Business Insider

Trying to save for retirement? A M.O.N.E.Y. plan will get you there

As a population, we are unprepared and undersaved for retirement. Everyone will eventually have a final paycheck, so it is vital that you convert at least some of your current income to future income through investments. The government is not equipped to support us all, and ignoring the future is the wrong course.

Average people can move from misinformed about money and finance to highly knowledgeable by learning a few simple concepts, and avoiding some key mistakes revealed by the science of behavioral finance.

Whether you’re a novice or a veteran investor, there is a simple guide you can live by to help you prepare for a successful, happy, debt-free retirement. It’s called M.O.N.E.Y.

M: Make a plan and stick to it.

O: Owe yourself. Begin the savings habit now.

N: Never stop saving. Use every account type and employer plan.

E: Educate yourself. Learn the basics about investing or hire a professional.

Y: Yield not to self-doubt and fear, and ignore conflicting messages.

M.O.N.E.Y. is a simple but effective plan. If followed it can lead to a retirement that lets you enjoy your free time, have enough to help your kids and grandkids, and support the charitable causes you value.

A few final thoughts.

▪  Borrowing can be a powerful tool to grow your net worth. Overuse and complacency can lead to disaster.

▪  Equities as represented by global diversification in stock markets around the world are essential for proper planning and diversification. Fear mongers who dissuade the public from owning great public companies perform a huge disservice to their audience, and contribute to the epidemic of unpreparedness.

If you follow the M.O.N.E.Y. basics, you’ll replace fear with a coherent strategy that can lead to financial success, and a happier, healthier relationship with your hard-earned cash.

Mark Daly is an investment management analyst and partner in The Perpetua Group.