Again, to take control you need to know what you have: savings and checking accounts give you your cash on hand, while all other investments and assets may require significantly more work to find out how they are invested and whether or not they are working for you. When my husband and I put together our savings, most of it was in retirement plans and we discovered that we have too many different plans and were not taking advantage of all that is out there. So, back to the books -- it was time to learn whether or not to leave our money where it was, whether we were taking advantage of the tax laws that favor saving for retirement, and whether there were other forms of savings that we could look into. Obviously, our goal is to save the maximum we can for retirement; however, we also learned that the minimum that people should have in "emergency savings," (money that can be easily made liquid) is six months worth of net (after tax) income. So, by looking at the savings we had, we set a few goals:
(1) increase my retirement savings in a 403(b) (similar to a 401(k) because it is money that is saved with pre-tax dollars;
(2) figure out how to take advantage of some sort of tax free savings for my husband because his plan does not allow him to come close to contributing maximums due to some strange glitch in his plan;
(3) consolidate all of my savings plan -- an IRA in one place and another 403(b) account from a previous account into an IRA which just rolls over my prior accounts into the same place as my former and present 403(b);
(4) consolidate my husband's account either in the same place as mine or in some other place where he currently has an IRA; and
(5) save at least $50.00 per week that can start us on the road to regular savings for emergencies and investments.
In order to make some decisions, we began relearning about the stock market. Several years back, I took a course in investing and became part of an investment club. We regularly got information from my father-in-law who does his homework when it comes to the stock market. We found out that our retirement savings may be somewhat conservatively allocated which could be fixed by shifting some mutual funds into others or by investing some into individual stocks. We learned that commissions matter -- we decided to pull out money that we had in one stock, for the first time in years, and put it in another -- at the place currently holding that account, we paid almost 5% of the total transaction in commissions, more than $1.10 a share and got absolutely no advice. The place I'm moving that IRA to is a place that charges $.25 per share for a trade. That would have been less than 1/3 of what we paid. That also made my husband realize he needs to ask his broker about his fees. I also chose a fund for my new account and a fund to switch my least aggressive money into until my IRA is fully up and running. Learning about all of this and filling out the paperwork has left me very little time to actually try to relearn how to look for a good stock.
It seems to me that the best advice is the simplest: buy low, sell high. How we do that, though, is very difficult. I've gotten very into some of the shows, one in particular, where I like the advice, but I don't want to do a lot of trading and I think that this person might advocate more trading than I'd like. My husband is trying to take this aspect of research on himself -- he's been reading some books and following the stock market. I believe in a philosophy: you buy a strong company but, for some reason, right now, the stock is out of favor. Not because of something fundamentally wrong with the company, but because it is undervalued. How do you find those stocks. There are a lot of great web sources and books. In fact, one great source that you can get to from here is Kiplinger's --filled with books and articles that can help out with all kinds of investment advise.
So, I'd encourage you for now to look at where your money is and figure out if it is doing as well as it can be and if you are spending too much money to make any money unless the market is amazing -- which is not likely to happen (ever?). Good cheap funds might be best if you want very little involvement; you may want to talk to a professional here or someone you trust. But, don't just leave your money that you have worked for and managed to save to just do nothing. There are opportunities to be made in the stock market or in other investments and depending on your age, you need to make sure to look into them.
As I learn more, I will share it with you. Hopefully, you will share it with your kids, because they should be saving NOW. I'm encouraging my children to develop sufficient funds to get themselves into the stock market.