Understanding past decisions is always easier in hindsight, particularly with financial choices we wish we’d made sooner. Instead of regretting past financial missteps, it’s more beneficial to focus on building a secure financial future right now. This is why the saying “there’s no time like the present” is especially relevant for financial planning and investment.
### Investing in the Future
A key part of investing in yourself is securing your financial future. As we get older, we realize time isn’t always on our side, which underscores the need for wise financial planning. Setting up the right investment accounts is a logical step. Outside of employer-sponsored options, three common types are Roth IRA, Traditional IRA, and general investment accounts.
#### Roth IRA
The type of account you choose should fit your individual circumstances. I opted for a Roth IRA with Betterment, a well-known robo-advisory service that’s affordable and manages account rebalancing, which is great for beginners. For self-employed individuals, a Roth IRA is smart because it uses post-tax contributions, making withdrawals tax-free during retirement. I prefer paying taxes on my investments now, while I’m earning, rather than later during retirement when my income may be lower. Keep in mind, there’s an annual contribution limit for Roth IRAs ($6,000 or $7,000 if you’re over 50 for 2020).
#### General Investment Account
In addition to my Roth IRA, I opened a general investment account with Acorns, a platform that rounds up your spending to help save and invest. This is perfect for those who find it hard to save money consistently. I started with Acorns Lite, which costs $1 per month, instead of the $3 per month Acorns Personal package, because I already had a Roth IRA and wanted an additional investment account. Like Betterment, Acorns manages portfolio diversification and rebalancing effectively.
### Keeping Track of Your Net Worth
Setting up investment accounts is just the beginning; you should also monitor your net worth to track your financial progress. A few years ago, while trying to become debt-free, I discovered Personal Capital. It’s a user-friendly platform that helps you keep tabs on your net worth. Although the initial setup of linking all your accounts takes some time, once it’s done, you get a clear snapshot of your finances. Watching your net worth grow monthly is not only satisfying but also a sign of financial success.
### Life Insurance
Life insurance might be an uncomfortable topic, but it’s crucial, especially in today’s uncertain world. My spouse and I debated it for years before deciding to get life insurance. The policy you choose should depend on your needs. For a straightforward term policy, Bestow Life Insurance is a good place to start. Their application process is simple and provides an estimated premium quickly. While life insurance isn’t a direct investment in your future, it’s vital for family security in case something happens to you.
### Summary: Investing in Yourself
In summary, you can start investing in yourself today through a few key actions:
– Open investment accounts
– Regularly track your net worth
– Invest in a comprehensive life insurance policy
By following these steps, you’ll be setting up a secure financial future, and your future self will thank you for your foresight and planning. What are some unique ways you’ve found to invest in yourself?