If you are unsure where to start with saving and investing we can help. Many people don't know where to start with their savings priorities and Investment Options. Following a "savings hierarchy" can help you learn where to start saving and investing. You can create a hierarchy that fits your own needs. Here are the steps in the savings hierarchy.

First, contribute as much as your workplace with match to your 401(k), 403(b) or 457 plan. Matched contributions are like "free" money, and you typically get tax-deferred growth and compounding returns. The sooner you start with this the better.

If your employer has a low contribution (less than 50%) and you have high interest rates on your credit card debt (25% or higher), you may want to pay this debt off first.

Second, pay down high-interest credit card debt. If your interest rate is higher than 9%, you should consider using some savings account money to pay down the balance of these accounts, starting with the highest interest rate first. While applying the most money to the highest interest rate card you should be making at least the minimum payments on the other cards to avoid extra penalties. Once one card is paid off, beginning applying extra money to the next highest interest rate. Do this until you are free from all high-interest debt.

Next, contribute the maximum amount to your workplace plan. This is more important than savings low-interest debt or tax-advantaged debt because you will need to save hundreds of thousands of dollars for retirement. Building up your tax-deferred savings early makes sense. Each year you can contribute up to $16,500 to your 401(5) and after 50 you can contribute up to $22,000.

Then, fund an IRA. Once you have maxed out your 401(k) contribution you may consider a Roth IRA or a traditional IRA depending on what you qualify for. The annual limit for contributions is $5,000 a year, or for people over 50$6,000 per year.

Finally start working on other savings goals. Have money transferred each month to a savings account for things like a child's college expenses or a down payment for a home. Make sure you look into tax-advantaged accounts like Coverdell Education Savings Accounts of 529 college savings plans. Learn more about finance and investing.

Article Source: http://www.articlesbase.com/wealth-building-articles/investing-options-with-tax-advantages-2641105.html

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