The Business of Trucking
The next step: saving for retirement
 OK, we’ve taken the first four steps in the financial planning process, including determining where you are financially right now, eliminating consumer debt and creating an emergency fund. Remember, you are now living below your income level, and all extra money is going toward your plan.
The next step in the process is to save money for retirement, and this should really be accomplished with a true retirement account so that the money is growing tax deferred. Your choices for retirement accounts include IRA, SEP IRA, ROTH IRA and individual 401-k plans. Without getting too deep into numbers, tax deferral makes your money grow faster because you are not paying tax on your earnings each year. As your account gets bigger, deferral be-comes even more important.
Choosing how to invest your retirement money is not as difficult as some people would lead you to believe. I truly think that the financial planning industry makes everything seem more difficult than it is so that you feel as though you have to pay a professional a high fee to invest your money. What follows is a simple savings strategy that you can put on autopilot and probably out-perform most high-priced money managers in the long run.
At this point you have some decisions to make, such as how much money do you want to contribute to your retirement ac-counts each month and how much do you want to direct towards achieving other financial goals. Then you have to decide where you want to invest the money. Many people confuse the retirement account with the investment. The retirement account is a box, and when you put your money in the box, the IRS doesn’t get any of it. But if it just sits in the box, you will never have any more money than what you put in. We want your money to grow so you need to invest it somewhere. Here is a simple, effective plan for your first years of investing. Divide your money into three different indexed mutual funds: S&P 500 index, small cap index and European/Asian index.
Then, invest as much as you can each month and forget about it. Don’t worry about what is happening to the stock market. In fact, don’t even look at the balance of your accounts. Just keep saving month after month and your investments will grow. This plan will work until you are about seven years away from retirement, and then you will start to adjust to more conservative investments over time.
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