this week’s money tip

It’s never to late to start saving for retirement.  Here are a couple tips:

1.  If your company offers a 401k plan, sign up and contribute at least as much as what your company will match, since that’s free money.  I’d recommend at least 15% of your paycheck (pretax) and pick a diverse set of mutual funds (if you’re in you’re in your mid 20’s-early 30’s, select 90-95% stocks, 5-10% bonds for your asset mix; make sure you pick a solid ‘core’ — at least 50% of your mix should be large cap, 10-15% in International Funds, and 10-15% in small or mid caps). 

2.  Contribute to a Roth IRA ($4,000/year max if you’re single; $5,000/year max if you’re married) on a yearly basis.  Sign up through a retirement/brokerage firm such as Vanguard or T.Rowe Price (two of the best) and purchase what’s known as Target Retirement Funds.  These funds automatically adjust your mix of stocks, bonds, etc according to your age.  So say, you’re 38 and you hope to retire in about 30 years, you’ll want to look for a Target Retirement Fund with the year that’s at or close to the year that you plan on retiring–in this case, “Target Retirement 2035″.  Here’s a good primer on Target Retirement Funds.