Step 3.

Open a
Retirement Account
Once you have a well-stocked emergency fund
set up, the best place to begin investing is in a
retirement account. This retirement account
can be a 401(k) plan (or its equivalent) through
your employer, or an Individual Retirement
Account (IRA) if there is no employer plan.

Retirement accounts are an excellent start

because they represent long-term
investing. Besides, they are tax-sheltered —
and can produce immediate tax savings —
and are typically funded through payroll
deductions. You can think of them as patient
capital, where you have decades to
accumulate and grow your money.
One of the best aspects of a retirement
account is that you can build up money in the
plan without actually investing any money until
you're ready to do so. You can keep it all in a
money market account within the plan until you
feel comfortable adding stocks and funds to
the plan.

There are a lot of retirement investment

accounts, and you may or may not have
access to all of them. Here's a quick rundown
of the most common retirement accounts you
might come across:

 401(k)
 403(b)
 Roth IRA
 Traditional IRA
 SEP IRA
There are a lot of differences between these
accounts. And you may not be able to open
and fund all of them.

Employer-sponsored Retirement
Accounts
Generally, your first step would be to find out if
your job offers a workplace-sponsored
retirement account like a 401(k) or a 403(b).
Individual companies may have limits on what
you can invest in or how long you have to work
at the company before you can begin
contributing to the plan.
These accounts may also come with an
employer match, which is when an employer
contributes the same amount of money or a
percentage of what you add to the account. It's
free money for your investments!

Reach out to your HR department and

see what retirement plans are offered. Then
get the ball rolling on signing up for one. And
for our brand new investors, feel free to ask
HR a lot of questions about how the plan
works. You want to understand as much as
you can about your plan when you begin to
invest money in it.
Individual Retirement Accounts
(IRAs)
After you sign up for a workplace retirement
plan, you have the option of opening an IRA
for yourself. IRA stands for “individual
retirement account.” Anyone over the age of
18 with income can open one for themselves.
IRAs are not generally tied to an employer,
making them appealing to freelancers and
part-time employees.

There are several options for IRAs, and they

each have different details to them. There are
income limits for a Roth IRA, for example. Do
some research on which account is best for
you before you open any of them. You can
start with our article that compares various
retirement accounts.