One of the most frequently asked questions we get is where do I start investing? The answer is simple: follow the Financial Order of Operations. These nine tried-and-true steps act as an instruction manual for your money, showing you how prioritizing your financial goals can help you maximize your money in the long run and which order to contribute to your retirement accounts.
When it comes to investing, in Step 2 of the FOO you take advantage of the free money offered in your 401(k) or other types of an employer plan. Step 5 encourages you to invest in a Roth IRA and HSA, if you have access to both, then in Steps 6 and 7, you’ll work to max out your retirement accounts and start building taxable investment assets. Tax diversity in retirement is essential: a mixture of both pre-tax and tax-free is the key to keeping a low tax rate in retirement.
What should I invest in?
When building foundational assets, start by looking into target date index funds. These contain the diversity of an entire portfolio in a single fund and become more conservative as you get closer to the target date that you need the funds. The leading providers of index target retirement funds are Fidelity Investments, Charles Schwab, and Vanguard.
Check out the video below where Brian breaks down the basics of investing!
