Page 45 - Kiplinger's Personal Finance - November 2018

AHEAD Commentary

MONEY SMART WOMEN Janet Bodnar
My Best Investment Advice

s the author of this column, I’m investment in Vanguard’s Total your retirement account, or with a
frequently asked what advice I Stock Market Index fund (VTSMX). regular deposit to a bank account for
Awould give to women who are If you also invest in Vanguard’s a short-term goal, such as next year’s
just starting out as investors. So this Total International Stock Index fund vacation. You can’t spend it if you
month I thought it would be useful (VGTSX), you can literally own the don’t see it.
to condense my top tips with a set world. Funds like these also make
of FAQs that crop up most often. sense as core, long-term holdings How do I balance saving for retirement
for experienced investors. You can with saving for my kids’ college educa-
How do I know when I’ll have enough branch out into other investments as tion? Retirement should always come
money to invest? It’s not the amount your interest and comfort level grow. first, especially for women, who tend
that counts. Successful investing Another option is to invest in a to amass less in savings than men over
hinges on just three steps: Start soon, single target-date fund, which is the course of their careers. If you have
start small, and keep it simple. It’s crit- designed to divvy up assets among a limited amount to devote to savings,
ical to start saving as soon as possible bonds as well as stocks in an age- your top priorities should be to build
to take advantage of the power of com- appropriate mix until you need the an emergency fund—aim to cover six
pounding, which over time can have money at some date in the future— to 12 months of expenses—and to put
a bigger effect than how much you in- usually at retirement. You’re likely at least enough money into a retire-
vest and where you put the money. to have access to a target-date fund ment account to take advantage of
Consider the case of two young through your retirement plan at work. any employer match.
women, Teri and Toni. At age 25, Teri Kiplinger’s likes target funds managed Can’t do that right away? Start
begins contributing $2,000 smaller and work up to it. Once you
a year to an IRA. She have an emergency cushion, you can
makes annual contribu- THESE ARE THE THREE shift those payments to college sav-
tions for 10 years and STEPS TO INVESTING ings. And don’t be afraid to tap the
then stops. Toni, on the SUCCESS: START SOON, grandparents. Instead of letting them
other hand, waits until shower your kids with stuff, encour-
age 35 to start funding START SMALL, AND age them to open state-sponsored 529
an IRA but makes reg- KEEP IT SIMPLE. college-savings accounts, for which
ular $2,000 contri- they’re also likely to get a state tax
butions for the next break. (My husband and I are funding
30 years. If they by Fidelity, T. Rowe Price 529 accounts for all three of our
both earn a similar and Vanguard. grandchildren.)
return, who will
have more money But I never have any money What are some saving and investing
at age 65? Incredi- left at the end of the month strategies that have worked for you?
bly, Teri—a stunning to save, let alone invest. I never skipped a contribution to my
illustration of com- No matter how much 401(k) account, even when the stock
pound interest work- you make, it always market tanked during the financial
ing its magic. seems to disappear crisis a decade ago. Outside of my
by the end of the retirement savings, I’ve made auto-
How do I know where month. Which is why matic monthly investments in a total
to invest? That’s I’ll add step number four: market index fund. And having cash
where “keep it sim- Invest steadily by having in an online bank paying 1.9% helps
ple” comes in. You money taken right off me sleep at night. ■ POON WATCHARA-AMPHAIWAN
can own shares in the top of each paycheck.
the entire U.S. stock You can do that with an JANET BODNAR IS EDITOR AT LARGE OF KIPLINGER’S
market with a single automatic contribution to PERSONAL FINANCE MAGAZINE. YOU CAN CONTACT HER
AT JBODNAR@KIPLINGER.COM.
24

K11-MONEY SMART WOMEN.1.indd 24 9/21/18 3:07 PM