Are you Investing for Retirement (or just saving?)

Which one are you focused on?

Everyone always talks about saving for retirement, but saving money (putting it aside into retirement accounts) is only part of the equation.

It’s great that you have done step 1 and are putting money aside for retirement, but the reality is that is just the beginning.

Once you have saved some money into a retirement account, then comes the second part of the equation. You actually have to make that money do something by investing it into an investment vehicle.

A retirement account is just a vehicle with specific rules around when you are paying taxes. Either you are paying taxes when you put the money in with a Roth account or down the road when you take the money out with a Traditional account.

What those accounts are invested in can be all over the map depending on which custodian you choose to hold your account.

If you look at your account today and see things like money market or cash, then you have done step 1, save for retirement, but have failed to do step 2 and invest those funds into something.

By far the most common kinds of investments for retirement accounts are mutual funds (MF) and exchange traded funds (ETF), but there is a ton of flexibility.

The key here is that investing those funds into something inside that account is a second step, and sometimes that second step gets left out of the conversation or even forgotten altogether.

You need to decide what to invest those funds into.

There are many considerations as to what the right mix of investments is, and as many gurus (and salespeople) with opinions about that too, but there is no one-size-fits-all solution in life especially when it comes to your money.

Everyone has different goals and targets they are shooting for, and therefore the right investment has a ton of variables that come into play, which is why “it depends” will be the answer to what you should invest into for any reputable advisor that isn't trying to sell you their specific product.

Don't stop after step 1 - saving for retirement. Make sure that you are also doing step 2 and putting that money into some kind of investment that is growing for your future retirement.