Ask The Expert
I would like to be able to quickly place trades by using the buttons on my keyboard. Is this available within ScottradeELITE?
GHT
Newsom's Depot, Va.
Tips of the Trade
Budget for Your Future
Money is tight, job security is shaky and the near future looks uncertain. If this sounds familiar, it may be time to consider making a personal budget to keep spending under control. But, what many people forget when they budget is to think long-term as well as short-term.
Budgeting for right now may get you through right now's challenges, but unless your budget includes investments in your future, you may face even more challenges down the road.
How do you make room for investments in an already tight budget? Keep it affordable and keep it consistent.
Keep it affordable. If you have $500 to split between groceries and the electric bill each month, you're not going to budget all $500 for groceries simply because you like buying name brands. Likewise, it doesn't make sense to stop paying necessary bills just to put more money in your Individual Retirement Account (IRA). However, you may decide that putting money away for retirement is more important than going out to dinner and a movie every Friday night, and making that sacrifice helps you keep your budget in check and keep your investments affordable.
Cutting down your dinner-and-a-movie dates to once a month instead of every weekend and setting that money aside (say dinner and a movie for two costs about $50), you could invest $150 a month!
Keep it consistent. The key to a successful budget is to stick to it. Cheating in moments of weakness can throw your whole financial plan out of whack, and while skipping a payment to your IRA may have no immediate consequences, the electric company won't be quite as understanding.
Plus, when it comes to your investments, contributing a consistent amount of money over time can actually help you buy more for less. This is a theory called Dollar-Cost Averaging. The idea is that when you contribute a fixed amount of money over time to an investment such as a mutual fund or retirement account, you buy more shares when the price is low and fewer shares when the price is high. Over time, the average price you paid per share will generally be lower than the actual average share price, and your total return may be higher than the fund's overall return.
Including investing as part of your personal budget can help keep your finances healthy both now and in the future. If you have questions about the investment options available to you or how to use the research and trading tools at Scottrade, talk to your local branch office.
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