What is the best way to save money?

Question

Can anyone tell me how to save money ..I mean what is 401K and IRS, CDs, stocks and bonds. I am 26 year old female

Answer 1

Put money in the bank. If you aren't spending it, you are saving it. The best way is the way that works for you.

A 401k is a qualified benefit plan available through your employer and will typically offer a match incentive. If you have one available through your place of work, DEFINITELY sign up for it as soon as possible, and contribute to the max.

An IRA is an "individual retirement account" and you can set one up through just about any financial institution. I would suggest a Roth IRA for you at age 26. You have until April 17th to fund your 2006 IRA. That means - you open an account and put the money in (4k max). You don't have to do anything with it yet - just get it in there. You cannot go back and do it later, so I'd put that on the top of your "to do" list.

CD is a certificate of deposit - a low risk investment tool that will generally pay a bit better than a savings account but less than other instruments.

Stocks are equity shares in a corporation.

Bonds are debt shares in a corporation, municipality or government.

http://biz.yahoo.com/f/g/mm.html

There's a glossary of financial terms.

You should not invest in anything until you know what the anythings are. Read! Wall Street Journal, Barron's, Money magazine. Forbes online. Yahoo! Finance... the business section of your local paper. Familiarize yourself with the terminology and before long .. you'll know exactly what to do.

Answer 2

You need to get your hands on a basic financial planning book ASAP. I highly recommend Smart Women Finish Rich by David Bach. You can read it in one sitting; it will only take a few hours. It's straightforward and easy to understand. He gives you a step by step guide to getting your finances organized and starting to pay off debt and build wealth.

Basic steps:
1. Pay off credit card debt.
2. Open a high yield savings or money market account. I would put 5% of my income in this account each month no matter what. It will cover any emergencies that arise, and you can also use it to save for short term goals like a vacation, a new car, or a downpayment on a home. Just keep adding to it; you'll always have short term goals.
3. Simultaneously contribute to a retirement account--use your 401k and contribute enough to get the match if you have access to one at work. After that, start a Roth IRA and max it out. Then, when you can afford to save even more than that, go back and up your contribution to your 401k.

That's pretty much it. How do you do this? By spending less than you earn. Save first--then spend. Make it automatic. Read the book, and it gives more details of how to do all this and how to set up those accounts.

Answer 3

The best way to save money is not to spend more than your income. There are risks investing in stocks and bonds thus it is safer to place the money in a time/term deposit and earn interests.

Answer 4

Talk with a licensed accountant or a reputable CFP in your area. Ask around,talk to friends to see who they might recommend for a financial planner. Most of these professionals won't charge you for advice the first time around.

Answer 5

401k is like where you get a job and they take money out of your paycheck,and then store it in a account that you can get when your older

Answer 6

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