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How You Invest May Depend on When You Were Born
By Mark Sonnier AAMS, Investment Representative
If you were born between 1946 and 1964, you’re a “baby boomer.” But if you came along between 1965 and 1978, you belong to “Generation X.”
Your age helps determine your tastes in music, food and culture and your attitudes toward a variety of social and political issues. And when you’re talking about your generation, you also need to be aware that it can influence the way you save and invest.
To understand the financial implications of belonging to a particular age group, consider the following generational characteristics:
Many baby boomers:
retirement saving well into their 40s and 50s.
While Gen X-ers:
loans to repay, along with heavy credit card debt;
Let’s take a look at some ways that Gen X-ers and baby boomers can address these needs;
If You’re a Gen X-er:
Pay off those student loans -
Of you still owe money on your student loans, you’re not along.
By paying off your student loans as quickly as possible, you’ll free up money for your short- and long-term savings and investment goals.
Avoid the credit
Responsible credit card management is a great habit to learn early.
Build a cash cushion -
Even if you aren’t earning much, strive to put away A$50 or $100 a month in a money market account, until you have built a cash cushion of about three to six months’ worth of living expenses.
Contribute to your 401(k) -
Start investing in our 401(k) or other employer-sponsored retirement plan as soon as you can. If you can’t afford to put in the maximum, at least contribute enough to earn the employer match, of one is offered.
If You’re a Baby Boomer:
Accelerate retirement savings -
If you aren’t “maxing out” on your e401(k) and IRA, now is definitely the time to start. If you haven’t saved much for retirement, you may need to weighl your retirement plan more heavily toward growth-oriented investments, although you’ll still need to feel comfortable with what you’ve doing, given your individual risk tolerance.
Use home equity wisely -
At this stage of your life, you may have built up considerable home equity. If so, you might be tempted to take out a home equity loan to consolidate other debts, make home improvements or accomplish some other goal. Your home equity
Your home equity loan may be tax-deductible, and you can probably find a competitive interest rate - but you’ll still want to use this data wisely. Remember, you’re putting your house up as collateral, so you don’t want to get in over your head.
Don’t bankrupt yourself to pay for college -
If you want to help your kids pay for school, try to avoid dipping into your retirement savings. Instead consider contributing to a tax-advantaged Section 529 plan or a Coverdell Education Savings Account. Also, encourage your child to apply for grants and scholarships. And shop around for good, reasonably priced schools - they’re still out there, if you look for them.
Make the Right Moves - at Every Stage
As you can see, you’ll need to make different types of financial decisions over time.
To make your job easier, consult with a qualified financial professional
who understands your individual needs and goals - and who can help you
develop a strategy for each stage of your life.
Mark Sonnier is an investment representative for Edward Jones. If you have an investment question or problem you would like Mark to address, you may reach him at (281) 332-8554 or 1025 East Main, Suite 102 in League City.
League City Area News Online.
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