Building wealth and income is an essential part of preparing for a successful financial future. It is vital for consumers to invest their funds intelligently to build wealth, whether they are saving to purchase rental properties for investment, sending kids to college, or putting away funds for their golden retirement years. While smart budgeting is essential to build savings, investing in various types of income funds can help grow your savings into a nest egg capable of supporting retirement. Although no investments are free of risk, these top three investment funds provide investors with reliable and steady financial growth with minimal risk and expense.
The first way for investors to build wealth and income is to invest in growth and income funds. These types of funds are similar to mutual funds, in that investors pool their money together to purchase shares in funds that are professionally managed. While there are expenses associated with the management of these funds, the ability for investors to participate in these funds make the expense ratios worthwhile. In fact, many expense ratios are less than 1%. Growth and income funds are popular for the middle-of-the-road investor who wants to increase their wealth with moderate risk and the guarantee of long-term stability. The top growth and income fund is the Vanguard Total Stock Market Index Fund (VTI), with a steady rate of growth at 3.30% and an expense ratio of only .05%.
Another valuable option for investors to add to their financial portfolios is a Roth IRA. Investing funds in a Roth IRA is all about managing the effects of taxes on a nest egg. Individual Retirement Accounts first became popular due to the ability for consumers to invest pre-tax dollars into these funds, which would grow over time and not carry a tax penalty until they matured and were withdrawn. However, tax rates only go up over time, which means that even though the investment dollars are able to grow without being taxed, the tax rate will be larger when the funds are withdrawn. Roth IRA accounts contain income that has has already been taxed but will never be taxed again. A Roth IRA can be open with a professional money manager or through an online discount brokerage firm. Scottrade is a popular choice due to the presence of brick-and-mortar offices in cities across the United States. The minimum deposit to open an account is $500, and charged commissions are limited to $7 per trade, with a maximum of $17 per mutual fund trade.
The third most popular way to invest even small amounts of money over time is through 401k retirement accounts. These accounts are funded with pre-tax money, usually through payroll deductions. This money is put into 401k accounts that are then managed similar to mutual funds and is not taxed until it is withdrawn. One of the principal advantages to investing in 401k plans is that employers match up to a certain percentage of what their employees invest each pay period into their 401k accounts. For example, a company may match up to 6% of an employee's investment each month, which makes a significant amount of money over time as it grows. Employees can also decide how their funds are invested in the 401k accounts, choosing the best offered plan for them. The Fidelity Blue Chip Growth Fund (MUTF:FBGRX) is one of the best available, with shares in companies that include Google and Apple. Growth remains steady with this fund, and expenses are only 0.8%.
There are so many valuable opportunities for consumers to invest their money and watch it grow over time. These top 3 investment funds offer investors ways to build income and wealth with minimal risk and expense.