One of the reasons that many family child care providers don’t like thinking about saving money for their retirement is because the topic can be extremely confusing and complicated.
It doesn’t have to be.
In fact, it’s possible to keep things simple so you can more easily take control of investing wisely for your retirement.
A new report “Vanguard’s Principles for Investing Success” does keep things simple.
I highly recommend it, particularly for those of you who don’t know much about retirement savings.
Here are the four principles from the Vanguard report:
1) Goals: Create clear, appropriate investment goals
An appropriate investment goal should be measurable and attainable. Success should not depend upon outsize investment returns, nor upon impractical saving or spending requirements.
2) Balance: Develop a suitable asset allocation using broadly diversified funds
A sound investment strategy starts with an asset allocation suitable for the portfolio’s objective. The allocation should be build upon reasonable expectations for risk and returns, and should use diversified investments to avoid exposure to unnecessary risks.
3) Cost: Minimize cost
Markets are unpredictable. Costs are forever. The lower your costs, the greater your share of an investment return. And research suggest that lower-cost investments have tended to outperform higher-cost alternatives. To hold onto even more of your return, manage for tax efficiency. You can’t control the markets, but you can control the bite of costs and taxes.
4) Maintain Perspective and Long-Term Discipline
You are saving money for the long run. Don’t let emotions cause you to act impulsively when the stock market goes down. Saving small amounts of money each month and watch it grow. Don’t chase “hot tips” or try to “beat the market.”