Welcome to a new feature on the blog, And to make it more fun, if I feature your question on GFC TV, I’m hooking you up with a copy of my book, Soldier of Finance, and a $50 Amazon gift card. If your question answered and a shot at winning some cool stuff, you can ask your question here. A lot of people are slowly moving into middle age, only to realize that they have very little in the way of savings and investments. There are a lot of reasons why it happens, like student loan debt, the tough job market, and even extended adolescence. But at just about any age you can play catch-up with investing. Check out our review on Motif Investing for more info! This topic was motivated by an Ask GFC question submitted by Kate C.: What’s the best way to “catch up” if I didn’t start investing early enough? I’m in my mid-30s and still have some time but I’m still not where I know I should be. Thanks Jeff! 🙂 Frankly, this is the question I wish more people would ask. There’s no crime in not having invested money up to this point, but just asking the question opens up the chance to change direction. How do you go about that?
Always Look Forward, Never BackTake everything that you’ve done in the past – including your inaction – and throw it out the window. It didn’t help you in the past, and it won’t help you now. Instead, focus on the future that you want to create. One of my favorite quotes is from Dan Sullivan who says, Always Make Your Future Bigger Than Your Past. Once you have a good handle on that, it becomes easier to set the financial goals that will enable that future to happen. And once you set the goals, you can establish an action plan. That plan should focus on what you are going to do, and you’re not going to ruminate on the past. Reaching any level of financial independence requires a commitment to the future, and to the processes that will get you there. Once you’ve got that set your mind, you can work on a plan for how to make it happen. Let’s talk about that plan.
Join Your Employer Retirement Plan and Max Out Your ContributionsFor most people, the easiest way to invest by far is through an employer-sponsored retirement plan. Participating in one gives you the advantages of:
- Automatic contributions, payroll deducted so you won’t even know it’s happening
- Automatic investing in pre-determined asset allocations
- Professional management – you don’t have to do the work
- Tax deductibility of contributions, and the ability to ignore the tax consequences of your investment activity
- The possibility of an employer matching contribution, if they provide one.