to make sure he does invest it?
Bigg Advice
Here’s some good news, Stan … the secret is that you don’t have to have the discipline to invest. You just have to have enough discipline to set it up so you automatically invest. The best way to invest money is to do it before you see it.
Your retirement plan
The way you do that is to invest more in your employer’s retirement plan, such as a 401(k) or 403(b). Max that out first, before you consider any other alternatives.
You won’t see the money at all, so you won’t miss it. This money also comes out pre-tax, so you’re investing it without paying any taxes on it for now.
You’re not getting away with something; you will have to pay taxes when you take the money out. However, you won’t be working anymore, so it’s likely that you’ll be in a lower tax bracket.
When your retirement portfolio really starts growing, consult with a certified financial planner to make sure that a pre-tax investment is still your best bet. But while your nest egg is relatively small, it’s probably not a concern.
Automatically invest
What if you still have extra money after you’ve invested the maximum allowed in your retirement plan? Then make sure your paycheck is direct deposited and set up an automatic deduction from your bank account into an investment account.
A lot of us think nothing of having payments (e.g. mortgage or car loan) and bills (e.g. cell phone, utilities, cable) automatically deducted from our bank accounts. But for some reason, we hesitate to set up the most important payment of all – the one to ourselves for our future!
So you see, Stan, lack of self-discipline isn’t really a problem at all. Thanks for sharing your bigg challenge.
Our bigg quote today is by an unknown author.
become easy. It all depends upon how one adjusts oneself to life.”
So take it easy … and make it easy … to retire on easy street.
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Hey Stan. What about a Roth IRA?
How do you feel about that? Does that work with your family?
Yea an automatic deduction from your paycheck will totally get you in the mind to invest…
But, the next step for you would be to leave the money alone for safe keeping.
The stock market is like gambling. If you want to play the stock market on a daily basis, you might as well go to Vegas.
But on the long term it has more benefits than Vegas. As long as you diversify your money (spread out),go long term, and try not to worry about it on a daily basis. It’s just going to make you worry even more..
Nick, thanks for bringing up the Roth IRA, it’s a great addition to the post!
Hey guys, thanks so much for the advice! I’m going to share this with my wife and we’ll give it a shot. You’ve simplified it so much that I’d be silly not to.
Stan, it’s our pleasure to help. THANK YOU for sending us your bigg challenge!! Please keep us posted…