Retirement planning is getting increasingly difficult due to the inherent problems with saving money over a long period of time. Your retirement fund is only as good as the investment account you choose and the trading strategy you employ inside that account.
Choose An Account That Makes Sense For You
There are many different types of trading accounts you can open. All of them can be divided into two basic account types: tax deferred and non-tax deferred. A self-directed IRA, for example, provides you with the ability to take advantage of all of the traditional types of investments inside of an IRA like mutual funds, but it also allows you to actively trade stocks, bonds, buy real estate and trade more exotic investments like stock options and even forex.
A traditional IRA does not typically allow you this kind of flexibility. If you have no interest in actively managing your retirement fund, then choose a traditional IRA. If you want to actively manage your own investment strategy, make sure your IRA is a self-directed one. Self-directed IRAs are set up with a brokerage firm or an insurance company. You can also set up a self-directed IRA through many banks.
Aside from self-directed IRAs, the only other account you can invest in is a traditional brokerage account. These accounts offer no tax advantages but give you full control over the savings and investing of your savings. Like IRAs, these accounts are typically set up with a brokerage firm, bank, or insurance company.
Choose A Strategy You Understand
There are many approaches to managing your own retirement portfolio. Broadly, you can take a fundamental approach to trading or a technical one. Fundamental analysis involves analyzing company cash flow statements, analyzing management philosophy, and studying how company performance is affected by economic data and government regulations. Technical analysis studies markets by using charts and tries to find patterns. It only looks at past performance and disregards fundamental data. Technical analysis trades on trends and considers past performance to be indicative of future returns which is why it relies so heavily on patterns and charts to make investment decisions.
Don?t Invest In Investments You Aren?t Familiar With
Having the option to trade practically any investment you want to can be exciting, but it?s also very dangerous. It?s very easy to become over confident in your abilities by watching the latest news headlines, or T.V personalities, talk about what companies are ?hot? right now.
You should ignore the financial gurus and experts touting stock picks or encouraging you to buy investments you yourself don?t fully understand. Buying real estate investments, for example, requires special knowledge and skill and an understanding of the real estate market. This market is driven by different fundamentals than the stock market and technical analysis doesn?t even apply to real estate investments. If you try investing in this market without understanding what you?re doing, you could easily lose your entire retirement savings.
Pay For Advice
While you shouldn?t just rely on the say-so of a self-proclaimed expert, it is wise to seek out financial professionals to help you learn about various investment and trading strategies. Financial professionals may be able to help you learn more about the investments you want to trade. You don?t always have to meet with a financial adviser though. Sometimes, reading a good book on investing is all you need (aside from experience). For example, ?The Intelligent Investor? is often cited as one of the best books on value investing. This book would be invaluable if you?re interested in a long-term investment strategy like value investing.
Post contributed by Liz Goldman, a freelance financial writer on behalf of Sunbird Forex Broker and currency trading specialists. Home to the MetaTrader ? ECN trading platform. All views and opinions expressed belong to the writer and do not necessarily represent Sunbird FX.
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