3 Easy Ways to Simplify Your Investment Life

Investing can seem like a complicated matter, and that is why many people give up and never get started. The nuances of stocks and bonds can seem pretty mysterious, and it is easy for the average person to feel they will never be able to compete.

The good news is that the average investor does not have to compete with the big boys or the hedge fund traders to succeed and build wealth for the future. By simplifying your investment life and focusing on the basics, you can save for the future and still live a typical life. Here are some simple ideas to get you started.

#1. Make Your Mutual Fund Do Double (or Triple) Duty

Whether they are called target-date retirement funds, asset allocation funds, or life strategies funds, these all-in-one mutual funds can simplify your investing life. By investing in a greatly diversified portfolio of stocks, bonds, and cash, and changing that allocation over time, these all-in-one funds make the decisions for you.

There are some trade-offs in this type of investment, and it is essential to choose your funds with care. Even so, if you genuinely want to put your finances on autopilot, these all-in-one funds are hard to beat.

#2. Put Your Contributions on Automatic

It can be hard to remember to make that monthly mutual fund investment, and even harder to find the money. Instead of taking that approach, turn things around and pay yourself (and your mutual fund) first.

Sign up for the 401(k) plan at work and have the money pulled pre-tax from every paycheck. Set up automatic monthly contributions from your bank account to your favorite mutual fund. Once those investments are in place, you will not have to think about it again.

#3. Consolidate Your Old Accounts

If you have held several different jobs, you may have some old retirement accounts still hanging around. While your former employers may let you keep the funds where they are, consolidating them all into a single rollover IRA will be much simpler and easier to manage.

Consolidating your old retirement accounts into a single basket is not as complicated or intimidating as you might think. Just choose where you want the money to go, ask the new custodian to send you the transfer forms, and provide the information they request. The new fund custodian will take it from there, transferring the funds from your old employers and putting them all under one roof.

You do not have to let the complicated nature of the financial world get you down or prevent you from getting started. When it comes to investing, time can either be your enemy or your friend. If you wait too long, you will need to save even more to catch up. If you get started early, the power of compounding and the value of extra time will reduce the amount you have to save. Investing may seem like an arcane matter, but when you boil it down, it is simpler than you realize. The three ideas listed above can simplify your financial life and make saving for the future more manageable than you ever thought possible.

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