how to: invest your money

Saving money and learning about investing is always a smart plan. Even if you’re newly hitched, it’s never too soon to start planning for those golden years. Think about it: Do you imagine yourselves lying on a beach or working behind a desk? If you picked the beach (or travel, or golf, or anything other than the 9-to-5 grind), you’ve come to the right place. We have all kinds of investment advice, including the basics of how to invest wisely and what all those financial terms really mean. Not sure where to begin? Start with our five easy steps to invest your money. We also have investing advice and Q&A on all kinds of financial basics about investing -- learn the difference between a 401(k) and an IRA, how to invest your savings, and your options if you can only invest a small amount. Our basic investing advice will help you get ready. But before you invest your money, you should be sure you’re out of debt: Use our debt calculator to help plan your payments, and follow our simple steps to go from credit card misery to debt free. And if your problem is a lack of cash, we’ve got tips for you, too. Learn the habits of spending-savvy couples, and find easy ways to save more of each month’s paycheck and stick to your budget. Don’t want to go it alone? Check out our local pages to find a financial planner in your area for some in-person investment advice.

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Money Q&A: Managing Your Savings?

Q.

The Nest Q&A We've got about $5,000 in savings. What's the best way to invest our money?

A.

Assuming you have no significant credit card debt, have a low interest rate on your student loans, and have enough income to cover your mortgage and/or car payments, contribute the maximum to your 401(k), and make a yearly contribution to an IRA or Roth IRA, you're in a position to invest.

You have three basic options: stocks, bonds, and cash. Most financial advisers argue for diversity in your portfolio, which means choosing all three options at once.

A rule of thumb that some experts use is a ratio of 80:20 ratio of stocks to other conservative investments like bonds if you're 20+ years away from retirement. If you're looking for a less aggressive option than stocks right now, go with mutual funds, which you purchase from an institution and require less research and daily upkeep because they give you automatic diversification. As for cash, consider an online savings account, a money market account, or high-yield CDs.

Nestpert Brett Graff, The Home Economist and former government economist

-- The Nest Editors

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