5 Financial Decisions to Make Today That Will Benefit You in 10 Years

Saving money - every young person needs to consider it seriously. As you enter the workforce, how much are you supposed to save? It’s always hard to gauge how much you should save. What we do know, you should be saving as much as possible as soon as possible.

Setting aside money and investing is the cornerstone for building a retirement plan, or at least a financially stable future. If you can save and invest this money from a young age (in your 20’s), you will be a lot closer to retiring at 60 than you would if you started saving in your 30’s, that’s just common sense. Additionally, with the help of the effect of compounding interest, and there is even more reason to start saving earlier.

Avoid procrastination
If you don’t start saving for retirement today, when will you? You are probably telling yourself tomorrow is the day, or next paycheck. Life will always give you a reason to not save; you have to start now.

Retirement saving is harder than ever before, people are living much longer and therefore having to support themselves for more extended periods of time. A changing economy can hurt people’s savings for a number of reasons, specifically seeing older worker’s skill sets being outdated or no longer relevant. Furthermore, the absence of income at an older age puts further pressure on savings to carry the load in retirement. Hence the urgency to start saving early.

More time, more money
Saving for retirement as soon as possible is a very straightforward concept. However, an individual’s situation can cause problems in regards to saving. Regardless of your situation, you should strive to save early. JP Morgan states a person that invests $5000 annually between the ages 25 and 35 will have over $600,000 at age 65. In comparison, investing that same $5000 between the ages 35 and 65 will not see the great benefits of compounding returns as much, only having $540,000. This is assuming a 7% annual return.

The earlier you start; the more money you will have. If you remain investing $5000 annually from the ages 25 to 60, you could accumulate $1 million.

Paying off debt
The best way to pay off debt, don’t get it in the first place. We don’t expect you to go without debt, so it’s wise to be smart when paying it back. Making these smart decisions about repayments are sometimes more beneficial than investment decisions. The most important piece of information regarding your repayments is the interest rate. You are better of consolidating your debts to the lowest interest rates possible.

Another decision, do you save money or pay off debts? Credit card debt has a high-interest rate, that should be paid off as quick as possible. Other deductable loans should be paid down, mortgages and student loans are an example of deductable loans.

Purchasing a home
Purchasing a home should not be taken lightly because poor decisions in regards to homes can drastically alter your financial future. Purchasing a home before building other savings means your financial assets portfolio is highly undiversified.

You must be prepared to purchase a home. First, save for a down payment, this is generally 20 percent of the total. Next, find out how much you can afford. You can get prequalified for a mortgage at your bank or a broker. Familiarise yourself with different mortgage options. There are many options to choose from, it can be confusing at the best of times. You will need to decide between a fixed or variable rate, the term of the mortgage and other options.

Investing
There are commonly two types of investing - active and passive. Active investors try to outperform the market, while passive investors accept market returns.

One of the most important actions you can take when considering investment is to diversify and not concentrate on one individual stock. Mutual funds are a good way to own diversified portfolio.
Another great way to invest money is away from stock options. Stocks are commonly hard to predict and require a lot of investment for decent return. Furthermore, you can only make money when a stock in rising. Something like Forex trading or currency trading can make you money while currency is trending down and up. Additionally, you can start with very little money, so the risk is not as high. Learn To Trade can teach you strategy and insight that will allow you to make quick money with forex.

Each of these five financial decisions will create a brighter future for anyone. Your attitude and motivation will further aid your journey to financial security later in life. You can save as little as you want or can afford, everything helps!