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How To Actually Start Saving And Investing Your Money

Yes, we all know that money doesn’t grow on trees. It can, however, grow in several other ways if you’re willing to put magical thinking aside and focus, instead, on can-do strategies that yield real results.

Too often, people assume that “investing” applies only to the wealthy who can dabble — worry free — in the stock market or real estate or exciting new business ventures. Not so. Regardless of your age or income, you can start to save money  and plan for retirement, a rainy day, or a future goal.

Regardless of what stage of life you’re in, you can take steps that could help put you on the path to financial security by growing your investment. No money tree needed.

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Reap The Rewards Of Company Retirement Plans

If you’re working for a company that offers a retirement plan, you’re one step closer to saving for a sound financial retirement. For example, if your employer’s plan includes  matching the money you put into a 401(k) up to a certain limit, and you’re not contributing the maximum amount possible, you’re missing out on what is essentially “free money” that could go towards your retirement.

According to Leibel Sternbach, founder of the retirement planning website Yields4U.com, “Matching employer contributions are like a 100% return on your investment. You aren’t going to get those types of returns anywhere else.”

Even if your employer doesn’t match contributions, enrolling in and contributing to a retirement plan is a good financial decision. By contributing early and consistently to a plan, you’ll enjoy the benefits of compound interest while you’re saving.

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Be Open To Opening A Savings Account

It’s a fact that savings accounts usually offer low interest rates:  less than 0.1% for non-jumbo accounts, according to the FDIC. But although you won’t be earning big bucks in terms of interest, you’ll be putting money aside for future use, including emergencies. Savings accounts also benefit from compound interest. The math is simple:  Deposit $200 into a savings account that pays 2% annually and you’ll have  $204 at year’s end. The following year, you’ll earn 2% interest on $204, and so on.

Additionally, earning interest on your savings can help you to feel proactive and offer an incentive to continue planning and saving. Ensure that you make regular deposits to your account by setting up automatic deposits that transfer money from your checking account to your savings on a schedule you determine.

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Count On A Financial Advisor

Financial advisors aren’t only for the rich or those who have money to burn. According to Sternbach, “There are lots of types of financial advisers out there for every step of life.” They can help you navigate developing a financial portfolio, making stock trades, determining tax and insurance issues, creating a financial plan, and more.

A fee-based financial planner earns money from clients while also receiving commissions and compensation from the purchase of financial products. A fee-only advisor is paid solely by the client, regardless of the advisor’s recommendations about financial products. You can locate a fee-only advisor through the National Association of Personal Financial Advisors (NAPFA).

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Decide How You Want To Divvy Up Money

Deciding that you want to become an investor is the first step; after that, you’ll need to determine which buying or selling investment options best suit your needs. You can choose to work with a full-service broker, an online or discount broker, or a robo-advisor.

A full-service broker can provide you with the services of a credentialed investment manager who can help guide you through the investment process, offer proprietary research on investment vehicles, provide access to initial public offerings, and help you develop a long-term financial plan. This type of broker generally charges higher fees than other brokerage services.

If you’re simply looking to invest in stocks, bonds, or mutual fees, and want to avoid high fees, an online or discount brokerage company might be the best choice. You’ll have access to tools for evaluating bonds, stocks, and mutual funds, but you may need to do the research yourself.

A robo-advisor can provide you with a list of funds you may want to invest in based on your answers to a questionnaire. After you’ve made your selections, an algorithm manages your portfolio. You’re responsible for paying the fees (expense ratios) charged by those funds as well as an annual management fee.

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Consider If An Investing App Is Appropriate For You

A little can become a lot when you use a micro-investing platform like those offered by apps like Stash or Acorns. When you sign up for Acorns Spend, you’ll receive an online checking account and an Acorns debit card. Any purchases made using the debit card are rounded up to the next dollar; that “spare change” is automatically invested in a portfolio of risk-based, exchange-traded funds (ETFs).

With Stash, you can start investing with as little as five dollars, but keep in mind that you’ll be charged $1 to $9 a month, depending on the type of account you select. To make the time and effort worthwhile, you’ll need to invest fairly regularly.