Suze Orman

What you do with your money today can
deeply impact your tomorrows – so make pre-
paring for the best possible future a priority
starting now. Let my “rules” for retirement
investing be your guide.

Before you get started:
  • Always pay down your credit card debt first.
  • Build an emergency savings fund to cover
    eight months of your monthly expenses.
  • When choosing to start saving for your retirement OR
    funding your child’s education, opt to save for your retirement.
  • Sign up for automatic savings deposits for both your
    emergency savings account and retirement fund.
  • Savings and investments need time to grow. Focus on saving as much as you can each day.
Making the most of your 401(k):
  • If your employer matches your 401(k) contributions, that’s a retirement bonus. Make sure you invest enough to get the match!
  • Diversify your 401(k) with “extended” or “total index” mutual funds.
  • Don’t touch your 401(k) money until you reach retirement age – no loans or cash outs!
Opening your IRA:
  • Open a Roth IRA if you’re eligible.
  • If your income is too high to qualify for a Roth IRA, open a traditional IRA and start converting it to a Roth in 2010.
  • If you cannot open a traditional IRA, then look into setting up a non-deductible IRA.
  • If you are a stay-at-home mom, look into opening a spousal IRA.
  • Fund your IRA to the annual maximum, which is currently $5,000 if you are under 50 and $6,000 if you are 50 or older.
Diversify your investments:
  • If you have 10 years or longer until you need your money, consider a 90/10 allocation for your mutual funds and/or Exchange Traded Funds (ETFs) – 90 percent in an index fund tracking U.S. stocks, and 10 percent in an international fund.
  • Don’t let your company’s stock account for more than 10 percent of your portfolio.
  • Opt for ETFs, if offered, over mutual funds. An ETF is a basket of equities that tracks an established market index and generally offers lower fees than mutual funds.
  • Choose no-load mutual funds if you want to invest in mutual funds.
  • If retirement is more than 10 years away, consider purchasing high-yield, dividend-paying investments such as ETFs. Corporate bonds are also worth considering if you have larger sums of money.
  • If retirement is less than 10 years away, begin moving your money to more stable-value funds.
These quick notes are presented in detail in Suze Orman’s book, Women & Money: Owning the Power to Control Your Destiny. Please refer to Pages 114-158 for details.

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