This column is intended for beginning investors, but it has been several months since it has provided pointers on how to get started in investing.  

For most people, investing begins with the 401k investment program offered by their employers.  

Most companies want to encourage you to contribute to your 401k, so that you will have more money when you retire.  Social Security by itself is definitely not enough for a comfortable retirement.  Your 401k savings will provide you with a sufficiently greater retirement income that will make life much easier.  

The most important decision is to invest at least six percent of your salary in your 401k.  Most companies have a matching program, where the company contributes a matching amount, up to six percent.  The matching amount may be 100 percent matching, or 50 percent, or 25 percent – but whatever the amount, it is free money, above your regular salary.  Take advantage of it!  Think of it as a raise.  The amount you will have when you retire will be pleasantly higher, and you will live more comfortably.

Monthly loan payments, such as for car loans, student loans, or home mortgages, are a fact of life for all of us.  When you pay off a loan, increase the amount deposited into your 401k by that same monthly payment amount.  Your retirement savings will grow much more quickly.

The maximum you can save into a 401k is 15 percent of your annual income.  Your goal is to reach that 15 percent each year – something you will thank yourself for when you retire!

Another feature of a 401k is that the money in a 401k account is not taxed.  When you begin withdrawing money after you retire, your annual income will be lower.  That means you will be in a lower tax bracket, so you will pay less tax on the money withdrawn from your 401k.  Obviously, the less you pay in taxes, the more money you will have for yourself.

When you change jobs, move your money out of that 401k, and put it into an “Individual Retirement Account” – an IRA.  An IRA is untaxed money, just like a 401k.  You have two choices regarding where to open your IRA account:  at a full-service broker such as Edward Jones, or at a discount brokerage, such as Charles Schwab or Fidelity.  Edward Jones has offices in Simpsonville and elsewhere; Charles Schwab and Fidelity have offices in downtown Greenville.  

A full-service broker provides lots of good guidance for how to get started.  In contrast, a discount brokerage expects you to manage your investments yourself, although they will provide guidance if you request it.  

One strategy is to open your first IRA at Edward Jones, whose advice will help you learn the ropes of investing.  When moving money out of a subsequent job’s 401k account, move it to an IRA at Schwab or Fidelity, where you can be more active in actually buying and selling stocks, the next step in your investment career.  

At some point, you may also have “after-tax” money – an inheritance or simply savings you have built up.  Rather than just keeping that money in a bank account, with a bank’s poor interest rate, you may want to open an additional, after-tax account at Schwab or Fidelity, where you can also buy and sell stocks. 

Learning to be an investor is far from easy.  It takes time and experience to learn what is needed to be a successful investor.  Rest assured you will make mistakes and lose money on occasion.  Losing money will continue throughout your years of investing, but learning from your mistakes is key to being a good investor.  

That learning never ends!  Learning has the side benefit of keeping your mind active and healthy as you grow older.  View that as part of the attraction of investing!  

Obviously, the goal is to make more money in total than you lose, and to increase your investing knowledge to be an increasingly successful investor.

Think of investing as a “second job”, but one where you are your own boss, and there is no retirement date.  Like any job, your goal is to learn more with time and to become better at that job as the years accumulate.  

Investing is challenging and exciting!

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