Our educational system fails to teach financial education and as a result, millions of Americans fail when dealing with financial matters. The recent collapse of real estate prices wiped out countless families who overextended themselves financially and ended up with their homes in foreclosure and a low credit score. In terms of investing for retirement, the average investor scores poorly as well. The level of your financial education in the area of investing may very well determine the level of your financial security in retirement. In your working years, you will likely invest in a retirement plan at work and/or in an IRA. Once retired, you have hopefully accumulated a retirement nest egg that can provide you with future income and financial security for life. All along the way, financial education is important, because you will be making investment decisions on an ongoing basis.
Start your education in the investment area by focusing on mutual funds. These investment packages pool money from many investors and manage a portfolio of securities for their investors at a reasonable cost. Mutual funds are designed for the average or new investor and are extremely popular. In fact, if you have a typical 401k or similar plan at work, you will notice at a glance that most of the investment options offered are mutual funds. Investing for retirement in an IRA has income tax advantages, and there are numerous ways to open and invest in these accounts. You can open an IRA at your local bank, through a life insurance agent, or with a brokerage firm. Millions of Americans open an IRA with a mutual fund company and make contributions on a regular basis. Others roll over money from one or more company pension plans to a mutual fund IRA to simplify and consolidate their retirement funds.
Probably the biggest advantage to mutual fund investing is the broad array of investment options offered. In the world of investing there are basically three different asset classes or investment options, and mutual funds offer easy access to all three. Stock or equity funds invest your money in stocks for long-term growth and potentially higher profits. Bond funds offer higher interest income, and money market funds feature safety and pay competitive interest rates. Few average investors have the time, experience, or financial education required to manage a portfolio of individual securities like stocks and bonds. Try investing for retirement or in retirement with a team of professional investment managers on your side. Focus on mutual funds and learn all you can about them.
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