Have You Considered these Smart Financial Moves?

Philip Rosenau |

An early start on saving and investing may pay off.

Financially speaking, what should you consider doing before age 40? Your to-do list should look something like this:

  • Start saving for retirement. The earlier you can begin, the better -– because the younger you are, the more compounding power you can potentially harness. A $300 monthly investment in an account returning 7% will grow to $787,404 in 40 years. At the same rate of return, a $500 monthly investment will turn into $1.31 million four decades later.1 (This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.)
  • Get the match. If your employer offers to match part of your 401(k) or 403(b) plan contribution, think about contributing at or above the level that will get you the match. Failing to do that is like turning down free money.
  • Consider investing in equities. If you want an opportunity for your money to potentially outpace inflation, equity investments (stocks, mutual funds) give you that chance. Equity investing offers you the potential to grow your net worth over time. Keep in mind, equity investing does involve risk, including the loss of your principal value.
  • Consider an emergency fund. Some people have no “rainy day” fund and live paycheck to paycheck. If your budget allows, start building a cash reserve. As time passes, it should ideally grow to the equivalent of six months of salary, or more.
  • Consider life insurance. If you have a spouse or a family, having a policy in place is important. Should you die prematurely, the policy’s death benefit could provide your loved one(s) with economic stability at a trying time, easing their financial burdens. It could even help pay outstanding debts or future college costs.

The cost and availability of Life Insurance depends on many factors such as age, health, and amount of insurance purchased. In addition to premiums, there are contract limitations, fees, exclusions, reductions of benefits, and charges associated with policy. And if a policy is surrendered prematurely, there may be surrender charges and income tax implications.