What Comes Next After Setting Up Savings and Retirement Funds?

Building Wealth: Where to Invest Your Money Next

Hey there, Kristin! I'm at a point in my life where I've got some nice cash flow going on and I'm trying to figure out my next move. I've got a solid savings account and emergency fund, and I'm well on my way to maxing out my Roth IRA. So, where should I turn to next for investing my money? – Curious Investor

Hey Curious Investor! I applaud your efforts to grow your wealth, especially now that you've taken the first steps to secure your savings and retirement. Many people tend to focus solely on saving for the future, without considering how to increase their wealth in the present. Before diving into new investments, let's ensure you're stashing away enough for retirement. You mentioned your Roth IRA – is that your only retirement account? If so, I'd suggest exploring other investment options to bolster your retirement savings.

Research shows that most individuals underestimate their financial needs in retirement, with only 36% feeling on track to meet their goals. To enhance your financial security, consider opening another investment account to support your retirement plans. This could be an employer-sponsored 401K or a personal investment account for long-term contributions. Once you've secured your retirement, you can expand your investment portfolio.

While saving is crucial, with a healthy savings account in place, you might want to redirect some funds towards investments. Budget for investing as you would for saving. Despite current market conditions, this could be an opportune time to purchase stocks and assets at discounted rates, priming you for potential future gains.

Ready to dive into investments? Stick with your current brokerage account and set up a new investment account for consistent contributions. Consider investing in index funds and ETFs for a diversified portfolio without the hassle of stock picking. Practicing dollar-cost-averaging by regularly investing funds can help manage risks and avoid overpaying for assets due to market fluctuations.

Consistent investing can lead to a substantial nest egg for future expenses like homeownership, weddings, or vacations. Remember, investing isn't just for retirement – the sooner you start, the more financial freedom you'll have for life's important moments without touching your savings account. Best of luck on your investment journey! – Kristin

If you have financial questions, Kristin is here to assist. Submit your inquiries anonymously for potential inclusion in upcoming columns. Sign up for The Balance's newsletter for daily financial insights, analysis, and tips straight to your inbox every morning!