Related Posts

Finances 102…

If you read my last entry on this issue, you’ve probably given it some thought and are trying to improve your financial situation. Hopefully putting some cash into your retirement account is a number one priority.

The other day I was watching a news program and they repeated the sentiment about paying yourself first, with a small difference. Their plan was for people to put the max contribution you need into your company-sponsored retirement account that will allow you to get the maximum match, so if they’ll match up to 6%, put in 6%. Then they recommended that you open a Roth IRA and put the remainder into that, which allows the beneficiary to withdraw the earnings tax-free. So if you’re currently socking away 10% into your retirement account, their suggestion is to put the 6% into the company account for that “free money” match, and then the remaining 4% into the Roth IRA. Personally, I’m still undecided and will have to do a little more research on which way has the most benefits financially.

Aside from that, while thinking about retirement is nice, sometimes you want to increase the cash you currently have by investing it in stocks. Now, investing is pretty risky, especially in the stock market and you should probably consult a financial advisor before tossing your nestegg into the market, but if you do have some spare cash, it can be a fun way to “play the market” and make a couple extra bucks on the side.

I use ShareBuilder.com as my resource and find it extremely easy to use—sort of a set it and forget it type of deal. The way I use it is to have it automatically take out a set amount of money from my checking account and put it in my sharebuilder account each pay period, say $25. Then once a month, the account will automatically use that money to purchase the stocks I’ve selected. The charge per transaction is $4, so if you select one stock that’s $4 per purchase, if you select two, that’s $8 and so on.

The neat thing about this method is that you can use your spare cash to buy into the market, without any huge upfront investments, and better, you don’t have to buy full shares. So if you choose to buy a stock like Google, which might be trading at $400/share, you’re $50 would buy you an eighth of a share. And that’s just fine.

Before you buy stocks, you should do your research, read the prospectus and know that just because they’ve performed well in the past it doesn’t mean they’ll continue to do so in the future. Like I said, it’s a risk, so don’t play if you can’t afford to lose. Aside from that, it’s a fun way to take your extra cash and invest it in companies you believe can make you some money. And like I said earlier, since you can set it and forget it, before you know it all that extra cash will add up and you can buy a new car, a computer or that addition to your house.

Tags: finances, stocks, money

 Print This Post
  Link to this Entry