By
John K. Kumi
April 27th, 2022
Investing for retirement is, in many ways, simple. But those looking to create better returns and secure their financial future should keep these hacks in mind.
If your retirement savings aren’t quite what you hoped they’d be at this point in your life, you’re certainly not alone. A huge number of Americans haven’t saved as much as they’d like, and millions more have little or nothing set aside for their golden years.
Even those with a more sizable nest egg can still feel some anxiety about whether they’ve done enough to provide for potential decades of retirement. That’s why we’ve rounded up this list of the five top investment hacks that will help get your retirement savings back on the right track.
Up Your Contributions
This may not be a “hack” in the way some people understand it. But one of the greatest secrets of reaching your retirement savings goals is simply taking advantage of the magic of compound interest.
This is true whether you’re investing in traditional products like mutual funds or alternative investments like real estate. After all, the only thing better than your money making a profit for you is that same profit-earning you even more returns for years to come. Especially if you’re a decade or more away from retiring, even adding just a bit to your weekly or monthly investments can make a massive difference as that extra amount compounds.
Finding the extra shouldn’t be too hard for most people. Look at areas of your budget where you can cut back slightly or consider a side-hustle that might bring in a bit more income. Your future self will thank you.
Don’t Leave Any Money on the Table
If someone was offering you free money, how many of us would decide to just ignore them? Still, this is precisely what many employees of companies that offer 401k matches are doing. Simply, a 401k match means that, for every dollar you contribute to your 401k (up to a certain level), your company will also contribute a dollar, effectively doubling your investment.
Other than in times of dire financial emergency, everyone who has access to such a plan should be contributing at least as much as their employer’s matching amount. This is one of the best ways for the average W-2 employee to supercharge their savings amount.
Older workers may also be able to take advantage of so-called “catch-up” contributions to their 401k. This tax rule allows those over 50 to contribute more tax-free to their 401k than the typical limit. The goal is to allow those close to retirement to “catch up” to the amount they need by providing an additional tax advantage. Of course, this may only be an option for higher earners who can afford the excess contribution amounts. Still, it’s a crucial loophole to keep in mind for older workers who see retirement looming.
Release Your Inner “Shark” with Startup Investing
If you’re a high earner looking for equally high returns, consider the world of startup investing and venture capital. While these types of alternative investments may not be suitable for everyone, those with a high-risk tolerance can find a potential diamond in the rough that can create life-changing wealth or at least high returns for your retirement.
Even those without connections in the startup world have new opportunities to get involved these days, thanks to crowdfunding platforms that put businesses directly in touch with everyday investors. It’s crucial to understand the company and industry you’re investing in, as startups can and often do go belly up, losing you and your fellow investors most if not all of your money.
Explore the World of Cryptocurrency
Cryptocurrency can seem scary to those unfamiliar with it, who only hear stories of get-rich-quick schemes gone wrong or stomach-churning ups and downs in value. But in reality, crypto can be one of the best alternative investments for upping your retirement portfolio’s performance.
Cryptocurrencies can play numerous different roles for you – as a speculative investment, hedge against inflation, and more. While Bitcoin remains the undisputed top dog, there are more cryptocurrencies than ever these days, many offering unique benefits or features. In addition, there are even more traditional products like ETFs that can track crypto prices to give you exposure to the currencies without needing to own the actual asset yourself.
They can also provide much-needed diversification for many investors. However, even more so than many other investments, it’s absolutely critical to do proper research and understand what you’re buying and how it is valued.
Keep Taxes in Mind
How you handle your investments and taxes can make a massive difference in your overall returns – especially when you’re saving for retirement. Federal government tax policy is designed to help people retire in numerous ways.
Just look at the variety of tax-advantaged retirement products out there, from 401k’s to IRA’s. Average investors should make sure they’re using these as much as possible to keep more of what they save.
When it comes to other investments, tax treatment can still vary widely based on a huge number of factors. This is especially true for alternative investments, international investments, or other nonstandard financial products.
If these are part of your retirement strategy, it’s more than worth the cost to employ an accountant or financial advisor to ensure you’re staying within the lines and avoiding hefty taxes. As they say, it’s not about how much you make; it’s about how much you keep!
Supercharge Your Retirement Savings with These Amazing Investment Hacks
Investing for retirement is, in many ways, simple. But those looking to create better returns and secure their financial future should keep these hacks in mind. Whether exploring alternative investments or simply contributing more, these few easy tips could make the difference between a comfortable retirement and living out the golden years of your dreams.
