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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Wednesday, May 24, 2006

Retirement Investing versus Outside Retirement Investing

Retirement investing and investing outside of retirement are two different investment approaches. With retirement accounts like your 401ks, Roth IRA, traditional IRAs, Simple IRA, Keogh, etc. you need to look at the big picture and long-term in order to hit your retirement funding goals. Now investing an extra $5,000 you have to make a profit works a little bit different. You have to answer some questions about your goals before making investment decisions. With this money are your goals short-term or long-term? Is this mad money that you can speculate with? Will you need that $5,000 in the future for an upcoming expense? These answers will take you down different paths to investing that money. Open an account at an online discount brokerage firm if you do not already have one. Check their fees that go along with each type of transaction (Remember that if you are going to put this money in mutual funds go directly to that fund to invest so you can save some money). Decide if you want bonds, mutual funds, stocks, etc or a combination thereof. Remember it is always best to be diversified so if this is not mad money please diversify. If it is mad money you still need to be smart—just do not pick an investment because you think it will do well; pick one because you researched it and the signs point to it doing well.

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