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Any time of the year represents a good time to invest money, but spring seems to be especially ideal. This is the time that many consumers have a little extra, because of tax refunds or bonuses. What's the best way to make that money work for you? The appropriate course depends upon your life circumstances, including your financial condition, your short-and long-term goals, and the needs of your dependents.
Five Investing Options
• Pay off debt. If you've incurred a significant debt burden, it's wisest to pay off your credit cards first. The high interest rates that most cards carry can negatively affect other investment decisions you make.
• If your employer has a 401K, be sure to invest. This is smart money, because it's an up-front tax deduction and tax deferred. Plus, most companies will match your investment to some extent, meaning that you're essentially giving yourself a raise.
• Consider a Money Market Account. This option is a good one if you're looking to maximize the return on your investment, but still want easy access to your funds. Choose this option if you're looking to set aside funds for a rainy day, or simply want to wait until the right investment opportunity comes along.
• Think about an IRA. If you're concerned about having enough income in your retirement years, consider investing in a traditional IRA. This may allow you to defer payment of taxes until you withdraw the money, and is one of the best ways to save. The maximum annual contribution is $3,000 under age 50. A Roth IRA is another option, and can be attractive because it's tax-free. Although it also contains the $3,000 maximum annual contribution under age 50, unlike the traditional IRA, it doesn't cut off contributions at age 70. For added savings, look for a no-fee IRA. Please note: before investing, you may wish to consult your tax advisor.
• Save now for college later. If your dream is to see your children through college, the best time to start saving for this goal is now. Consider Money Market Accounts. Also, there are tax-free options available, such as a 529 college-savings plan.
Consider All Your Options
When making your decision, consider alternatives to traditional banking institutions, such as eBanking companies, which can offer more competitive rates. For those who feel uncomfortable conducting business on the Web, some eBanking institutions have developed a network of relationships with financial services brokers, which can offer the trust and comfort of dealing with a local financial adviser, while also taking advantage of a great rate.
If you are still unclear about which way to go, free resources are available to help you learn more about saving for the future. MetLife Bank® offers a variety of Web-based calculators designed to take the guesswork out of building financial freedom, including calculators to help plan for retirement, and information about savings alternatives. There are also calculators to help develop a budget and assist with estate planning. They are available by looking under "calculators" at www.metlifebank.com.
Also, as part of its Life Advice program, MetLife offers "Investing for the First Time," a free brochure created to help people understand the intricacies of investing and how to take appropriate steps to financially prepare for the future. It's available by calling 1-800-MET-LIFE (1-800-638-5433).
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