Friday, February 20, 2015

Weighing Your Options

America is a fortunate place. A standard job earning $50,000 over 40 years without increase in salary would yield $2 million dollars. The big question in your life is what to do with the hard-earned money.

Here are some big ticket items a standard American hopes to 'purchase' over their lifetime. 
     1. A house 
     2. Children
     3. A car
     4. Retirement

The last option is probably the most important of all of the options above BECAUSE it is the most difficult to manage. Saving for retirement is difficult because over your entire working life, there are billions of combinations to save for retirement. Annuities, pensions, 401K's, IRA's, Roths, mutual funds, stocks and bonds are all examples of vehicles to lead you to retirement. All options have different risks and rewards associated with them.

Annuities are a source of constant payment that do not yield a high return. Dividends are an example of a type of annuity. However, they offer an advantage because when you sell a dividend you receive capital gains from the stock. 

Bonds are low risk vehicles. The U.S. Treasury yields fluctuate but stay pretty much consistent. Again, these yields are pretty low.

Pensions are a rare breed in corporate America. Companies provide income to employees for their years of service. This is very similar to an annuity.

401K's and IRA's are retirement vehicles to allow individuals an opportunity to invest in various forms of stocks, bonds, and funds to gain wealth. There is more risk involved but the yields can be very high. People have gained over 100% (double your money) return in the stock market over a year. Be very careful of investing because it is easy to lose all your hard-earned money. I would recommend most people talk to a trained professional and become educated to how you would like to invest your money.

Mutual funds are similar to stocks and bonds. These funds invest in a wide range of stocks and bonds. Mutual funds can be very beneficial because you have the opportunity to invest in various strategies based on strategy and size of stocks.
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