Financial Literacy - Families and Finance
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Savings strategies for different goals

If you're going to fund this savings bucket with a CD, it's best to time the maturity date as close to the wedding date as possible. This will prevent you from getting hit with early withdrawal penalties.

With mid-term savings buckets, you still want to avoid exposure to too much risk. The goal is still to preserve or increase capital.

"I don’t think you want to put that (mid-term bucket money) in stock," says Henry K. "Bud" Hebeler, a financial planning expert and former president of Boeing Aerospace Co.

"If you choose stocks, that should be a very small part of it because that's really a gamble. You're pitting yourself against a whole bunch of professionals and most people don’t do very well at that."

Bankrate's story on Safe havens for cash lists several relatively stable fixed-income investments to consider for mid-term savings goals.

4. Don't overlook long-term goals

A comfortable retirement is perhaps the most important long-term goal to save for, but retirement funds have taken a beating lately. The S&P 500 lost 37 percent last year, and retirement plans followed suit. Long-term investors with job tenures of 20-plus years, and those with account balances of more than $200,000 suffered losses exceeding 25 percent, according to the Employee Benefit Research Institute. 

A retirement account, however, is perhaps the one savings bucket where the time horizon is long enough that you can usually ride out market corrections.

That all depends, of course, on how long you've been investing, how close to retirement you are and what sort of lifestyle you expect in retirement.

Most experts say the only way long-term investors can achieve a comfortable retirement is to invest a certain percentage of their long-term savings bucket in equities.

"For retirement, you still need to believe in the stock market because you're not going to make enough to outpace inflation otherwise," says Campbell.

"We've gone through some very tough times in the market before, but the market will recover as it has after every other downturn we've ever had."

An easy way to fund your retirement account is by participating in your employer's retirement plan, which is typically a 401(k), 403(b) or 457 plan, depending on if you work for a private employer, a nonprofit or the government, respectively. (If your employer doesn't offer a plan, then look into investing in an IRA.)

You'll not only be saving for your retirement, but generally your taxable income will be reduced by the amount you save.

Hebeler says families should try to save at least 10 percent of their gross income for retirement, if possible, and adults who are single should save even more.

When you're young, you can allocate a larger percentage of your bucket toward equities of various sizes and types -- large, small, domestic and foreign stocks. But as retirement age approaches, you'll need to do some tweaking and reduce the percentage of equities in your retirement fund to reduce risk.

"You can tweak them by adding a bond fund or other funds," Hebeler says.

For more on how to invest your long-term retirement portfolio, see Bankrate's story, "Asset allocation helps mitigate risk."

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