Investment Advice for Low-Income Employees

Irrespective of your present earnings, it is vital to invest for you and your family’s future. It is quite understandable how difficult it is for lowly paid workers to put aside some money for that purpose.  Yet, low earnings can’t be the reason for not making investments. Website named Money Fool found that even workers having minimum wages could have over one million dollars in their account at the time of retirement by just making a saving of ten percent of their salary, starting as early as twenty year of age. Here’s helpful investment advice for low-income employees.

Don’t sacrifice free money

If you don’t deposit sufficient funds in your 401k account to match the amount of your employer, you are wasting money. It’s bad to keep throwing away money in that manner, especially for those with low income for whom every penny matters a lot. You may be thinking that no way you can keep depositing money in your 401k when you have a low income, but you don’t seem to realize the pretty amount that you don’t collect on signing for that account. Perhaps, you aren’t aware that money so deposited in your 401k account is not taxed! It means your taxable income gets reduced and so does your tax amount. In case you don’t feel comfortable with the idea of money getting deducted from salary, why not begin with a contribution of just one percent and gradually keep increasing your contribution. Of all investment advice for low income employees, this is the most advisable.

Create an emergency fund

Workers with low income are especially vulnerable to disturbances in their regular income, making it vitally important for them to create an emergency fund and start building the same at the earliest. Start thinking on the lines of having a savings bank account exclusively for depositing a small part of you all paychecks in that account. Keep building that amount till you have enough funds that facilitate living for a minimum of five to six months.

Make a budget

On planning a budget and sticking to those even workers with very low salary can avoid wasteful expenditure. If you keep tracking your funds you’ll easily identify the points where you have been spending money unnecessarily. Once you start making your budget regularly, you’ll find more ways of saving money and investing the same.

Keep investing constantly

Another significant piece of investment advice for low income employees would be to locate good inexpensive mutual funds. The minimum sum to be invested in certain mutual funds is as low as $1000, enabling you to get started without much financial strain. When you agree to automatically transfer your monthly contribution from your bank to your mutual fund account, you may be required to pay amount lower than the stipulated minimum requirement.

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