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As you begin your career, find out when you’re eligible for your company’s 401(k) retirement savings plan, if it has one. Mark on your calendar when you’re eligible to participate and sign up as soon as possible.
Companies are now permitted to automatically enroll employees in their retirement savings plan, but you can opt out. The Pension Protection Act also allows your employer to put your contribution into a specified investment. Instead of opting out of a 401(k), contribute as much as you can and select the investment option that best meets your goals.
If you have earnings from a part-time job and your tax bracket is low, open a Roth IRA. You can check out the Web site of mutual funds to find out if there are fees for opening an account. You’ll see that many of them waive the minimum investment if you agree to fund your Roth IRA with automatic deductions from a checking, savings or money market account. You can open a Roth IRA online or by making a phone call. Many brokerage firms also have programs, so you can fund your IRA gradually instead of coming up with a larger amount.
Some mutual funds and brokerage firms will assess an account maintenance charge. Before opening an account, find out how much it is and whether there are ways to avoid the charge. You might bypass the fee by consolidating your investment accounts, taxable and non-taxable, at the same firm. The fee may be waived if you exceed a specified dollar amount. Check with your parents or other family members to see if you can link your account to theirs and avoid the maintenance fee.
In the long run, you’ll be glad you began investing early. To be a millionaire at age 65, let’s crunch the numbers:
Your life will be a whole lot easier if you can get started now.
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