Start Investing Early
In addition to saving and investing, it's also important to be smart about how you spend money. While you're setting aside money in your 401(k), you also need to set aside funds in a short-term savings account. You'll want this to support unexpected expenses or life events (like a job loss). Hopefully, this will prevent you from dipping into your growing retirement account.
One of the worst financial moves you can make is withdrawing money from your 401(k). You will be required to pay a 10 percent tax penalty, as well as paying taxes on the balance. As you move up the career ladder and switch jobs, you can roll your current retirement savings into a new employer's plan or into an Individual Retirement Account.
Buying Stock Outside of 401(k)
If you're interested in purchasing stock outside of your 401(k) investments, there are two options to consider: a full service or discount broker. The full service broker is the pricier option, as they provide financial planning and advice. The discount brokers depend on the buyer to do their own research and have their own investment strategy for making purchases.
Keep in mind that you don't want to be swayed into purchasing a stock because it's being hyped in the media. Do your research. You want to make smart investing decisions.
Clarky Davis is the author of the Debt Diva Blog and the Debt Diva's 2008 Financial Guide. She offers budgeting and money management advice based on her own experiences and more than five years working in the debt management industry and is a spokeswoman for CareOne Services, helping consumers gain control over their debt.
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