Online Investment Tips

There is certainly no shortage of online investment tips today, and plenty of them are worthwhile. However, it's easy to get so excited about investing that you overlook the importance of savings. It's always a wise idea to squirrel away money for a rainy day. Before you begin to seriously invest, make sure you have all of these savings bases covered.

Emergency fund

The thing about emergencies is that they always show up without notice. They don't give you time to get your finances in order; they just fall into your lap and expect you to deal with them. By building an emergency fund, you cushion yourself against unexpected blows. Try to save at least three to six months' worth of your income in a savings account over time. The simplest way to do this is to set up an automatic transfer from your checking to your savings account each month.

Retirement

Much can be said for saving for retirement, but the most important thing to know is that the sooner you start, the better. The best way to see how much you need to save is to use an online retirement calculator. Once you have that figured out, take one of two approaches. If you want to get to your goal in ten years or less, focus on aggressively saving money. A rule of thumb is to save ten to fifteen percent of each paycheck, but if you have less than ten years, up the percentage accordingly. If you have more time to save than ten years, focus on making solid investments. Max out your 401(k), and fortify your portfolio with solid investments that will yield the returns you need in the given time frame.

College Fund

With college costs on the rise, it's more important than ever to invest in your children's future. Open a state-sponsored 529 savings account for your child as soon as possible, and dedicate a portion of your income to the account over time. How much you save will depend on your child's projected college costs. Keep in mind that college costs increase on an average of 5% per year. You can aim to save 75% of their projected college costs, and have your child supplement the remaining costs with work study, loans, and other aid.
Learning to save is an important skill to have in life. It leads to a life of financial stability for you and your family, which is a valuable thing to have in these economic times.