BUFFALO, NY (WKBW) — Inflation and gas prices are just some of the factors that are making it harder for so many people to make ends meet.
A recent Lending Club study found that more than 60% of Americans live paycheck to paycheck.
When it comes to investing and saving, financial experts explained that “playing it safe” is the best thing to do right now in a choppy market.
“Just kind of a hiding place in value names or just kind of a dividend payer, just because history tells us they perform a lot better and hedge against volatility a lot better than your typical growth stocks,” said Sgroi Financial, director of investment research and development. , said Vincent Scarsella.
Sgroi Financial’s Director of Research and Investment Development, Vincent Scarsella, said that we are currently in a “bear market”, which is when a market experiences prolonged prices go down because people are reluctant to invest.
He said, you can, just wait for it.
“You get some of the best market days when you’re in these bear markets, so just stay invested, know that the market is going to come back at some point,” Scarsella said. “But when you look at the full history of the market, if you have more than 10 or 15 years of time on that money, you should be fine. History shows us, I don’t know the exact number but, you have about 80 % chance of making money.”
If your company doesn’t offer a 401k, there are a variety of things you can still do to invest for your retirement.
The first is an IRA, also known as a “traditional IRA”.
“You’re not allowed to invest that much per year, like a 401K, but you’re allowed to invest $6,000 or $7,000 in it depending on age. It’s a great way to start retirement,” he said. Scarsella.
For example, if you earn $50,000 a year and put $6,000 into your traditional IRA. The IRS will only tax you $44,000 for that year. You will be taxed on that $6,000 when you retire and want to withdraw that money.
Another option is something called a “Roth IRA”, which sort of does the opposite when it comes to taxed money.
“If you’re under certain income limits, you’re actually allowed to start this Roth IRA,” he said.
For example, you earn $50,000 a year and invest $6,000 in the Roth IRA. The IRS says you made $50,000 this year, so you’re investing with “after-tax money.” When you retire and want to withdraw that money, it’s actually tax-free.
“It’s kind of out of sight, out of mind, and then once you retire, in 30-40 years, whatever. If you put in $6.00 and you get 6% -7% returns, or whatever, that’s a good number to have. It’s a good number to have when you eventually retire,” Scarsella said.
More information on the difference between an IRA and a Roth IRA can be found here.