Financial literacy includes both a strong understanding of and a variety of skills needed for managing personal finances. This includes everything from monitoring your cash flow to managing a checking account and planning for retirement. Financially literate people also often think ahead when it comes to their money. The more you understand your finances and the better you can manage and plan for them, the less likely you are to face financial hardships, according to research released by TIAA Institute.
In an economic climate where fewer workers rely on their employers for retirement contributions or other funds to help support them after they stop working, financial literacy has perhaps become more important than ever. According to U.S. Money Reserve, a leading distributor of government-issued gold and other precious metals bullion and coins, “This link between financial literacy and financial well-being definitely involves saving for retirement.” But the road to financial literacy is paved with terms and concepts that must be understood and put into practice. These include income tracking, budgeting, spending and saving, eliminating debt, considering retirement savings tactics, and diversifying a portfolio.
When it comes to portfolio diversification, many individuals can get tripped up or misunderstand the concept of diversification. Here, diversification means not only spreading funds across different assets (e.g., stocks from different corporations) but also among classes of assets that are not related to one another. A great example of uncorrelated asset classes is stocks and precious metals. For example, when changes in the stock market decrease the price of stocks, precious metals such as gold have historically increased in price. This is why gold is often called a safe-haven asset. Financial literacy often requires an understanding of how different assets may or may not affect one another. This allows you to plan your retirement portfolio more responsibly.
Retirement planning can also include more traditional avenues such as a 401(k) plan, in which an employer opens an account that an employee can then contribute funds to over time. This type of retirement account may also allow for certain tax benefits. If your employer provides a match to your contributions, it is often considered a best practice to contribute enough to maximize the amount matched whenever possible. However, there are other types of retirement savings plans to research as you work on your financial literacy, such as IRAs, or individual retirement accounts. These accounts come in different types and may allow for tax-deductible contributions. One type of IRA, known as a self-directed IRA, allows for the inclusion of gold and other precious metals, as well as a variety of other alternative assets. Aptly referred to as a precious metals IRA or simply a gold IRA, this type of retirement account may provide tax-deferred growth.
Most importantly, it is never too late to start working toward increasing your financial literacy and putting that knowledge toward retirement planning. Over time, you’ll build up your financial knowledge until you reach a point where you can more easily calculate how much to set aside for a more comfortable retirement and know which types of accounts and assets may help you get there.
About U.S. Money Reserve, America’s Gold Authority®
U.S. Money Reserve is one of the nation’s largest private distributors of government-issued gold, silver, platinum, and palladium products.
Founded in 2001, U.S. Money Reserve has grown into one of the world’s largest private distributors of U.S. and foreign government–issued gold, silver, platinum, and palladium legal-tender products. Hundreds of thousands of clients across the country rely on U.S. Money Reserve to diversify their assets with physical precious metals, primarily in the form of legal-tender gold and silver coins and precious metals IRAs.
U.S. Money Reserve’s uniquely trained team includes coin research and numismatic professionals equipped with the market knowledge to find products for precious metals buyers at every level. U.S. Money Reserve goes above the industry standard to provide superior customer service, with the goal of establishing a long-term relationship with each and every one of its customers. U.S. Money Reserve is based in Austin, Texas. Like them on Facebook, connect on LinkedIn, and follow on Twitter.