Here’s How You Should Invest at Every Age

Invest in a Roth IRA

If you don’t have a 401(k), or you want to contribute additional money for retirement, check out the tax advantaged Roth IRA. If you meet certain income guidelines you can invest up to $5,500 in after tax dollars.

The advantage of the Roth is that the money grows tax deferred and unlike the 401(k), you won’t owe any taxes when you withdraw the funds in retirement.

Invest in Mostly Stock Funds, With Some Bonds

Over the long term, stock investments have beaten those of bonds and cash. From 1928 through 2016, the S&P 500 has returned an annual average of 9.53 percent, the 10-year Treasury bond earned 4.91 percent per year and the 3-month Treasury bill (a cash proxy) yielded 3.42 percent.

While bonds are more stable, you won’t beat stocks if you’re looking to multiply your money over the long-term.

So, if you’re relatively risk tolerant, you should invest 70 percent to 85 percent in stock funds and the remainder in bond and cash investments. Or, if you want to go the easy route, choose a target date mutual fund and your assets will start out more aggressive when you’re younger and automatically become more conservative as you move closer to retirement.

Invest in Real Estate

You might invest in a home, if you think you’ll stay put for at least 5+ years. Or consider investing in a rental property or REIT fund. With the low current interest rates, if you’re not in one of the major over-priced real estate markets like New York of San Francisco, it can make good personal and financial sense to buy real estate.

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