The best way to plan for retirement🐼 is t⛎o break it down into small, manageable steps. With that in mind, here are the five most important rules of thumb to follow when saving for retirement.

1. Start Saving Now

Ideally, you would have started 澳洲幸运5开奖号码历史查询:saving for retirement the moment you st🉐arted earning income, which for many of us was at 16 when we got that after-school job at the mall or the movie theater or the🍸 sandwich shop. In reality, you probably spent that money on short-term expenses.

It probably didn’t make sense, or even occur to you, to start saving for retirement until you got your first full-time job, had kids, celebrated a milestone birthday, or experienced some other defini𝓀ng event that got you thinking hard about your future.

No matter what your age today, don’t lament the years you didn’t save. Just start saving for retirement now. The sooner you start, the less you have to contribute each year to reach your savings goal, thanks to the benefits of 澳洲幸运5开奖号码历史查询:compound interest.

2. Save 15% of Your Income

A good rule of thumb for the percentage of your income you should save is ܫ15%. That’s after taxes and before any matching contribution from your employer. If you can’t afford to save 15% right now, that’s okay. Saving even 1🤡% is better than nothing. Each year when you file your taxes, you can reevaluate your financial situation and consider increasing your contribution.

If you’re older and haven’t been saving throughout your working life, you have some catching up to do, and you should aim to save 20% to 25% of your income for retirement if you can. But if that’s not realistic, don’t let an all-or-nothing attitude defeat you. Just🐠 getting into the habit of saving and investing, no matter how small the amount, is a st𒐪ep in the right direction.

3. Choose Low-Cost Investments

Over the long run, one of the biggest factors in how large your nest egg becomes is the investment expenses you pay. The most common investment costs are the expense ratios charged by mutual funds and 澳洲幸运5开奖号码历史查询:exchange traded funds (ETFs), and the commissio💛ns for buying ♔and selling.

“The power of compound interest doesn’t just apply to returns, but also expenses,” says Mark Hebner, founder and president of , in Irvine, California. “The more you pay, the less you keep. Simple as that. And research has shown that cost is the biggest determinant of ending wealth for ജinvestors.”

The expense ratio is an annual percentage fee you’ll 🅘pay for as long as you hold the fund. If you have $10,000 invested in a fund with an expense ratio of 1%, your fee is $100 a year. You can find a fund’s expense ratio at an investment research website like Morningstar or 🃏on the website of any company that sells the fund.

When choosing a fund, the rule of thumb to follow is the closer the expense ratio is to 0%, the better. That being said, it’s reasonable to pay closer to 1% for certain types of funds, like 澳洲幸运5开奖号码历史查询:international funds or 澳洲幸运5开奖号码历史查询:small-cap funds.

There are two simple ways to minimize commissions. One is selecting commission-free investments. If you buy a Vanguard index fund directly through your Vanguard account or a Fidelity mutual fund directly through your Fideli♋ty account, you probably won’t pay a commission. The other is buying and holding investments 𒀰instead of making frequent trades—another good retirement strategy we’ll address momentarily.

Get 澳洲幸运5开奖号码历史查询:the lowdown on index funds and read our 澳洲幸运5开奖号码历史查询:mutual fund tutorial if yo💯u don’t know anything about theওse popular investments.

4. Don’t Put Money in Something You 🗹Don’t Understand

If the only investment you currently understand is a savings account, park your money there while you learn about slightly more sophisticated investments like index funds and ETFs, which are the only investments most people need to understand to build a solid retirement 澳洲幸运5开奖号码历史查询:portfolio.

Don’t let salesp🍃eople or advisers talk you into buying something you don’t understand. They might have yo♉ur best interests in mind, or they might be trying to sell you an investment that will earn them a commission. Until you educate yourself about different investment options, you’ll have no way of knowing.

Even putting your money in a relatively simplܫe investment like bonds can backfire if you don’t understand how bonds work. Why? Because you might make irrational, emotion-based buy-and-sell decisions based on what you hear and read in the news about how the markets𝔍 are performing short term, not based on your bonds’ long-term value.

“The best and brightest investors in the world are always trying to find the nexꦑt great investment for their portfolio. If you are not a full-time investor with an expertise in that investment, you will be at a disadvantage to those who are. Focus on your strengths and that is what will give you your best probability of success,” says Kirk Chisholm, wealth manager at in Lexington, Massachusetts.

5. Buy and Hold

Adopting a 澳洲幸运5开奖号码历史查询:buy and hold investment strategy means that even if you choose investments that charge a commission, you won’t pay commissions very often. ✃This rule of thumb also means that you won’t let your emotions dictate your investment decisions.

When people follow their emotions, they tend to buy high and sell low. They hear how high a stock has gotten, and they want in because it seems like a great inv﷽estment—and it is, if you’ve already been holding it for years. Or, when the economy slides into a recession, people panic about how far the Dow has fallen and dump their S&P 500 index fund at the worst possible tim🔥e.

Numerous studies have sho𒐪wn that you’re better off keeping your money in the market even during the worst of downturns. Over the long run, you’ll come out far ahead by leaving your portfolio alone through the market’s ups and downs compared to people who are always reacting to the news or trying to time the market.

“Basically, investors are found to be horrible at market timing and stock picking,” says Michael Zhuang, fﷺounder of in Bethesda, Maryland. “That's why they should stᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚop doing what they are bad at.”

The Bottom Line

While there’s a lot to learn about saving for retirement, underওstanding how to save and invest your money is one of the most important skills you’ll ever develop. It means leveraging all the hours of research you’re doing today into years of leisure time in the future. Keep in mind these top five rules of thumb for saving for retirement and you’ll b😼e well on your way to a financially comfortable future.