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As life expectancies continue to rise and early retirement mounts due to layoffs or medical conditions, you will need to sustain yourself for more years in retirement compared to your parents’ generation. The biggest part of your financial success is having a plan. AXA advisers say it’s good for young professionals just starting out to think of their money as three buckets; short, mid, and long-term.

Short-term goals are generally defined as those goals you want to achieve within two years.

#1  Savings Vehicles:
  • Savings account: Although interest rates are lower, your money is liquid and your deposits are FDIC-insured up to at least $250,000 per insured bank. You can easily transfer or withdraw your money from savings accounts.

  • Checking accounts: Although most are non-interest bearing, some banks and credit unions offer higher interest rates. These accounts are FDIC-insured and can be easily accessed. Banks may impose minimum balances, limit the number of transactions that can be made within a time period or may require direct deposit to qualify for the high-interest rate.
  • Money Market Accounts: The rate of return is typically higher on MMA’s since they are based on the current market rate of interest. They are generally FDIC-insured. Banks may impose minimum balances, or limit the number of transactions that can be made within a time period.
#2 Mid-term goals:
  • Mutual Funds: By investing in a pool of stocks, bonds, and other instruments with multiple investors, gives you holdings in several different companies (diversification). Like stocks, they can also be converted into cash.
  • Stocks: Ownership of a corporation represented by shares that are a claim on the corporation’s earnings and assets.
  • Real Estate: A publicly traded company that invests in a specific type of property, from shopping centers and office buildings, to apartment complexes and hotels.
# 3 Long-term goals
  • 401(k)-Tax deferred retirement account that an employee elects automatic contributions from their paycheck to the plan on a pretax basis. Distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies.
Don’t forget to build a budget!
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