In the iconic words of Regis Philbin during his game show hosting duties, “Who wants to be a millionaire?”
The better question should be who doesn’t. While it may sound lofty to dream about retiring with 6 zeroes (or more) in your account – it’s not entirely far-fetched if you play smart with your investments. So why not make 2019 the year that you grab the reigns on your 401(k)?
Sure, it’s not the most exciting resolution, but taking control of your investments is one of the most important changes you can make. Luckily, it doesn’t require you to completely upend your lifestyle, or make drastic cuts to your budget.
Here are 5 practical ways that you can make 2019 the year you resolve to live well & retire with more.
1. Ask Your Advisor How Much You Pay in Fees
This is a big must. Sure, we all want to trust that our investment advisor has our best interests at heart, but the fact of the matter is that this is not always the case. In fact, in 2015 alone, excessive fees cost investors over $17 billion. That’s a big chunk of change and these expensive fees compound over time, meaning you could lose up to 30% of your nest-egg to unscrupulous investment practices. While the fiduciary rule is working to make it easier to find out how much you pay, why not take it into your own hands? If you’re not sure how to ask, we’ll help you, with this Dear Advisor letter. Finding out how much you pay today can save your investments in the long run.
2. Maximize your 401(k) Tax-Deductible Contributions
It may seem simple, but many people do not actually maximize their 401(k) contributions. In any given year, you can invest up to $18,500 of your income into your tax sheltered 401(k) account. This means you pay less on your income tax, and you get to grow that money tax free until you need it. Talk about a win-win!
3. Utilize Budget Apps that Cut Spending so You can Invest More
Because not everyone has $18,500 in expendable income, making small cuts to your spending frees up money (even if it’s just a small amount) for investing. There are plenty of budget apps out there that make this process easier – such as AskTrim, which helps you cancel unnecessary subscriptions, evaluates where you spend your money, and helps you stay on a budget and save more. Check out AskTrim and find out where you can “cut the fat” in your spending habits.
4. Automate Your Savings
If you have to manually take money out of your account each month and transfer it to your custodial investment account, you may be turned off by the feeling of “losing” a portion of your monthly income. However, if you set up automatic contributions via your online banking account to occur as soon as your paycheck hits your account , you never miss the money (mostly because you never see it). Many workplaces set up automated contributions for you, but if you’re an independent contractor or own your own business, this can be quite literally a “life-savings saver.”
5. Ignore the Allure of Stock Picking
This may be the most important tip we can offer (aside from finding out how much you pay in fees). Stock picking may seem exciting – it has a similar “high” to gambling – but jumping in and out of the market can greatly deplete your savings over time. We’ve said it time and time again, but the most important rule of long-term investing is to stay the course, and ignore the noise of “BUY” and “SELL.” So, turn off Jim Cramer, try to ignore regularly checking your statements, and have faith that historically, in the long run, you will end up with a better return if you simply stay in the market.