Suze Orman: 6 Do’s And Don’ts Of Investing For Retirement
Written by
Katie Wudel
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Investing for retirement can often feel like navigating a complex maze. Suze Orman provides clear guidance to help simplify this journey.
Tailored for both novice and experienced investors, these guidelines serve as a roadmap to navigate the often intimidating world of retirement planning. Here are Orman’s six essential do’s and don’ts for retirement investing that will help you build a secure financial future.
1. Do: Start Early and Consistently Invest
Orman emphasizes the importance of starting your retirement investments as early as possible. The power of compound interest means that even small, regular contributions can grow significantly over time. It’s often said that it’s not about timing the market, but time in the market. Start by setting aside a portion of your income – even if it’s a modest amount – and invest it consistently.
2. Don’t: Underestimate the Need for an Emergency Fund
Before diving deep into retirement investing, Orman advises having an emergency fund in place. This fund acts as a financial buffer to prevent the need to withdraw from your retirement savings in case of unexpected expenses. Ideally, this fund should cover at least six months of living expenses. Having an emergency fund ensures that your retirement investments remain untouched and continue to grow.
3. Do: Diversify Your Investments
Diversification is key in any investment strategy. Orman suggests spreading your investments across different asset classes like stocks, bonds, and real estate. This strategy helps to mitigate risk because if one investment performs poorly, others might compensate. For retirement accounts, consider a mix of individual stocks, mutual funds, and exchange-traded funds (ETFs) to achieve a balanced portfolio.
4. Don’t: Chase High Returns Without Understanding the Risks
High returns often come with high risks. Orman cautions against investing in something solely because it promises high returns. Understand the risks associated with each investment and assess if they align with your retirement goals and risk tolerance. It’s better to aim for steady, long-term growth rather than short-term gains that come with considerable risk.
5. Do: Regularly Review and Adjust Your Portfolio
Your investment needs and risk tolerance will change over time, especially as you move closer to retirement. Orman recommends reviewing your portfolio at least once a year to ensure it still aligns with your retirement goals. As you age, gradually shift toward more conservative investments to protect your nest egg.
6. Don’t: Overlook Tax Implications
Orman stresses the importance of understanding the tax implications of your retirement investments. Different retirement accounts like 401(k)s, IRAs, and Roth IRAs have distinct tax treatments. Be aware of how taxes will affect your retirement savings and plan accordingly. This might include strategies like tax-loss harvesting or considering Roth conversions.
The Bottom Line
Orman’s advice for retirement investing is grounded in practical wisdom. By following her do’s and don’ts, you can approach retirement investing with confidence, knowing you’re on a path to a secure financial future. Â
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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