Start investing, saving for retirement

We all know we should invest and save for our future, but many of us don’t know how to start investing. Getting started can be easier than you think.

Here’s a look the most common ways people start investing and building up a nest egg.

Employer’s 401(k)

Sign up for your company’s 401(k) plan. This is the single easiest point of entry for most workers.

You just have to start a conversation with the human resources department. They’ll instruct you on the specifics of how to get signed up.

You can arrange to make automatic contributions to the retirement plan each pay period.

Select investments

A lot of people now have the option of opening a Roth 401(k) at work, alongside the traditional option of a regular 401(k). But there’s one big reason why I like Roth 401(k)s more than traditional ones.

With a Roth 401(k), you put in money that’s already been taxed into your 401(k), and it’s never taxed again. If you don’t do a Roth 401(k) then you’re just putting in pre-tax dollars. Everything your plan builds to over the years is all subject to tax down the road.

Contribution level

I have one rule when it comes to setting your contribution level in your employer’s retirement plan: Always start out by contributing at least the minimum necessary to pick up the full company match.

Many companies will match the money you put in at either at 50% or 100%, up to a certain contribution level.

I recommend that you raise your contribution rate by 1% every six months. Do this until you hit the ceiling of what you’re allowed to contribute by law to a 401(k) or Roth 401(k).

Extra money

Once you’ve maxed out your employer’s retirement plan, then you need to find other places for additional contributions to go.

For most people, doing a Roth IRA makes the most sense. A Roth IRA is a tax-free account that lets you put in $6,000 a year max if you’re under age 50, or $7,000 if you’re 50 and over.

You’re only allowed to contribute the full amount to a Roth IRA if your income is less than $122,000 as a single person or $193,000 as a couple. Beyond that, you may still be able contribute — but at a reduced amount.

For self-employed

A Roth IRA is also a good starting point if you don’t have access to an employer-sponsored retirement plan.

Final thought

Most employers want to make saving for retirement easy for you since so few of them offer pensions any longer. Offering a retirement plan with a company match is widely touted as an employee benefit.

Be sure you take advantage of this low-hanging fruit in your life. If you don’t, you may have to work way longer than you want to.

Meanwhile, maybe you’re one of those people who doesn’t have access to a retirement plan at work. In that case, it’s up to you to get the job of learning how to start investing done.

That’s where opening a Roth IRA, SEP IRA or solo 401(k) at a place like Vanguard or Fidelity comes in.