Your Future Depends on Investing Now

Posted: 17 Mar 2011 04:00 AM PDT

No one can deny that the effects of the recession have been devastating. With many adults suffering layoffs, families losing their homes to foreclosure, and pretty much everyone cutting back on spending, it’s not exactly the best time to consider your investment opportunities. After all, you’re probably having a hard enough time just paying the monthly bills, much less saving anything.

The problem is that if you don’t plan for that hazy someday far down the road, it’s still going to come (whether you’re prepared or not). And the longer you wait to start saving for your retirement, the less money you’ll have to live on when you reach your golden years. But never fear; despite your current financial state, there are still a few ways you can start to invest in your future. Here are five that won’t put you in the poorhouse today.

: Photo: Think Panama

1. Pay off debt. This might strike you as the exact opposite of an investment, but in fact, there are few moves that will help you in more ways than just ridding yourself of debt. By paying off your creditors (slowly but surely), you are not only working to lower your monthly payments (eventually) but also improving your credit along the way. This is an important step towards a solid financial future, one in which you can get a loan when you need it, to purchase a home or start the business you’ve been planning for.

2. Start saving. There’s no better way to start saving than by putting aside money from every paycheck. Once you’ve built up a decent nest egg in the bank (3 month’s salary is generally recommended, although 6 is better), you can start to think about investing the extra. By funneling additional funds into a diverse investment portfolio (stocks, bonds, mutual funds, etc.) you can really start to make your money work for you with very little effort. And while a savings account will net you about 1-2% interest annually, the take from your portfolio could be as high as 13% over the course of a year.

3. 401K /RRSP Just about every company offers you the option to start a 401K with pre-taxable income taken out of your check before you even see it. There are several great reasons to contribute to this type of account, but one of the best is that you simply won’t miss the money you aren’t counting on seeing in your check. Also, you should take advantage of a matching program if your employer offers one, since you could score an additional 4-6% donation to your account, courtesy of the company. [Editor's note: 401K is the American equivalent to RRSP, these tips apply to both equally]

4. Self-directed IRA. Most people have taken it under advisement to start a Roth IRA, an account that you put your own money into much like a 401K (to supplement your retirement). And while you can get a break on your taxes by deducting these contributions, you still have to have the cash to put in. A self-directed IRA, on the other hand, allows you to control how your retirement funds are managed, meaning you could use the money for your future to invest in a business of your choice (like your own or that of a family member or friend) and potentially see a huge return (from both interest and a percentage of earnings).

5. Purchase property. The housing market is still down, which makes it a great time to buy real estate (if you can get a loan). You stand to show an amazing return on investment if you can buy cheap now, fix the place up, and hang on to it until the market rebounds.

Mike Thimmesch writes for J.G. Wentworth, the largest purchaser of future payments to individuals who hold assets in the form of a structured settlement loan and/ or annuities.

Dollar Matters: In the News

Posted: 16 Mar 2011 09:00 AM PDT

There has been a lot going on lately. And a lot of it can be related to money matters. here are some great posts from around the financial inter webs regarding the latest headlines:

Forex Traders for Japan Disaster Relief

You don’t have to be a forex trader to join in. There are a number of people looking to fundraise for earthquake relief. Kathy Lien has set up a fundraising page through FirstGiving and Shelter Box, where the money is sent to the Red Cross to help with the Japan earthquake.

How to Measure the Financial Impact of Japan’s Earthquake

We know that the devastation in Japan will have far-reaching impacts. Nelson Wang offers some various resources to help you figure out the financial impact of the Japan earthquake.

How to Financially Survive a Disaster

What happens if you are caught up in a disaster? How would your finances fare? Flexo provides some tips for getting through a disaster financially intact.

Do Sponsored Tweets Work? @CharlieSheen Shows Us the Money

Twitter as a business model? Everyone’s still trying to figure out how to monetize Twitter effectively. Brian Solis takes a look at what a little celebrity Twitter power can do.

Some Things Charlie Sheen Taught Me About Money

Charlie Sheen (and his break down) have been everywhere. And Big Cajun Man knows that there are financial lessons to be learned from the man.

Sex, Drugs, and Charlie Sheen’s Money

If you want to learn a few more lessons from Charlie Sheen, J. Money can oblige by taking a celebrity meltdown and turn it into a teaching moment.

Clariity Review: Gifting Financial Dreams to Your Family

It’s news here in the PF blogosphere: A new financial planning web site is launching. Junior Boomer offers a look at the new web site, and its financial planning gift card.

How to Find the Cheapest Gas in Your Area

Events in the Middle East (Bahrain is the latest hot spot) have many worried about gas prices. Mr. Money offers tips on finding cheap gas in your locale.

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