How to Retire Rich

by admin on November 3, 2010

Anybody who has tried to show you how to get rich quickly was selling you snake oil. While we don’t want to crush anyone’s dreams, and we readily acknowledge that a few people have indeed made a lot of money off of various business ideas, the vast majority of those who try to get rich quickly not only don’t get rich quickly, but don’t get rich ever. They would have been much better off to put their money into a high interest savings account.

The good news is that, with a little discipline, anyone can achieve a fairly sizeable amount of wealth. And while “rich” may mean different things to different people, we can assure you that with time and discipline, anyone can have a comfortable retirement without needing to worry about money.

The key is to start while you’re young. If you’re reading this and you’re a twenty year old just starting out in life (or even younger), take heed to what we’re saying. You’ll be glad that you did. You have a lot of time on your hands, but you need to get your money working for you as soon as you can.

If, on the other hand, you’re somewhat older than 20 years old, you can still do a lot to help yourself retire comfortably. Regardless of how old you are, you aren’t getting any younger, and the absolute best time you can start is now.

There are several different savings vehicles you can use to help you get ahead of the game before you retire. It really doesn’t matter so much what you do as much as that you do something to start putting money aside for retirement. Here are some of the better options:

  • High interest savings account. High interest accounts typically pay as much as double what passbook savings accounts pay. They offer you the flexibility of having some access to your money if you need it (though you need to leave it alone) while still offering a reasonably attractive interest rate.
  • CDs. Certificates of Deposit (CDs) offer much better interest rates than most savings vehicles, with the tradeoff being that you need to leave your money in the CD for the duration of the contract. Most CDs are for a year or more, and the longer you are willing to leave your money in the CD, the better rate you can generally get.
  • IRAs/Roth IRAs. You can put up to $5,000 into an IRA and allow it to grow tax deferred. This makes them very attractive options, as long as you are willing to let your money sit there until you retire.
  • Annuities. An annuity is a savings vehicle which allows you to save money, tax deferred, until you are ready to retire. When you retire, instead of taking out a lump sum, you are given a monthly income based on how old you are and how much money you have managed to save.

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Where Is the Best Place for My Emergency Fund?

by admin on October 27, 2010

If we pay any attention to financial advisors at all, we already know that we should have several months’ worth of income as an emergency fund. But where is the best place to put it. Most experts suggest a high interest savings account.

When you consider your other options, it just makes sense. Really, you could put it:

  • In a coffee can buried in the back yard. The problem here is that you could forget where you put it. Of course, you could draw a map, but that would mean anyone could find it. On top of that, it won’t earn any interest at all.
  • In mutual funds. The problem here is that you introduce the element of risk. Not a good idea for an emergency fund. Additionally, it will take you longer to get your money if you need it for something like, oh say, maybe an emergency.
  • In a passbook savings account. This is an option, and the money will be safe, but as far as interest goes, you might just as well have left it in the coffee can.

Clearly, a high interest savings account is the best option. Now, don’t get us wrong: high interest savings accounts are currently earning anything but high interest. The rates on most of them are still under 2%. Still, it’s considerably better than what you will earn on a standard savings account, and you will have ready access to your money.

Another benefit (or drawback, depending on how you look at it) to having your money in a high interest savings account is that you are limited regarding how many times per month you can withdraw money. In a perfect world, this would keep you from being tempted to drain your savings account over a shoe emergency instead of a real emergency. Unfortunately, we don’t live in a perfect world, and there’s nothing to stop you from buying 20 pair of overpriced pumps. But at least you’ll be limited regarding how many times per month you can do it.

So, once you have enough money put aside to qualify for a high interest savings account at your financial institution, transfer your money there and leave it alone until you have an emergency. If an emergency comes, you’ll be glad you left it alone. If an emergency never comes, you’ll be glad that you earned higher interest on your money.

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The Three Little Piggy Banks

October 20, 2010

These days, there are many options when it comes to saving money. There are all sorts of places you can put it, from burying it in the back yard to opening a high interest savings account. Each option has its relative strengths and weaknesses, of course, and different solutions work better for different people. With [...]

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The Differences between a Bank and a Credit Union

October 13, 2010

Whether you are looking for a loan, starting a high interest savings account, or seeking other financial services, you will eventually be faced with the choice of conducting your business through a bank or a credit union. It’s a good idea to know a little about the similarities and differences between the two types of [...]

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47 Stories About Making Small Lifestyle Changes to Save Big

August 30, 2010
Thumbnail image for 47 Stories About Making Small Lifestyle Changes to Save Big

Many people are trying to save every penny they can due to the current economy. Although they typically look at huge things to save money, we often forget the small changes we can make. Those small changes can add up over a time period to make big savings. Things like skipping that high priced coffee [...]

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Steps for Opening a High Interest Savings Account

July 14, 2010

There are a number of things to consider before opening a high interest savings account, especially if you are doing it over the internet.  This is one of the numerous conveniences that the internet has provided us with along with being able to conduct any and all of your financial business.  Here are some steps [...]

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Are High Interest Savings Accounts Safe?

July 14, 2010

Everyone wants to get the best return on their money as possible anytime they open a savings account.  This is the key reason behind the increased popularity of the high interest savings account, especially with the way in which the world’s markets have become so unpredictable and volatile in the past couple of years.  It [...]

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Tips regarding High Interest Savings Accounts

July 14, 2010

Just as the name implies, a high interest savings account pays higher rates of interest so you earn more money on your investment compared to the more conventional savings accounts.  Prior to the collapse of the stock market in late 2008, most banks and other financial institutions that offered these traditional savings accounts were paying [...]

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