Buzz
If your workplace doesn’t offer a 401(k), starting to invest on your own is easy. Just take one simple action: open an individual retirement account (IRA). If you’ve been postponing it, let your tax refund be the push you need.
According to Harvard Professor and behavioral economist Brigitte Madrian, procrastination is the biggest mistake people make when it comes to investing. Despite how simple it is to begin, most people delay opening an account because there’s no immediate deadline.
She recommends setting your own deadline:
Madrian suggests effective ways to encourage yourself to start a retirement account. She advises people to create a specific plan for when and how to open an IRA or Roth IRA, and even sharing this with friends to add social pressure. Studies show this increases your chances of following through.
She advises using all or part of your tax refund to open your first retirement account—or even a 529 college savings plan. This is a great way to create a plan with a deadline, according to Madrian.
Of course, this is based on the assumption that you will receive a tax refund. If you do, it’s a solid tip because it provides a set due date and a built-in savings plan. For more information, check out NPR’s full report below.
Photo by Pictures of Money.
