Pay off high-cost debt.
The best investment most borrowers can make
is to pay off consumer debt with double-digit
interest rates. For example, if you have
a $3,000 credit card balance at 19.8%, and
you pay the required minimum balance of
2% of the balance or $15, whichever is greater,
it will take 39 years to pay off the loan.
And you will pay more than $10,000 in interest
Buy a home and pay off the mortgage before
The largest asset of most middle-income
families is their home equity. Once these
families have made their last mortgage
payment, they have far lower housing expenses.
They also have an asset that can be borrowed
on in emergencies or converted into cash
through sale of the home.
Participate in a work-related retirement
Many employees turn down free money from
their employer by not signing up for a
work-related retirement program such as
a 401(k) plan. If they did participate,
with a dollar-for-dollar match they would
likely receive an annual yield of greater
than 100% on their investment.
Outside of work, save monthly through
an automatic transfer from checking to
These savings will provide funds for emergencies,
home purchase, school tuition, or even
retirement. Almost all banking institutions
will, on request, automatically transfer
funds monthly from your checking account
to a savings account, U.S. Savings Bond,
or stock mutual fund. What you don't see,
you will probably not miss.
Calculate your risk and return.
If you earn 4% interest, your money will
double in less than 15 years; at 7% it
will double in about 10 years and at 10%
it will double in 7%. Use Asset Allocation
to reduce your overall risk.
more articles by Cindy Morus
more articles about Personal Finance
ING Savings Account Information