How to Make a Side Income Running a Vending Machine Business

As we continue to make our way through COVID-19, many people are still looking for ways to get items they need without physical contact with another person.

Vending machines serve that purpose — and make money for the machine’s owner.

Owning and operating vending machines is big business, providing passive income without any specialized skills. It’s also called automatic merchandising.

Basically, all you need to get started is some startup money to buy a machine, a good location and the right products.

The Vending Machine Business During COVID-19

Revenue for the vending machine industry was $24.2 billion in 2019, up 3% from the year before.

That data came from the Automatic Merchandiser’s Annual State of the Industry Survey — before the full impact of COVID-19 hit.

There were 2,175,756 vending machines in service in 2019 in a variety of locations including:

  • Manufacturing areas
  • Offices
  • Retail spaces
  • Hotels/motels
  • Schools
  • Hospitals and nursing homes
  • Universities/colleges
  • Correctional facilities
  • Military bases
  • Restaurants, bars and clubs

Cold beverages were the top-selling product category. A majority of vending machines involve food and beverage products including sodas, coffee, snacks and candy.

There are also machines for bulk vending like gumballs, stickers, toys, novelties and more. During COVID-19, machines popped up selling masks and hand sanitizer.

At places like airports, vending machines often sell tech accessories and travel essentials like neck pillows, blankets and eye masks. Laundry rooms in residential buildings often have machines with detergent and fabric softener.

With many offices, businesses and other public spaces closed or restricted due to the coronavirus pandemic, the vending industry is certainly taking a hit.

“We’re in a tough, tough industry right now with COVID-19. A lot of stores don’t want the machines there, they don’t want the kids congregating, they don’t want people touching them,” said Scott Ausmus, director of manufacturing for National Entertainment Network, Inc. and president of the National Bulk Vendors Association.

He grew up in the vending business. The machines he sells and operates are the novelty kind, offering things like stuffed animals, toys and gumballs. Many are in restaurants and entertainment venues like bowling centers.

Many factors make owning a vending machine an attractive business venture.

The startup costs are relatively low, sometimes around $2,000. The work is flexible and often doesn’t require much day-to-day involvement. The risk is comparatively low and there is growth potential.

“There’s a higher profit in the gumball then there is anything else,” Ausmus said. “The cost of goods is low on the gumballs and everybody likes gum, so everybody still purchases a gumball and so that is a winner for a lot of people.”

Starting a Vending Machine Business

While the startup costs are low and the income is often passive, owning vending machines is not without risk. You must be able to understand your own financial situation and how much you can afford to invest.

There is the cost of the machine, the cost of inventory, personnel to keep it stocked, maintenance and more.

The more perishable the product and the busier the area, the more of your time the machine will take.

“If (your machine location has) a big break room and a lot of employees, you would have to be there once a day to fill your machines up because that’s how busy they are,” Ausmus said. Other machines like toys and candy don’t require as much restocking.

One of the first steps in starting a vending machine business is finding your niche and deciding what to sell. That takes a bit of research and knowing who your customer is.

“You gotta buy the right product. If you buy the wrong product, it won’t move and you won’t make any money and you certainly don’t want to throw [product] away,” Ausmus said. “You’ve got to have the variety for people and find out which ones they want and that’s what you restock with, what sells.”

Vending machine businesses are scalable, meaning it’s possible to start small and expand. You don’t have to wait for payments because customers pay when they purchase an item.

Location, Location, Location

To put yourself in the best position to be profitable means finding the right location.

Places with lots of foot traffic are good. Before COVID-19, that meant schools and universities, malls, office parks, etc.

Think about where people need to wait. While waiting, they may get hungry or thirsty. Ausmus’ novelty machines need kids around.

“One of the hardest things to do is to locate a location,” he said.

Location can be about trial and error.

“It’s really not a bad risk to put it in a location and find out that it’s not making enough money. … You can remove it and move it to the next one until you find that right location,” Ausmus said.

When looking for locations, be prepared to approach the owner or landlord with a business plan for the machine.

Also be prepared to:

  • Pay a percentage of sales or other fee for having your machine in their location.
  • Pay for the electricity the machine uses.
  • Ensure the security of the machine. There is money inside a machine as well as inventory. Theft and vandalism are always possible.
  • Research state and local laws and regulations.
  • Pay sales tax on the revenue the machine generates.

Key Purchase: Your Vending Machine

Then you will need an actual vending machine. There are several types, and prices vary depending on what is in the machine, whether it needs refrigeration or heating, and the interactivity.

Buying directly from a manufacturer or supplier is one option, as is purchasing on a secondary market. Some companies also rent machines. Ausmus cautioned to make sure there are spare parts and support available for what you buy.

Machines range from about $1,500 for a used or refurbished machine to several thousands for a new, high-end machine with many technical features.

Some machines have:

  • Remote monitoring software: This helps keep track of how the machine is working and notifies the operator if something is wrong.
  • Low stock alerts: Notify the operator when items needs replacing.
  • Vending management systems (VMS): Tracks sales and other data to help owners make better business decisions.
FROM THE MAKE MONEY FORUM
Make Money on What Other People Throw Away
1/27/21 @ 4:20 PM
F
Entry Level Employment in NYC
2/5/21 @ 1:23 PM
marcdjones
Passive Income Strategies
10/17/19 @ 9:00 PM
Theodora
See more in Make Money or ask a money question

Running a Vending Machine Business

While owning vending machines does not require any special skills, it is a business.

You will need inventory and someone to keep the machine stocked and maintained. This may require a van or truck.

Perishables need to be stocked more often than other items. Learning some basic maintenance skills could keep you from having to hire someone if there is a problem with the machine.

Different types of machines have different capabilities. Some take only cash while others will process credit or debit cards. Some models have touch screens or voice capabilities.

“Make sure that you have your phone number on the machine, and that the store location knows your phone number,” said Ausmus. “If somebody didn’t get what they wanted, make sure the store can give them a refund and you pay the refund back to that store. Then get out there as soon as you can to fix the machine so that you can continue to make money.”

Automatic merchandising isn’t for everyone, but owning and operating a vending machine can be a good business. Being able to retrieve the money you make and restock your machines easily is the key.

“Then you only work probably three days a month, basically on the whole gig,” said Ausmus. “Three four days a month can make somebody a good little extra income.”

Tiffani Sherman is a Florida-based freelance reporter with more than 25 years of experience writing about finance, health, travel and other topics.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How to Buy a Used Car, Step By Step

New cars are sleek, shiny, full of impressive tech and smell amazing — mmm, new car smell. But they also come with price tags that can take your breath away — and not in a good way.

According to Kelley Blue Book, the average price of a new car in November 2020 was more than $39,000. Yowser.

If you’re in the market for a set of wheels that’s more affordable, steer your sights over to the used car lot to save a little money. Or even a lot of money.

Why Buying a Used Car Is a Smart Money Move

If you’ve ever heard someone refer to a car as a depreciating asset, it’s true. The longer you have a car, the less it’s worth. The first year of owning a new vehicle is when depreciation really packs a punch.

Jim Sharifi, formerly a content editor at Carfax, said research shows a new vehicle can lose as much as 10% of its value within the first month.

“In the first year of ownership, depreciation can continue, and that same car could be worth up to 20% less than its original sale price,” he said.

When you buy a used car, the original owner has already taken that initial hit on depreciation and the price you pay accounts for that, so you don’t have to shell out as much cash.

Just because you’re buying a car at a lower price point doesn’t mean you’ll be stuck with a clunker that was manufactured decades ago. Cars that are just two or three years old often hit dealership lots when their previous owners reach the end of their lease.

Those vehicles often have low mileage and are in great condition, having had only one previous owner. Sometimes they even still retain a hint of that new car smell.

So that covers the why. Now let’s get into how to buy a used car.

The Best Time to Buy a Used Car

RobertCorse/Getty Images

Unlike new car releases, used cars come on the market throughout the year. It all depends on when their previous owners end their leases, put them up for sale or decide to trade in their vehicles.

However, there are certain times when you’re more likely to score a better deal.

Matt DeLorenzo, senior managing editor for Kelley Blue Book, said when dealerships host big sales events for new models that can also benefit used car shoppers.

“[Dealerships] will have more used vehicle inventory as a result of those types of promotions,” he said.

Think of the big sales that fall around holidays like Memorial Day, Fourth of July and Labor Day.

The end of a model year — around September or October — is another good time to shop, DeLorenzo noted, as salespeople are looking to make deals to clear out their used vehicle stock to make room for new inventory.

It’s best to avoid shopping for a car on the weekend when there’s an influx of customers and sales staff is spread thin, Sharifi said. You’ll get more attention from the sales team by visiting on off hours, specifically on weekdays.

“The end of the month (or the end of a quarter) can also be a good time to strike a deal, since dealerships may need to hit monthly or quarterly sales goals,” he said.

Of course, when you need a car might not align with a particular sale or time of month. Shopping for a vehicle before you’re in critical need of one will allow you time to search for the best deal rather than having to settle for something quick.

FROM THE SAVE MONEY FORUM
No spend challenge
12/14/20 @ 2:48 PM
Debi Hoyt
Looking for a Financial Accountability Partner
1/15/21 @ 4:16 PM
K
Saving money
12/7/20 @ 1:17 AM
r
See more in Save Money or ask a money question

Where to Shop for a Used Car — and Where to Avoid

Where you shop for a used car matters so you can avoid purchasing a lemon.

DeLorenzo recommends shopping at franchised car dealerships that have certified pre-owned cars — used vehicles that have been thoroughly inspected and typically come with some type of warranty coverage. Non-certified cars aren’t bad — and they’ll typically cost less — but they’re more likely to have higher mileage and more maintenance needs.

Be wary of independent car lots that boast they can make you a deal regardless of your credit or circumstance.

“Typically they’ll try to get you in with a low price, but you may not be getting the best quality car,” he said. “The other thing is that if you get your financing through those types of dealers, they typically charge you a much higher interest rate.”

Pro Tip

DeLorenzo recommends pre-qualifying for a loan at a bank or credit union before visiting a dealership. You can compare the offer with the dealer’s financing terms for better negotiating leverage.

For any dealer you visit, do some due diligence and check customer reviews online. If you know others who’ve recently purchased a car, ask for recommendations.

Outside of dealerships, look for cars online at trusted sites like Autotrader, Kelley Blue Book, Carfax or Edmunds — or buy from a private seller.

When you’re buying from a private party, you may be able to get more accurate information about how they’ve driven and maintained the vehicle and what particular issues it might have, said Ron Montoya, senior consumer advice editor at Edmunds.

However, you also need to be OK with buying the vehicle as-is and securing your own financing. And be sure the owner has clear title to the car — in other words, don’t let anyone sell you a car they don’t legitimately own.

If cost is your primary concern, a private seller is likely to offer a lower price. A dealer folds overhead, repairs and marketing into its price.

What to Look for When Buying a Used Car

GreenPimp/Getty Images

Knowing when and where to buy a used car is just half the battle. Figuring out how to vet a used car can be tough, especially if you have little to no car knowledge.

These tips will give you some guidance to make a good choice.

1. Find a Vehicle That Fits Your Needs

It’s easy to focus on the numbers — age of the car, mileage and cost — but you also want to make sure you’re buying a car that’ll fit your needs for however long you expect to have it. If you have a growing family, you might want to rethink that two-door coupe or compact vehicle.

“You want to make sure there’s enough room for you,” Montoya said. “Take a look at the cargo area. Take a look at how easy it is to see out of the vehicle. Test out the entertainment system.”

2. Determine How ‘Used’ You’re Willing to Go

The older a car is, the cheaper it’ll be — but the more it’s likely to have issues requiring repair. Everyone has a different comfort level when it comes to what they’re willing to handle. A general rule of thumb is that a car is driven about 12,000 miles per year. A higher average could mean the car has more wear and tear.

Montoya said used car buyers must strike a balance between the age of the car, the amount of miles and what price they’re willing to pay.

Buying an extended warranty or service plan can give you peace of mind that certain repairs or maintenance jobs will be covered.

Pro Tip

Montoya said plans sold by auto manufacturers or reputable dealerships are better options than those sold by third-party companies. Make sure you understand exactly what your plan covers.

3. Make Sure The Price is Right

Before you accept a sales price, research the value of the car to make sure you’re not overpaying. Carfax, Kelley Blue Book and Edmunds all have price appraisal tools online.

You can also compare similar vehicles on the market to get an estimate of a car’s value, but keep in mind, no two used vehicles will be the same due to how they were driven and maintained. Use all this information when you sit down to negotiate — and don’t be afraid to walk away if you don’t think you’re getting a fair price.

When you’re budgeting for a car purchase, make sure you’re factoring in all the associated costs, like sales tax, insurance and getting the car registered.

4. Check the History of the Car

Sometimes just looking at a car will give you some idea of its history. Rust, worn out pedals and a side panel painted in a different color are red flags.

But don’t just assume a car’s history. Getting the car’s history report, such as through Carfax, is a crucial step when buying a used car.

You’ll have to purchase the report if you’re buying from a private seller, so wait until you’re seriously interested in a particular vehicle. If you’re buying from a dealership, the salesperson should provide a copy of the vehicle history report for free.

Sharifi said to watch out for discrepancies with the odometer reading and if there’s a branded title, which indicates that the car has been significantly compromised in some way.

“Severe accidents and instances where a car has been declared a total loss should signal the buyer to use caution,” he said. “That said, a small fender bender shouldn’t always mean that a buyer should walk away from a great deal.”

5. Go for a Test Drive

Always, always, always take a car for a spin before buying it. If you can bring a mechanic with you, even better.

“Some general things you can do on your own without being super knowledgeable about cars is [to] turn off the radio [and] listen for any strange noises,” Montoya said. “See if the steering wheel stays straight when you drive down the road. Does it pull to one side? Look at the tires to see how old they are.”

Pro Tip

Don’t just look at the tires’ tread. Each tire should include a four-digit number marking the month and year it was manufactured. Tires older than six years can be dried out and need replacing.

For any used car purchase, but especially if you’re buying from a private seller, have your mechanic inspect the vehicle before committing to buy.

Knowing the ins and outs of how to buy a used car will make the whole process less stressful and, most importantly, save you money.

Nicole Dow is a senior writer at The Penny Hoarder. Former staff writer Carson Kohler contributed to this post.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Your Car Insurance Company is Probably Planning to Rip You Off — Unless You Do This

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

Watch out for your wallet! Do you live in one of the five U.S. states where car insurance rates are going up this year?

According to industry reports, rates are going up this year in Florida, Indiana, Massachusetts, New York and Rhode Island. For example, New York rates are expected to rise by 1.2%, and Indiana’s by 1.1%. Annoying, isn’t it? Here you are, probably driving less than ever, and they want to raise your car insurance premiums.

They’re ripping you off. The good news? There’s something you can easily do about it.

A website called Insure.com makes it super easy to compare car insurance prices and make sure you’re not getting ripped off. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Are you driving less than 50 miles a day? Do you have zero DUIs on your record? You could qualify for discounts.

Using Insure.com, people save an average of $540 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He lives in one of these five states, and he’s mad about this.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

5 Steps to Take When Budgeting for a Career Break

Not everyone’s career path is a 40+ year marathon working full time until you can finally come up for air in your golden years.

Sometimes you need a little break along the way.

Taking time away from the workforce — whether it’s to travel, take care of loved ones, learn a new skill or whatever — can be a beneficial thing. But money — or the lack thereof — is what stops many people from even considering it.

With some significant planning and budgeting, however, it’s possible to make your career break dreams a reality. Here are five steps you should take when budgeting for a career break.

5 Steps for Career Break Budgeting

1. Think About What Your Career Break Will Look Like

People take career breaks for a number of reasons. Take some time to reflect on why you are planning time away from the workforce and what you intend to do.

When thinking about what your new day-to-day will look like, try to get as detailed as possible. Hone in on aspects that will affect you financially.

How long will your break last? When would you like it to start? Will you be staying at home or traveling the world? What adventures would you like to experience?

While it’s nice to dream about your best life ever, you’ve got to be practical too. Ranking what you want to do with your newfound free time will be helpful if you have to cut your list down to fit what you can afford.

2. Explore What Your Costs Will Be During Your Break

After you’ve fantasized what your work break will look like, it’s time to focus on the numbers. You’ve got to know what your expenses will be in order to determine whether your plans are realistic.

If you don’t already budget your income and track your expenses, now’s the time to start. Your budget will give you a good idea of how much you spend on essentials and where you can cut costs as you save up for leave.

Research all the additional costs you expect to incur during your break. If you’re taking extended parental leave after the birth of a child, you’ll be dealing with a ton of new baby-related expenses. If you’re taking time off to travel, you’ve got to pay for transportation and lodging.

The length of your break will also be a big factor here. Obviously, the longer you’re away from the workforce, the more money you’ll need saved up.

FROM THE BUDGETING FORUM
Grocery Shopping – How far away is your usual store?
1/29/19 @ 9:29 PM
F
We should to learn to do the math
1/25/21 @ 2:24 PM
Karen E Peyton
Starting a budget
10/29/20 @ 5:43 PM
S
A reminder NOT to spend.
1/7/20 @ 12:55 AM
Jobelle Collie
See more in Budgeting or ask a money question

3. Set Up a Sinking Fund to Cover Expenses on Your Break

If you haven’t heard the term “sinking fund,” that’s just personal-finance speak for a stash of savings that you regularly contribute to over time to break up a big expense.

Once you’ve estimated the overall expenses for your leave, divide that by how many months you have left to come up with your target monthly savings goal.

Pro Tip

Switch to a bare-bones budget or try these other ways to save money fast so you can free up cash to add to your sinking fund.

If you already have existing savings you want to use to fund your career break, that will cut down on how much you’ll need to put aside each month — just make sure you don’t touch your emergency fund!

Your emergency savings should only be used on an actual emergency — like if you get into a car accident or Fido needs to be rushed to the pet hospital. Being away from work won’t make you immune to emergencies, so do not plan to use your emergency fund to tide you through your break.

In fact, before you focus on building up your sinking fund, you ought to have adequate savings in an emergency fund first.

A woman helps her mother up from a chair outside in their garden.

4. Explore Opportunities to Make Money On Your Break

If you’re able to make money while you’re away from work, you’ll be less financially burdened. You won’t have to save up as much or worry about burning through your entire savings.

The first income stream you should explore is your current job. Taking a career break doesn’t necessarily mean calling it quits where you work now.

Depending on what type of leave you’re taking, your job may be protected and you might be able to continue collecting your salary — or a percentage of your current pay.

The Family and Medical Leave Act (FMLA) provides eligible workers with up to 12 weeks of leave after the birth or adoption of a child, to deal with a serious health condition or to care for an ill or injured family member. While this type of leave is unpaid, you’ll continue to be covered under their workplace health insurance plan and there may be the possibility of coupling this leave with short-term disability pay.

Pro Tip

President Joe Biden’s proposed coronavirus stimulus package includes extending the expired paid time off policies for sick workers and those needing to care for family members due to COVID-19.

Find out if your employer offers any other paid leave programs — whether that’s parental leave, unlimited PTO or sabbaticals. According to the Society for Human Resource Management’s 2019 Employee Benefits Survey, 27% of employers offered paid parental leave, 6% offered unlimited paid leave and 5% offered a paid sabbatical program.

Another 11% of employers surveyed offered an unpaid sabbatical program. While unpaid leave isn’t as ideal as paid leave, it gives you peace of mind that you’ll have a job to come back to after your break.

Other options to make money during your leave include picking up a side gig, bringing in passive income, renting out rooms (or your entire place) on Airbnb or selling your belongings.

If you need to pick up a little work while you’re on a career break, just make sure it doesn’t conflict with the reason you needed to take leave in the first place.

5. Develop a Re-Entry Plan

You need to plan for all aspects of your career break — including your transition back to the workforce.

Your budget needs to not only cover your expenses while you’re backpacking through Europe or nursing your elderly mother back to health. You’ve got to add a cushion for that period at the end where you’re actively seeking your next gig.

While data from the U.S. Bureau of Labor Statistics shows the average length of unemployment is about 23 weeks, how long it’ll take you to find new work will vary depending on your industry and the position you’re seeking.

Plan to keep up with contacts in your field and engage in relevant volunteer work or continued education while you’re away to improve your chances of quickly finding a new job.

If your savings run low toward the end of your leave, don’t brush off finding a bridge job — a temporary role to help you pay the bills while you search for better opportunities.

Pro Tip

A resume gap isn’t the kiss of death it used to be. You can even craft a way to include side gigs on your resume.

A career break should provide you with freedom to pursue something outside of your typical work life. You don’t want that freedom to drag you deeper into debt or put you in a worse financial position if you can avoid it.

Do your best to budget for more time than you’ll need so you can enjoy your career break stress free.

Nicole Dow is a senior writer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

Dear Penny: How Do I Save for Retirement on a Teacher’s Salary?

Dear Penny,

I’m 51 years old and don’t have a large nest egg. I’m a single parent with three kids. I’m a second career middle school teacher, so there is not a lot of money left over each month. 

How much money should I be saving to be able to retire in my 70s? Where should I invest that money?

-B.

Dear B.,

You still have 20 years to build your nest egg if all goes as planned. Sure, you’ve missed out on the extra years of compounding you’d have gotten had you accumulated substantial savings in your 20s and 30s. But that’s not uncommon. I’ve gotten plenty of letters from people in their 50s or 60s with nothing saved who are asking how they can retire next year.

I like that you’re already planning to work longer to make up for a late start. But here’s my nagging concern: What if you can’t work into your 70s?

The unfortunate reality is that a lot of workers are forced to retire early for a host of reasons. They lose their jobs, or they have to stop for health reasons or to care for a family member. So it’s essential to have a Plan B should you need to leave the workforce earlier than you’d hoped.

Retirement planning naturally comes with a ton of uncertainty. But since I don’t know what you earn, whether you have debt or how much you have saved, I’m going to have to respond to your question about how much to save with the vague and unsatisfying answer of: “As much as you can.”

Perhaps I can be more helpful if we work backward here. Instead of talking about how much you need to save, let’s talk about how much you need to retire. You can set savings goals from there.

The standard advice is that you need to replace about 70% to 80% of your pre-retirement income. Of course, if you can retire without a mortgage or any other debt, you could err on the lower side — perhaps even less.

For the average worker, Social Security benefits will replace about 40% of income. If you’re able to work for another two decades and get your maximum benefit at age 70, you can probably count on your benefit replacing substantially more. Your benefit will be up to 76% higher if you can delay until you’re 70 instead of claiming as early as possible at 62. That can make an enormous difference when you’re lacking in savings.

But since a Plan B is essential here, let’s only assume that your Social Security benefits will provide 40%. So you need at least enough savings to cover 30%.

If you have a retirement plan through your job with an employer match, getting that full contribution is your No. 1 goal. Once you’ve done that, try to max out your Roth IRA contribution. Since you’re over 50, you can contribute $7,000 in 2021, but for people younger than 50, the limit is $6,000.

If you maxed out your contributions under the current limits by investing $583 a month and earn 7% returns, you’d have $185,000 after 15 years. Do that for 20 years and you’d have a little more than $300,000. The benefit to saving in a Roth IRA is that the money will be tax-free when you retire.

The traditional rule of thumb is that you want to limit your retirement withdrawals to 4% each year to avoid outliving your savings. But that rule assumes you’ll be retired for 30 years. Of course, the longer you work and avoid tapping into your savings, the more you can withdraw later on.

Choosing what to invest in doesn’t need to be complicated. If you open an IRA through a major brokerage, they can use algorithms to automatically invest your money based on your age and when you want to retire.

By now you’re probably asking: How am I supposed to do all that as a single mom with a teacher’s salary? It pains me to say this, but yours may be a situation where even the most extreme budgeting isn’t enough to make your paycheck stretch as far as it needs to go. You may need to look at ways to earn additional income. Could you use the summertime or at least one weekend day each week to make extra money? Some teachers earn extra money by doing online tutoring or teaching English as a second language virtually, for example.

I hate even suggesting that. Anyone who teaches middle school truly deserves their time off. But unfortunately, I can’t change the fact that we underpay teachers. I want a solution for you that doesn’t involve working forever. That may mean you have to work more now.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How to Copy Warren Buffet’s Biggest Investment of 2020

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners.

Warren Buffett is notoriously a good investor. Sure, he’s made some mistakes along the way (who hasn’t?), but whatever move he makes, you can bet he’s thought it through, and it will pay off — big time.

Which is why when Mr. Buffett made his biggest stock purchase of the year into Apple, we thought, “Isn’t it too late to do that?” Apple is already trading at the highest price it ever has. It feels out of reach for us non-billionaires.

But it turns out, that’s not the case. While we don’t have the ability to own $111 billion (yes, billion with a B) in AAPL shares, we can still get our hands on some — and reap the rewards as the market goes up.

One of our favorite ways to get into the stock market and be a part of infamous big-tech returns, without risking billions is through a free app called Stash.

It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies — including Buffett’s choices — for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

Kari Faber is a staff writer at The Penny Hoarder.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

10 Risky Investments That Could Make You Lose Everything

If the stock market crashed again, would you respond by investing more? Is day trading your sport of choice? Do you smirk at the idea of keeping money in a savings account instead of investing it?

If you answered yes to these questions, you’re probably an investor with a high risk tolerance.

Hold up, Evel Knievel.

It’s fine to embrace a “no-risk, no-reward” philosophy. But some investments are so high-risk that they aren’t worth the rewards.

10 Risky Investments That Could Lead to Huge Losses

We’re not saying no one should ever consider investing in any of the following. But even if you’re a personal finance daredevil, these investments should give you serious pause.

Sure, if things go well, you’d make money — lots of it. But if things go south, the potential losses are huge. In some cases, you could lose your entire investment.

1. Penny Stocks

There’s usually a good reason penny stocks are so cheap. Often they have zero history of earning a profit. Or they’ve run into trouble and have been delisted by a major stock exchange.

Penny stocks usually trade infrequently, meaning you could have trouble selling your shares if you want to get out. And because the issuing company is small, a single piece of good or bad news can make or break it.

Fraud is also rampant in the penny stock world. One common tactic is the “pump and dump.” Scammers create false hype, often using investing websites and newsletters, to pump up the price. Then they dump their shares on unknowing investors.

2. IPOs

You and I probably aren’t rich or connected enough to invest in an IPO, or initial public offering, at its actual offering price. That’s usually reserved for company insiders and investors with deep pockets.

Instead, we’re more likely to be swayed by the hype that a popular company gets when it goes public and the shares start trading on the stock market. Then, we’re at risk of paying overinflated prices because we think we’re buying the next Amazon.

But don’t assume that a company is profitable just because its CEO is ringing the opening bell on Wall Street. Many companies that go public have yet to make money.

The average first-day returns of a newly public company have consistently been between 10% to 20% since the 1990s, according to a 2019 report by investment firm UBS. But after five years, about 60% of IPOs had negative total returns.

3. Bitcoin

Proponents of bitcoin believe the cryptocurrency will eventually become a widespread way to pay for things. But its usage now as an actual way to pay for things remains extremely limited.

For now, bitcoin remains a speculative investment. People invest in it primarily because they think other investors will continue to drive up the price, not because they see value in it.

All that speculation creates wild price fluctuations. In December 2017, bitcoin peaked at nearly $20,000 per coin, then plummeted in 2018 to well below $4,000. That volatility makes bitcoin useless as a currency, as Bankrate’s James Royal writes.

Unless you can afford to part ways with a huge percentage of your investment, bitcoin is best avoided.

4. Anything You Buy on Margin

Margining gives you more money to invest, which sounds like a win. You borrow money from your broker using the stocks you own as collateral. Of course, you have to pay your broker back, plus interest.

If it goes well, you amplify your returns. But when margining goes badly, it can end really, really badly.

Suppose you buy $5,000 of stock and it drops 50%. Normally, you’d lose $2,500.

But if you’d put down $2,500 of your own money to buy the stock and used margin for the other 50%? You’d be left with $0 because you’d have to use the remaining $2,500 to pay back your broker.

That 50% drop has wiped out 100% of your investment — and that’s before we account for interest.

5. Leveraged ETFs

Buying a leveraged ETF is like margaining on steroids.

Like regular exchange-traded funds, or ETFs, leveraged ETFs give you a bundle of investments designed to mirror a stock index. But leveraged ETFs seek to earn two or three times the benchmark index by using a bunch of complicated financing maneuvers that give you greater exposure.

Essentially, a leveraged ETF that aims for twice the benchmark index’s returns (known as a 2x leveraged ETF) is letting you invest $2 for every $1 you’ve actually invested.

We won’t bore you with the nitty-gritty, but the risk here is similar to buying stocks on margin: It can lead to big profits but it can also magnify your losses.

But here’s what’s especially tricky about leveraged ETFs: They’re required to rebalance every day to reflect the makeup of the underlying index. That means you can’t sit back and enjoy the long-haul growth. Every day, you’re essentially investing in a different product.

For this reason, leveraged ETFs are only appropriate for day traders — specifically, day traders with very deep pockets who can stomach huge losses.

6. Collectibles

A lot of people collect cars, stamps, art, even Pokemon cards as a hobby. But some collectors hope their hobby will turn into a profitable investment.

It’s OK to spend a reasonable amount of money curating that collection if you enjoy it. But if your plans are contingent on selling the collection for a profit someday, you’re taking a big risk.

Collectibles are illiquid assets. That’s a jargony way of saying they’re often hard to sell.

If you need to cash out, you may not be able to find a buyer. Or you may need to sell at a steep discount. It’s also hard to figure out the actual value of collectibles. After all, there’s no New York Stock Exchange for Pokemon cards. And if you do sell, you’ll pay 28% tax on the gains. Stocks held long-term, on the other hand, are taxed at 15% for most middle-income earners.

Plus, there’s also the risk of losing your entire investment if your collection is physically destroyed.

7. Junk Bonds

If you have a low credit score, you’ll pay a high interest rate when you borrow money because banks think there’s a good chance you won’t pay them back. With corporations, it works the same way.

Companies issue bonds when they need to take on debt. The higher their risk of defaulting, the more interest they pay to those who invest in bonds. Junk bonds are the riskiest of bonds.

If you own bonds in a company that ends up declaring bankruptcy, you could lose your entire investment. Secured creditors — the ones whose claim is backed by actual property, like a bank that holds a mortgage — get paid back 100% in bankruptcy court before bondholders get anything.

8. Shares of a Bankrupt Company

Bondholders may be left empty-handed when a corporation declares bankruptcy. But guess who’s dead last in terms of priority for who gets paid? Common shareholders.

Secured creditors, bondholders and owners of preferred stock (it’s kind of like a stock/bond hybrid) all get paid in full before shareholders get a dime.

Typically when a company files for bankruptcy, its stock prices crash. Yet recently, eager investors have flocked in to buy those ultracheap shares and temporarily driven up the prices. (Ahem, ahem: Hertz.)

That post-bankruptcy filing surge is usually a temporary case of FOMO. Remember: The likelihood that those shares will eventually be worth $0 is high.

You may be planning on turning a quick profit during the run-up, but the spike in share prices is usually short-lived. If you don’t get the timing exactly right here, you could lose big when the uptick reverses.

9. Gold and Silver

If you’re worried about the stock market or high inflation, you may be tempted to invest in gold or silver.

Both precious metals are often thought of as hedges against a bear market because they’ve held their value throughout history. Plus in uncertain times, many investors seek out tangible assets, i.e., stuff you can touch.

Having a small amount invested in gold and silver can help you diversify your portfolio. But anything above 5% to 10% is risky.

Both gold and silver are highly volatile. Gold is much rarer, so discovery of a new source can bring down its price. Silver is even more volatile than gold because the value of its supply is much smaller. That means small price changes have a bigger impact. Both metals tend to underperform the S&P 500 in the long term.

The riskiest way to invest in gold and silver is by buying the physical metals because they’re difficult to store and sell. A less risky way to invest is by purchasing a gold or silver ETF that contains a variety of assets, such as mining company stocks and physical metals.

10. Options Trading

Options give you the right to buy or sell a stock at a certain price before a certain date. The right to buy is a call. You buy a call when you think a stock price will rise. The right to sell is a put. You buy a put when you think a stock price will drop.

What makes options trading unique is that there’s one clear winner and one clear loser. With most investments, you can sell for a profit to an investor who also goes on to sell at a profit. Hypothetically, this can continue forever.

But suppose you buy a call or a put. If your bet was correct, you exercise the option. You get to buy a winning stock at a bargain price, or you get to offload a tanking stock at a premium price. If you lose, you’re out the entire amount you paid for the option.

Options trading gets even riskier, though, when you’re the one selling the call or put. When you win, you pocket the entire amount you were paid.

But if you end up on the losing side: You could have to pay that high price for the stock that just crashed or sell a soaring stock at a deep discount.

FROM THE INVESTMENT FORUM
Investing
6/10/20 @ 6:48 PM
Elite Four47
Question- equity for work
12/29/20 @ 2:51 PM
bob G
Home Repair
9/28/20 @ 3:53 PM
Keron X Willis
See more in Investment or ask a money question

What Are the Signs That an Investment Is Too Risky?

The 10 things we just described certainly aren’t the only risky investments out there. So let’s review some common themes. Consider any of these traits a red flag when you’re making an investment decision.

  • They’re confusing. Are you perplexed by bitcoin and options trading? So is pretty much everyone else.If you don’t understand how something works, it’s a sign you shouldn’t invest in it.
  • They’re volatile. Dramatic price swings may be exciting compared with the tried-and-true approach of investing across the stock market. But investing is downright dangerous when everything hinges on getting the timing just right.
  • The price is way too low. Just because an investment is cheap doesn’t mean it’s a good value.
  • The price is way too high. Before you invest in the latest hype, ask yourself if the investment actually delivers value. Or are the high prices based on speculation?

The bottom line: If you can afford to put a small amount of money in high-risk investments just for the thrill of it, fine — as long as you can deal with losing it all.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How to Save for Retirement in Your 20s, 30s, 40s, 50s and 60s

You probably don’t need us to tell you that the earlier you start saving for retirement, the better. But let’s face it: For a lot of people, the problem isn’t that they don’t understand how compounding works. They start saving late because their paychecks will only stretch so far.

Whether you’re in your 20s or your golden years are fast-approaching, saving and investing whatever you can will help make your retirement more comfortable. We’ll discuss how to save for retirement during each decade, along with the hurdles you may face at different stages of life.

How Much Should You Save for Retirement?

A good rule of thumb is to save between 10% and 20% of pre-tax income for retirement. But the truth is, the actual amount you need to save for retirement depends on a lot of factors, including:

  • Your age. If you get a late start, you’ll need to save more.
  • Whether your employer matches contributions. The 10% to 20% guideline includes your employer’s match. So if your employer matches your contributions dollar-for-dollar, you may be able to get away with less.
  • How aggressively you invest. Taking more risk usually leads to larger returns, but your losses will be steeper if the stock market tanks.
  • How long you plan to spend in retirement. It’s impossible to predict how long you’ll be able to work or how long you’ll live. But if you plan to retire early or people in your family often live into their mid-90s, you’ll want to save more.

How to Save for Retirement at Every Age

Now that you’re ready to start saving, here’s a decade-by-decade breakdown of savings strategies and how to make your retirement a priority.

Saving for Retirement in Your 20s

A dollar invested in your 20s is worth more than a dollar invested in your 30s or 40s. The problem: When you’re living on an entry-level salary, you just don’t have that many dollars to invest, particularly if you have student loan debt.

Prioritize Your 401(k) Match

If your company offers a 401(k) plan, a 403(b) plan or any retirement account with matching contributions, contribute enough to get the full match — unless of course you wouldn’t be able to pay bills as a result. The stock market delivers annual returns of about 8% on average. But if your employer gives you a 50% match, you’re getting a 50% return on your contribution before your money is even invested. That’s free money no investor would ever pass up.

Pay off High-Interest Debt

After getting that employer match, focus on tackling any high-interest debt. Those 8% average annual stock market returns pale in comparison to the average 16% interest rate for people who have credit card debt. In a typical year, you’d expect a  $100 investment could earn you $8. Put that $100 toward your balance? You’re guaranteed to save $16.

Take More Risks

Look, we’re not telling you to throw your money into risky investments like bitcoin or the penny stock your cousin won’t shut up about. But when you start investing, you’ll probably answer some questions to assess your risk tolerance. Take on as much risk as you can mentally handle, which means you’ll invest mostly in stocks with a small percentage in bonds. Don’t worry too much about a stock market crash. Missing out on growth is a bigger concern right now.

Build Your Emergency Fund

Building an emergency fund that could cover your expenses for three to six months is a great way to safeguard your retirement savings. That way you won’t need to tap your growing nest egg in a cash crunch. This isn’t money you should have invested, though. Keep it in a high-yield savings account, a money market account or a certificate of deposit (CD).

Tame Lifestyle Inflation

We want you to enjoy those much-deserved raises ahead of you — but keep lifestyle inflation in check. Don’t spend every dollar each time your paycheck gets higher. Commit to investing a certain percentage of each raise and then use the rest as you please.

Saving for Retirement in Your 30s

If you’re just starting to save in your 30s, the picture isn’t too dire. You still have about three decades left until retirement, but it’s essential not to delay any further. Saving may be a challenge now, though, if you’ve added kids and homeownership to the mix.

Invest in an IRA

Opening a Roth IRA is a great way to supplement your savings if you’ve only been investing in your 401(k) thus far. A Roth IRA is a solid bet because you’ll get tax-free money in retirement.

In both 2020 and 2021, you can contribute up to $6,000, or $7,000 if you’re over 50. The deadline to contribute isn’t until tax day for any given year, so you can still make 2020 contributions until April 15, 2021. If you earn too much to fund a Roth IRA, or you want the tax break now (even though it means paying taxes in retirement), you can contribute to a traditional IRA.

Your investment options with a 401(k) are limited. But with an IRA, you can invest in whatever stocks, bonds, mutual funds or exchange-traded funds (ETFs) you choose.

Pro Tip

If you or your spouse isn’t working but you can afford to save for retirement, consider a spousal IRA. It’s a regular IRA, but the working spouse funds it for the non-earning spouse. 

Avoid Mixing Retirement Money With Other Savings

You’re allowed to take a 401(k) loan for a home purchase. The Roth IRA rules give you the flexibility to use your investment money for a first-time home purchase or college tuition. You’re also allowed to withdraw your contributions whenever you want. Wait, though. That doesn’t mean you should.

The obvious drawback is that you’re taking money out of the market before it’s had time to compound. But there’s another downside. It’s hard to figure out if you’re on track for your retirement goals when your Roth IRA is doing double duty as a college savings account or down payment fund.

Start a 529 Plan While Your Kids Are Young

Saving for your own future takes higher priority than saving for your kids’ college. But if your retirement funds are in shipshape, opening a 529 plan to save for your children’s education is a smart move. Not only will you keep the money separate from your nest egg, but by planning for their education early, you’ll avoid having to tap your savings for their needs later on.

Keep Investing When the Stock Market Crashes

The stock market has a major meltdown like the March 2020 COVID-19 crash about once a decade. But when a crash happens in your 30s, it’s often the first time you have enough invested to see your net worth take a hit. Don’t let panic take over. No cashing out. Commit to dollar-cost averaging and keep investing as usual, even when you’re terrified.

Saving for Retirement in Your 40s

If you’re in your 40s and started saving early, you may have a healthy nest egg by now. But if you’re behind on your retirement goals, now is the time to ramp things up. You still have plenty of time to save, but you’ve missed out on those early years of compounding.

Continue Taking Enough Risk

You may feel like you can afford less investment risk in your 40s, but you still realistically have another two decades left until retirement. Your money still has — and needs — plenty of time to grow. Stay invested mostly in stocks, even if it’s more unnerving than ever when you see the stock market tank.

Put Your Retirement Above Your Kids’ College Fund

You can only afford to pay for your kids’ college if you’re on track for retirement. Talk to your kids early on about what you can afford, as well their options for avoiding massive student loan debt, including attending a cheaper school, getting financial aid, and working while going to school. Your options for funding your retirement are much more limited.

Keep Your Mortgage

Mortgage rates are historically low — well below 3% as of December 2020. Your potential returns are much higher for investing, so you’re better off putting extra money into your retirement accounts. If you haven’t already done so, consider refinancing your mortgage to get the lowest rate.

Invest Even More

Now is the time to invest even more if you can afford to. Keep getting that full employer 401(k) match. Beyond that, try to max out your IRA contributions. If you have extra money to invest on top of that, consider allocating more to your 401(k). Or you could invest in a taxable brokerage account if you want more flexibility on how to invest.

Meet With a Financial Adviser

You’re about halfway through your working years when you’re in your 40s. Now is a good time to meet with a financial adviser. If you can’t afford one, a financial counselor is typically less expensive. They’ll focus on fundamentals like budgeting and paying off debt, rather than giving investment advice.

A woman waves her hands in the air as she overlooks a mountainous view in Alaska.

Saving for Retirement in Your 50s

By your 50s, those retirement years that once seemed like they were an eternity away are getting closer. Maybe that’s an exciting prospect — or perhaps it fills you with dread. Whether you want to keep working forever or retirement can’t come soon enough, now is the perfect time to start setting goals for when you want to retire and what you want your retirement to look like.

Review Your Asset Allocation

In your 50s, you may want to start shifting more into safe assets, like bonds or CDs. Your money has less time to recover from a stock market crash. Be careful, though. You still want to be invested in stocks so you can earn returns that will keep your money growing. With interest rates likely to stay low through 2023, bonds and CDs probably won’t earn enough to keep pace with inflation.

Take Advantage of Catch-up Contributions

If you’re behind on retirement savings, give your funds a boost using catch-up contributions. In 2020 and 2021, you can contribute:

  • $1,000 extra to a Roth or traditional IRA (or split the money between the two) once you’re 50
  • $6,500 extra to your 401(k) once you’re 50
  • $1,000 extra to a health savings account (HSA) once you’re 55.

Work More if You’re Behind

Your window for catching up on retirement savings is getting smaller now. So if you’re behind, consider your options for earning extra money to put into your nest egg. You could take on a side hustle, take on freelance work or work overtime if that’s a possibility to bring in extra cash. Even if you intend to work for another decade or two, many people are forced to retire earlier than they planned. It’s essential that you earn as much as possible while you can.

Pay off Your Remaining Debt

Since your 50s is often when you start shifting away from high-growth mode and into safer investments, now is a good time to use extra money to pay off lower-interest debt, including your mortgage. Retirement will be much more relaxing if you can enjoy it debt-free.

FROM THE RETIREMENT FORUM
Re-locating
1/5/21 @ 2:53 PM
Trish Young
Military pension & SS
1/5/21 @ 2:55 PM
D
TSP and mortgage
12/23/20 @ 2:41 PM
J
See more in Retirement or ask a money question

Saving for Retirement in Your 60s

Hooray, you’ve made it! Hopefully your retirement goals are looking attainable by now after working for decades to get here. But you still have some big decisions to make. Someone in their 60s in 2021 could easily spend another two to three decades in retirement. Your challenge now is to make that hard-earned money last as long as possible.

Make a Retirement Budget

Start planning your retirement budget at least a couple years before you actually retire. Financial planners generally recommend replacing about 70% to 80% of your pre-retirement income. Common income sources for seniors include:

  • Social Security benefits. Monthly benefits replace about 40% of pre-retirement income for the average senior.
  • Retirement account withdrawals. Money you take out from your retirement accounts, like your 401(k) and IRA.
  • Defined-benefit pensions. These are increasingly rare in the private sector, but still somewhat common for those retiring from a career in public service.
  • Annuities. Though controversial in the personal finance world, an annuity could make sense if you’re worried about outliving your savings.
  • Other investment income. Some seniors supplement their retirement and Social Security income with earnings from real estate investments or dividend stocks, for example.
  • Part-time work. A part-time job can help you delay dipping into your retirement savings account, giving your money more time to grow.

You can plan on some expenses going away. You won’t be paying payroll taxes or making retirement contributions, for example, and maybe your mortgage will be paid off. But you generally don’t want to plan for any budget cuts that are too drastic.

Even though some of your expenses will decrease, health care costs eat up a large chunk of senior income, even once you’re eligible for Medicare coverage — and they usually increase much faster than inflation.

Develop Your Social Security Strategy

You can take your Social Security benefits as early as 62 or as late as age 70. But the earlier you take benefits, the lower your monthly benefits will be. If your retirement funds are lacking, delaying as long as you can is usually the best solution. Taking your benefit at 70 vs. 62 will result in monthly checks that are about 76% higher. However, if you have significant health problems, taking benefits earlier may pay off.

Pro Tip

Use Social Security’s Retirement Estimator to estimate what your monthly benefit will be.

Figure Out How Much You Can Afford to Withdraw

Once you’ve made your retirement budget and estimated how much Social Security you’ll receive, you can estimate how much you’ll be able to safely withdraw from your retirement accounts. A common retirement planning guideline is the 4% rule: You withdraw no more than 4% of your retirement savings in the first year, then adjust the amount for inflation.

If you have a Roth IRA, you can let that money grow as long as you want and then enjoy it tax-free. But you’ll have to take required minimum distributions, or RMDs, beginning at age 72 if you have a 401(k) or a traditional IRA. These are mandatory distributions based on your life expectancy. The penalties for not taking them are stiff: You’ll owe the IRS 50% of the amount you were supposed to withdraw.

Keep Investing While You’re Working

Avoid taking money out of your retirement accounts while you’re still working. Once you’re over age 59 ½, you won’t pay an early withdrawal penalty, but you want to avoid touching your retirement funds for as long as possible.

Instead, continue to invest in your retirement plans as long as you’re still earning money. But do so cautiously. Keep money out of the stock market if you’ll need it in the next five years or so, since your money doesn’t have much time to recover from a stock market crash in your 60s.

A Final Thought: Make Your Retirement About You

Whether you’re still working or you’re already enjoying your golden years, this part is essential: You need to prioritize you. That means your retirement savings goals need to come before bailing out family members, or paying for college for your children and grandchildren. After all, no one else is going to come to the rescue if you get to retirement with no savings.

If you’re like most people, you’ll work for decades to get to retirement. The earlier you start planning for it, the more stress-free it will be.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com