Don't Blow It. Invest It

You've weeded out all the wooden nickels from your spare change jar and have tallied up some extra dough. Don't blow it. Invest it. Your illustrious investing career starts now.

The key is to keep your costs of investing (including brokerage fees) to less than 2% of the transaction value. After all, you don't want fees eating into your returns. So if you're planning to add to your position in stocks a few times a month, a Drip or a low-cost mutual fund may be the way to go.

Need another nudge? Say you've got 40 years to retirement. If you start with $1,000 and invest an additional $1,000 each year, and your money earns 10% annually, when you're ready to retire at age 65, you'll have $532,111.07. Nudge, nudge.

If you have earned income, you can set up a Roth IRA and not even pay any taxes on that $532K when you withdraw it. Your mileage may vary, so use this handy savings calculator to play with the inputs.

Again, the key is to keep fees from eating up your earnings. Nowadays, with such low commissions being offered by discount brokers (compare costs here), it's easy to manage your account for much less than 2% of your assets annually.

For a few ideas on exactly what investments catch our eye, pick up a few free trials of our analysts' newsletters.


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