Time-Tested Tactics to Build Your Wealth

Here is a nice article provided by the Editors of Kiplinger’s Personal Finance:

By the Editors of Kiplinger’s Personal Finance | April 2017

We have doled out a lot of good advice over the 70 years we’ve been publishing Kiplinger's Personal Finance magazine. So in many ways it was easy to come up with 70 ideas on how to create wealth. But when our editorial staff submitted nearly 300 ideas, the editors had to roll up our collective sleeves and distill the advice into absolute gems.

In this post, we offer advice on how to build, protect and enhance your wealth, time-tested strategies to help you keep your eye on the ball, and our top tips for finding value, so your hard-won wealth doesn’t leak out in dribs and drabs. We devote a section to the biggest goal of all -- a secure retirement. And because life isn’t all about making money, we include fulfilling ways to give back. Take a look.

Save Early and Often

The sooner you start to save, the easier it will be to amass a comfortable nest egg -- thanks to the power of time and the magic of compounding. A 25-year-old who saves $450 a month in a tax-deferred retirement account and earns an average yearly return of 7% will have about $1.1 million by age 65.

If the same investor waits until age 35 to start saving, she’d have to sock away $950 a month to reach roughly the same balance by age 65. Try to save 15% of your income, including any employer match for your retirement plan. If that’s not doable, put away as much as you can and increase the percentage as your income and budget allow.

“Getting started, even if you’re saving 3% of your income or $10 a week, is the critical goal,” says Molly Balunek, a certified financial planner in Cleveland. “Once you see progress, it becomes easier to save 1% more, or $5 more a week.”

Create an Emergency Fund

If you have a dedicated stash of cash at the ready in case of a job loss or an unexpected bill -- say, for a major car repair or hospital visit -- you won’t have to resort to racking up credit card debt or, say, tapping retirement savings to cover the tab.

Squirrel away at least three to six months’ worth of living expenses in a safe, easy-to-access savings or money market deposit account. (For a more personalized amount to save, use HelloWallet.com’s tool.) Look for an account with no monthly fee, a low (or no) minimum balance requirement and a competitive rate, such as the Synchrony Bank High Yield Savings and the GS Bank Online Savings accounts. Both recently yielded 1.05%.

Make the Most of Employer Incentives

For the slow-and-steady way to get rich, take full advantage of your company’s 401(k). You can contribute up to $18,000 ($24,000 for people 50 and older) in 2017 to this pretax account; your employer may kick in another 4% to 6% of your pay, or even more. Many companies enroll employees automatically, at a contribution rate of, say, 3% of their salary. But aim for 15% of your income, including the company match, from the beginning of your career until the end. If you have to cut back for a few years -- say, to buy a house or pay college bills -- try to kick in at least enough to get the full company match, and boost your contributions later to get back on track.

Teachers typically have access to 403(b) plans, which carry the same terms and benefits as 401(k)s but generally lack the breadth of investment options. Public-sector workers may be offered a 457 plan, which is also similar to a 401(k) plan but has a higher contribution limit for people within three years of normal retirement age, usually defined as the age when they can collect unreduced pension benefits.

Open a Roth

Another surefire wealth builder is a Roth IRA. You fund this account with after-tax dollars, so the pain is up front. The payoff? Withdrawals are tax-free if you’re at least 59½ and have held the account for at least five years (you can always withdraw your contributions tax- and penalty-free). You don’t have to take required minimum distributions from a Roth, as you do with traditional IRAs and 401(k)s, allowing you to withdraw the money strategically or let it grow and leave it to your heirs. And because withdrawals from a Roth aren’t reported to the IRS as income, they won’t increase the taxes on your Social Security benefits or trigger the high-income surcharge on Medicare Part B or Part D.

You can contribute up to $5,500 a year to a Roth ($6,500 if you’re 50 or older) in 2017. The allowed contribution starts to shrink if your modified adjusted gross income is more than $118,000 ($186,000 for married couples filing jointly) and disappears altogether at $133,000 ($196,000 for joint filers).

Earn too much to qualify for a Roth? Your employer may offer a Roth 401(k), which has no income limits and carries the same contribution cap as a regular 401(k).

Roths aren’t just for grown-ups. One of the best ways to help your children or grandchildren build wealth is to get them started early with a Roth IRA. Children of any age who have earned income from a job can contribute up to $5,500 to a Roth IRA (or their earnings for the year, if less), and you can give them the money to get started. Not all brokerages let children open Roths, but several -- including Fidelity, Charles Schwab and TD Ameritrade -- offer custodial Roths with little or no investing minimum and no IRA maintenance fees.

Ask a Pro for Advice

A financial adviser can help you blaze a path to financial success -- especially when you’re starting out or facing a complex financial situation. A certified financial planner (CFP), for example, offers guidance in strategizing retirement savings, allocating or managing investments, creating an estate plan, and performing other tasks.

At napfa.org, you can search for a fee-only adviser, who avoids conflicts of interest by accepting no commissions from selling investments or other products. If you need extra assistance with tax planning, look for a certified public accountant (CPA) with a personal financial specialist (PFS) designation at aicpa.org.

You don’t need deep pockets to get help. At GarrettPlanningNetwork.com, search for planners who charge hourly rates and require no asset or income minimum. Independent outfits, such as Betterment and Wealthfront, as well as full-service firms, such as Charles Schwab and Fidelity, offer online “robo” adviser services, which provide low-cost, computer-generated advice and portfolio management.

Polish Your Credit

Good credit helps you get the lowest interest rates and best terms on a credit card, mortgage or other loan, and your credit history may even affect your job prospects, insurance rates, and ability to get an apartment or cell phone plan. Generally, a credit score of 750 or higher (on a 300-to-850 scale) is considered top tier. The most important credit-building step is to pay all of your bills on time.

Another score booster: Keep the amount that you owe on your credit cards as a percentage of their overall limits (known as your credit utilization ratio) as low as possible. On each card, use no more than 30% of your limit, and keep the ratio to 10% or less on each card if you plan to apply for a loan soon.

Open a Brokerage Account

Once you’ve established a bank account and started to participate in your employer’s retirement savings plan, take your wealth-building program to the next level by opening a brokerage account. That will allow you to invest in individual stocks and exchange-traded funds, which most people can’t do in their 401(k), as well as no-transaction-fee mutual funds. You’ll need $2,500 to open an account at Fidelity, our top-ranked online broker; Charles Schwab requires just $1,000, which is waived if you sign up for automatic monthly deposits of at least $100.

Set Specific Goals

You’re more likely to accrue wealth if you have specific goals and a plan to reach them. That means coming up with short-term goals, such as paying off debt, buying a house, and saving for a rainy day or a vacation, as well as long-term goals, which may include funding your retirement and your children’s college education.

Make your goals specific and realistic. “Instead of saying that you want to save for your child’s education, say you want to have $50,000 saved for your child’s education in 15 years, and you’ll get there by depositing $200 a month into a 529 savings plan,” says Roger Ma, a certified financial planner in New York City.

Live Like the Invisible Rich

Live within -- and ideally below -- your means. By resisting the temptation to buy a big house or expensive cars, you can invest in things that will create long-term wealth, such as stocks and real estate.

Cultivate Your Career

Want to move ahead in your organization or switch to a more lucrative job? Keep your skills sharp and never stop networking, says Mary Eileen Williams, a career counselor and author of Land the Job You Love: 10 Surefire Strategies for Jobseekers Over 50. An updated LinkedIn profile is critical because most employers use the website to vet potential candidates, Williams says. And learning new job skills doesn’t have to cost a lot of money. Khan Academy, a nonprofit website, offers video tutorials on everything from statistics to computer programming.

Your local community college may also offer career-advancement courses. Considering an advanced degree? According to Payscale.com, nurse anesthetists, MBAs in business strategy and chemical engineers earn the highest salaries after graduate school; graduates with master’s degrees in education and human services earn the lowest pay.

Another secret to success: Spend half an hour a day learning about your job, industry or a dream you’re pursuing. More than 95% of self-made millionaires spend at least 30 minutes every day reading materials related to their careers or self-improvement, says Tom Corley, a certified financial planner who spent five years researching the habits of wealthy people for his book Rich Habits.

Buy a Home (When You're Ready)

Owning a home is one of the best ways to build wealth. You can still lock in low mortgage rates, and Uncle Sam offers a helping hand in the form of tax deductions for mortgage interest and property taxes. Ideally, you’ll put down at least 20% of a home’s purchase price, which allows you to avoid private mortgage insurance. The bank may be willing to lend you more than you can comfortably afford.

To avoid feeling house poor, however, figure out how much of your monthly budget you can devote to a mortgage payment and still have enough left over for retirement and college savings, travel, and just plain fun. And note that the maxim “Buy the worst house in the best neighborhood” doesn’t pay off.

In Zillow Talk: Rewriting the Rules of Real Estate, Spencer Rascoff, CEO of Zillow, and Stan Humphries, chief economist, write that the data prove you should “buy a decent house in the right neighborhood.” What’s the right neighborhood? The most expensive one where you can afford a home that is not in the bottom 10% of listings by price. Homes in the bottom 10% don’t appreciate as well as homes in the top 90%.

Save for College as Soon as Your Kids Are Born

Too many parents sacrifice their own wealth by raiding their retirement savings to pay for their kids’ college. Or their children graduate with large student-loan payments to go with their sheepskin. If you set aside money in a 529 college-savings plan every year starting when your children are born, you’ll have a big chunk of the tuition bill saved when they’re 18.

They can use the 529 money tax-free for college costs, and you may get a state income tax deduction for your contributions. Go to SavingForCollege.com for more information about each state’s rules. If your state doesn’t offer a tax break, check out Utah’s plan, which features low-cost Vanguard funds and FDIC-insured accounts.

Fill the Gaps in Home Insurance

Your home may be your biggest asset, so make sure you have enough insurance to protect it from disasters. Review your policy to see if your dwelling coverage is enough to rebuild. (Your insurer may inspect your home, or you can get an estimate for $25 at e2value.com.) Let your insurance company know about any major improvements that affect the value.

Check the amount of coverage for your possessions, and consider buying a rider to cover special items, such as jewelry. Add insurance for sewage back-ups (typically $130 for $10,000 of coverage), and consider flood insurance if you’re concerned about that risk (ask your homeowners insurance agent for a price quote, or go to FloodSmart.gov for additional information).

Shield Yourself From Lawsuits

The most important part of your auto insurance policy is the liability coverage, which protects your assets and future earnings if you are liable for injuries and damage as the result of an accident. State liability coverage requirements are usually inadequate; most people should get coverage to pay at least $250,000 per injured person and $500,000 per accident. Also make sure you have uninsured-motorist coverage (and underinsured-motorist coverage, in states with inadequate liability limits). That can pay for damage to your car, medical expenses and lost wages for you and your passengers if the at-fault driver does not have insurance.

Most families with typical risks should also safeguard their assets and future earnings with an umbrella policy. You can boost your auto and home liability protection by $1 million with an umbrella policy for about $200 to $400 per year. Make sure you have at least as much liability coverage as your net worth.

Get Enough Life Insurance

Life insurance would replace lost income if you or your spouse died early. One rule of thumb calls for buying at least eight to 10 times your gross income, and you can get a refined estimate by using a life insurance calculator (such as the one at LifeHappens.org). A 20- to 30-year term policy, which has no savings component, is best for most families. The policy would likely cover you until your kids are out of college, you pay off your house or you stop working.

You can compare rates for several insurers at AccuQuote.com. If you need insurance longer—for example, if you’re supporting a child with special needs -- consider a permanent insurance policy, such as whole life or universal life, which builds cash value. (Note that premiums for permanent coverage tend to be much higher than for term insurance.)

Buy Disability Insurance

If you become disabled and unable to work, you don’t want to be forced to raid your retirement savings or incur expensive debt. You may have some disability insurance through your employer, but employers’ policies typically cover just 60% of income, with a $5,000 monthly maximum, and don’t take bonuses and commissions into account. Plus, payments from employer disability plans are taxable.

Calculate how much your policy will pay out every month, compare that with your monthly expenses, and consider buying an individual policy to fill the gaps (see Why You Need Disability Coverage). You may be able to cover up to 85% of your income, and payouts from individual disability policies are tax-free.

Make the Most of a Health Savings Account

Instead of using HSA money to cover current medical bills, let the money grow long term and cover medical costs out of pocket. Keep your receipts for eligible medical expenses you incur after you open the account and withdraw the money later -- even in retirement.

To set up an HSA, you need an eligible health insurance policy with a deductible of at least $1,300 for individual coverage or $2,600 for family coverage. You can contribute up to $3,400 to the HSA for individual or $6,750 for family coverage, plus $1,000 if you’re 55 or older. Your contributions are tax-deductible (or pretax if they’re through your employer), and the money grows tax-deferred.

You can’t contribute to an HSA after you’ve enrolled in Medicare, but you can use the money already in the account tax-free to pay premiums for Medicare Part B, Part D and Medicare Advantage, plus a portion of long-term-care premiums based on your age.

Invest in Stocks

The best way to build wealth over the long haul is to invest in stocks. U.S. stocks, as measured by Standard & Poor’s 500-stock index, have returned about 10% per year compounded. Stocks are notoriously fickle and volatile over the short term, and after their long ascent, they are due for a breather or possibly a full-fledged bear market. But with interest rates still in the gutter, stocks will almost certainly outpace bonds and cash-type investments (for instance, savings accounts and money market funds) over the next decade and beyond.

Start investing with low-cost exchange-traded funds, such as iShares Core S&P 500 (symbol IVV), which tracks the S&P 500, or Vanguard Total Stock Market (VTI), which follows a benchmark that includes nearly every U.S. stock. You can rev your engines with a sector ETF, such as Vanguard Information Technology ETF (VGT) or Guggenheim S&P 500 Equal Weight Health Care ETF (RYH). But don’t invest money you’ll need soon.

Monitor Your Credit

You may not know if an ID thief has struck or when a mistake is marring your credit record. To check, go to AnnualCreditReport.com and order your credit reports from the three major credit bureaus (Equifax, Experian and TransUnion). You can get a free report from each bureau once a year. Pore over each one for mistakes, such as variations on your name or accounts you never opened. If you find an error, file disputes with both the lender and the bu­reau(s) that reported the error, preferably by certified mail so you can create a paper trail.

On a more regular basis, monitor your credit score for un­explained dips that could signal something fishy is going on in your credit report. If your bank doesn’t offer a free FICO score, look up services that do.

Thwart ID Thieves

Cleaning up after identity theft can be costly and time-consuming. Worse, ID theft may prevent you from getting credit, at least until you finish the painstaking process of cleaning up your credit files. Rule one: Don’t carry your Social Security card in your wallet or give out your Social Security number unless you’re sure it’s needed, and shred unneeded documents that include the number.

If a thief has already stolen your SSN, he may try to file a tax return in your name and collect a refund. To deter such an attempt, submit your tax return as early as possible. Watch out for calls or e-mails from crooks posing as representatives of your bank, the IRS or other entities in attempts to collect your personal information or money, and never click on a link in an e-mail or text message unless you’re sure of its source. Password-protect your PC and smartphone, and use strong and diverse passwords for your online accounts, too.

Update Your Estate Plan

Pat yourself on the back if you already have a will and other estate-planning documents, including a durable power of attorney (which lets the person you appoint manage your finances and legal affairs) and health care power of attorney (which gives a trusted person the authority to make health care decisions on your behalf if you can’t). Now make sure these documents reflect current circumstances, including the birth of a child, a divorce or a move to a new state (see Estate-Planning for Snowbirds). Also review the beneficiaries of your life insurance, 401(k) and IRA.

Do your family another favor by leaving instructions as to whether you want your body to be buried, cremated or donated to science, and let family members know whether you prefer a funeral service or a memorial service, and where it should be held. Better yet, plan and put aside funds for the whole thing yourself (see How to Plan Your Own Funeral). The median price for a traditional, full-service funeral runs $7,180, not including cemetery costs or extras, such as flowers, according to a 2015 report by the National Funeral Directors Association. Prices vary widely even in the same area, however, so check costs at several funeral homes.

Let Uncle Sam Help Pay for Raising Your Kids

The Department of Agriculture says middle-income parents will spend more than $233,000 to raise a child to age 17, and high-income parents will spend more than $372,000. You’ll feel less of a pinch in the pocketbook if you take advantage of family-friendly tax breaks. Parents who pay for child care are eligible for two breaks: a dependent-care flexible spending account and the child-care credit. You usually have to choose one or the other, and for most families, the flex account is a better deal (assuming your employer offers one).

You can set aside up to $5,000 pretax in a dependent-care FSA. (The maximum contribution is $5,000 per household each year, even if both spouses have access to a dependent-care FSA where they work.) That money avoids not only federal income taxes but also the 7.65% Social Security and Medicare tax, and it may bypass state income taxes as well. The higher your tax bracket, the bigger the benefit. If you have two or more kids, you can max out your dependent-care FSA and still take the child-care credit for up to $1,000 in additional expenses. Don’t forget to count all child-care costs (even the cost of summer day camp) for children younger than 13.

Teach Your Children Well

Raising financially literate and responsible kids should be part of your estate plan. Be up front about the wealth you have and your plans for it, and make sure your legacy is as much about your values as it is about your bank account. Start teaching budgeting skills at an early age. Have teens use allowance to pay some of their own expenses, and steel yourself to let the cell phone go dark if they fall behind on the wireless bill. Seed an investment account for young adults, and perhaps promise to match a portion of the investment returns. The kids are free to withdraw the money, but parents can’t add to the principal. This shows the power of compound growth as well as the opportunity cost of robbing a nest egg.

Shelter Retirement Income

The general post-retirement rule is to draw from taxable accounts first: When you sell investments in a taxable account, you pay tax only on the profit, and if you’ve held the investments for more than a year, the profit is taxed at the long-term capital-gains rate, which tops out at 20%. But you may get an even sweeter break: In 2017, married couples with taxable income up to $75,900 and single people with income up to $37,950 are eligible for a 0% capital-gains rate. (President Trump’s tax reform plan would retain the 0% capital-gains rate; under the House Republican tax reform plan, the lowest hit on capital gains would be 6%.)

With pretax accounts, every dollar you withdraw is taxed at the ordinary income tax rate of up to 39.6%. Generally, it’s best to tap such tax-deferred accounts after your taxable accounts, letting Roth IRAs -- which aren’t subject to required minimum distributions—ride to take advantage of tax-free growth. There are lots of exceptions to these rules of thumb, so consult an adviser if you’re not sure what’s best for you.

Keep an Eye on Recurring Fees

Don’t let recurring charges nibble away at your assets. Households with two cell phones, a landline, and a cable and internet bundle spend a whopping $2,700 a year, on average, on those services, according to a Consumer Federation of America report. Consider sharing a phone plan with family members and dropping your cable plan in favor of using an antenna to get over-the-air channels and signing up for streaming video. You may also find you’re not getting your money’s worth out of, say, your satellite radio or audiobook subscription. And don’t overlook hidden fees, such as hotel resort fees, airline charges and bank fees, which can add up to big bucks. You can look up resort fees at ResortFeeChecker.com and airline fees at Kayak.com. Search for low-fee checking accounts at FindABetterBank.com.

Invest to Beat Inflation

Kiplinger expects inflation for 2017 to be a still-modest 2.4%, up from 2.1% in 2016. That’s nowhere near 1970s-style runaway levels, but it’s enough to merit some inflation protection in your portfolio. One good option: Treasury inflation-protected securities. The principal value of TIPS is adjusted to keep pace with increases in consumer prices. Buy TIPS directly from Uncle Sam at TreasuryDirect.gov. Another inflation fighter is Fidelity Floating Rate High Income (FFRHX), which invests in loans that banks make to borrowers with below-average credit ratings. The interest rates adjust periodically in response to changes in short-term rates, which are likely to rise as inflation accelerates. Commodities should also perform well as inflation heats up. For exposure to commodities, consider Harbor Commodity Real Return Strategy (HACMX). For more on staying ahead of inflation, see Inflation-Proof Your Assets.

Capitalize on a Windfall

About one-fifth of U.S. retirees are expected to have estates that top $390,000, according to the banking and financial services organization HSBC. If you are the beneficiary of parental largesse (or you win the lottery), start by doing nothing. Stash your bounty in a safe place, such as a savings or money market account, for six months to a year. That will give you time to come up with a solid plan to get the most out of your good fortune. It will also give you time to assemble a team of advisers to help you manage your money.

Your team should include a financial planner and a certified public accountant or enrolled agent. Depending on the nature of your windfall, you may also need help from a lawyer and an insurance professional. Resist the temptation to tell your boss to take your job and shove it. Windfall recipients often underestimate how much money it will take to replace their income. Plus, once you quit, you’ll stop earning income that contributes to your Social Security benefits -- which you may need if your investments go sour.

Spread Out Your Investments

Playing it safe with a diversified mix of stocks and bonds can help your portfolio stay afloat during bad times and improve your long-term returns. If you have at least 10 years until retirement, for example, hold 70% of your portfolio in stocks and 30% in high-quality bonds. A mutual fund can work nicely, too. Vanguard Wellington (VWELX), a member of the Kiplinger 25 (the list of our favorite mutual funds), holds about two-thirds of its assets in stocks and the rest in bonds, and it has an annualized 8.2% return over the past 20 years.

Give Emerging Markets a Shot

Before delivering modest gains in 2016, stocks in developing markets, such as China and India, had lost money in four of the previous five years. But emerging-market stocks still deserve a place among your assets. Not only are the stocks relatively cheap, but corporate earnings in emerging-markets firms are expected to expand by more than 13% in 2017—far more than firms in the U.S. For access to these stocks, invest in Baron Emerging Markets (BEXFX), a Kiplinger 25 fund, or in exchange-traded iShares Core MSCI Emerging Markets ETF (IEMG), which tracks an index.

Don't Try to Time the Market

Wondering if it’s time to sell all of your stocks? Don’t. First, what are you going to do with the proceeds? Cash pays almost nothing, and bonds come with their own set of risks. And how will you know when it’s time to get back in the market? Our advice: Set an appropriate allocation, then rebalance.

Take a Flier on Small Stocks

After you’ve stashed money in an emergency fund and maxed out contributions to retirement accounts, consider taking a moonshot on stocks that could turbocharge your returns. Small, fast-growing companies may be a good bet now because small companies should benefit from a focus on the healthy U.S. economy, and they could get a lift from fewer regulations and lower corporate tax rates now being considered in Washington. Two top choices: T. Rowe Price QM U.S. Small-Cap Growth Equity (PRDSX) and T. Rowe Price Small-Cap Value (PRSVX), both members of the Kip 25.

Also on our shopping list these days are companies cashing in on high-tech trends. Chipmaker Broadcom (AVGO), factory robotics firm Cognex (CGNX) and cybersecurity company CyberArk Software (CYBR) all look compelling. We also like biotechnology stocks for their long-term growth prospects. You can buy a bundle of them in an exchange-traded fund such as SPDR S&P Biotech ETF (XBI).

Get a Side Gig

Turning a hobby or activity you love into a part-time enterprise can help you raise money to pay down debt and beef up savings. If you’re well along in your first career, it could also lay the foundation for your next one or turn into a part-time retirement job. Websites such as Etsy and Zazzle provide a way to turn your creative endeavors into cash.

Plan to relocate when you retire? Consider buying a property in your retirement destination now -- which will lock in the price -- and renting it out until you’re ready to move.

Rebalance Regularly

You’ll need to trim your winners periodically and add to your laggards to keep your mix intact. Check your brokerage statements every six months to see if your portfolio has veered off track. If your allotment to a particular category has drifted by more than five percentage points from your target allocation, make the needed trades to bring your allocations back into alignment.

Get on Top of Your Spending

You can’t set long-term goals unless you get a handle on where your money goes. Budgeting apps make the task a lot easier. After you monitor your cash flow for several months, you’ll have the tools to hew to your spending limits. With Mint, for example, you link to credit card, loan, bank and investment accounts to track and categorize balances and transactions automatically and get a snapshot of your net worth. You can also create budgets for each spending category and set savings goals, and Mint sends you alerts when you exceed your limits.

If you’re primarily interested in keeping an eye on cash flow and investment performance, check out Personal Capital, which lets you both watch the big picture and dig in to expenses, income and other areas with easy-to-navigate charts and graphs.

Set It and Forget It

Set up an automatic transfer from your checking account to your savings or brokerage account (or both) each month shortly after payday so that your emergency and retirement funds will fatten up before you have a chance to spend the cash. Alternatively, see if your employer can divvy your paycheck between two accounts. Automating certain payments can also pay dividends: A number of auto insurers, including Allied, Allstate and Geico, offer a small discount or cut you a break on fees if you enroll in auto-pay.

You can also slice 0.25 percentage point off your federal student loans by signing up for automatic debit. Even AT&T, Sprint, T-Mobile and Cricket Wireless trim the monthly charges for some plans if you sign up for auto-pay. For the rest of your bills, use automatic bill payments through your bank. Your payment will arrive before the due date, you’ll avoid late fees, and you won’t have to buy stamps and envelopes, either.

Target Your Investing

Target-date funds, which are widely available in 401(k) plans, are designed to be set-it-and-forget-it investments. They are best for investors who aren’t sure how to invest or don’t want to bother figuring out how much of their portfolio should be in stocks or bonds or when to rebalance.

In a target-date fund, the pros do the work for you, shifting the stock-bond mix to a more conservative allocation as you get older and even after you retire. Choose the fund with the year in its name that matches when you plan to retire. Our favorite target-date series are Vanguard Target Retirement, which holds index funds, and T. Rowe Price Retirement, which holds mostly actively managed funds. If you’re 18 years from retirement, for example, go for Vanguard Target Retirement 2035 (VTTHX).

Maximize Your Credit Card Rewards

By playing your (credit) cards right, you’ll earn hundreds of dollars annually in cash back or free flights and hotel stays. For travel, choose a card that offers a hefty sign-up bonus. The Chase Sapphire Preferred ($95 annual fee) ponies up 50,000 bonus points after you spend $4,000 in the first three months, as well as double miles on travel and dining purchases.

For cash back, the no-fee Citi Double Cash card can’t be beat for its flat return of 2% on every purchase. You might also want a card with a return of 3% to 5% in cate­gories you spend the most on, such as groceries or gas. You can also save money with the perks that many credit cards offer: extended warranties, price matching, coverage for damage and theft of recent purchases, rental car insurance, and travel insurance.

Get All the Insurance Discounts You Deserve

Ask your auto and home insurers for a list of potential discounts. You may get an automatic break (typically 10% to 20%) by bundling your home and auto policies with the same company or keeping a clean driving record, but you may need to let your insurer know if you qualify for other discounts. Most insurers offer a good-student discount (usually worth up to 25% if your student maintains a B average or better).

Some offer a break of 10% to 15% for certain jobs, and a 15% discount if you’re 55 or older and sign up for a defensive-driving course. You may get a bigger break -- as much as 50% -- by signing up for a data-tracking service, such as Progressive’s Snapshot or State Farm’s Drive Safe & Save, if you have low annual mileage and practice sedate driving habits. You could get home insurance discounts for many home improvements, such as adding storm-proof shutters (up to 44%, depending on the state) or an alarm system (up to 15%).

Tap the Sharing Economy

The sharing economy isn’t always about sharing. It’s often simply about saving money. For example, you can rent a house, apartment or private room (or a castle, houseboat or yurt) through sites such as Airbnb and HomeAway. The nightly rate may be lower than a hotel, especially when you’re splitting the cost among a group. To avoid paying for accommodations at all, swap your home with another traveler through a service such as HomeLink or Intervac.

If you live in an area with a car-sharing service, you could skip the high cost of buying, insuring and maintaining a car or two. Car2Go charges $15 per hour or 41 cents per minute, and Zipcar typically charges $70 per year or $7 per month plus hourly or daily rates. Need home services? At TaskRabbit or Handy, you can find gardeners, painters and plumbers, among a plethora of other helpers, who often charge surprisingly low rates.

Reshop Your Car Insurance Every Year

Rates can vary a lot by insurer, and by shopping around, you may be able to trim your premiums and put hundreds of dollars a year back in your pocket. Compare premiums at InsuranceQuotes.com or Insurance.com, or look for an independent agent at TrustedChoice.com. You can find sample prices for all insurers licensed in your state at most state insurance departments’ websites (find links for each state at naic.org, and search for the auto insurance shoppers’ guide).

Contact the companies with the best rates for the situation most like yours and compare premiums for the same amount of coverage you have now. If one offers a better rate, let your current insurer know before switching; it may offer to match the lower rate if you’re a longtime customer.

Never Pay Retail (Part 1)

A new car starts to depreciate as soon as you drive it off the dealer’s lot. After three years, it has typically lost half its original value. Those numbers bolster the argument for buying used, which can save tens of thousands of dollars over the years. The growth of factory-inspected, certified preowned vehicles, which are the cream of the used-vehicle crop and come with a warranty, has injected transparency into what you might charitably call the opacity of the used-car industry.

What if you are stubbornly in the new-car camp? Negotiate hard. Shop for an identically equipped model at several dealers, then use your best price to squeeze concessions from the other dealers. (Or use a service that does this for you, such as CarBargains.org.) If you lean toward the luxury side of the market, consider leasing. Carmakers often offer subsidies that hold down monthly payments.

Never Pay Retail (Part 2)

You can get money back from your online shopping sprees if you route your purchases through a cash-back site such as BeFrugal, CouponCabin, Ebates or Splender. The process is easy: Register at the site, search for your retailer, and click the site’s link to make your purchase (browser cookies must be turned on). You’ll typically earn back less than 10% of your purchase price, but rebates can go as high as 35% to 40%. Once your cash stash reaches a certain level, you can collect it via check, PayPal or gift card. Compare offerings for retailers across various sites through CashbackHolic.com or CashbackMonitor.com.

Negotiate for Practically Everything

You know it pays to haggle hard over cars and homes. A lot of other purchases are ripe for negotiation, too. Avoid naming your top price right away. If the seller has a lower figure in mind than you do, you won’t save as much as you could have. Instead, ask the seller how much he could come down in price.

Keep Investing Costs Low

All else being equal, the less you pay, the more you get to keep for yourself. Start by opening an account with an online broker, such as Fidelity or Charles Schwab. You’ll be able to buy and sell stocks for roughly $7 per trade. In addition, many of the top discounters let you trade select ETFs without sales fees. Fund investors should focus on mutual funds and ETFs with low expense ratios. You can buy index funds, such those that track the S&P 500, with annual fees of roughly 0.05%. Top low-cost actively managed funds include Dodge & Cox Stock (DODGX) and Mairs & Power Growth (MPGFX), both Kip 25 members.

If you work with a money manager, you’ll probably pay about 1% a year. Try to negotiate a lower fee. Or consider signing up with a “robo” adviser, which uses technology to manage your port­folio. Betterment charges just 0.25% of assets under management annually. Wealthfront levies no management fee for balances under $10,000 and charges 0.25% a year for any amount above that.

Trim Your Wireless Costs

Families with children spent an average of $1,526 on cell phone service in 2015, or about $127 per month, according to the U.S. Bureau of Labor Statistics. That number may be a lot higher if you have, say, a couple of data-hungry teens. Take stock of your typical monthly usage and shop for a plan that fits your needs at the lowest price. If you use data to stream several hours of music or video monthly, for example, switching to an unlimited data plan may make sense.

Consider smaller carriers, which often piggyback on the networks of larger ones and offer plans at lower rates. Use the tool at WireFly.com to search for suitable plans based on your typical usage. With the demise of subsidized phones, look beyond the latest iPhone or Samsung phones for more-affordable options. Or, rather than getting the latest model, consider buying a previous-generation phone (say, an iPhone 6s rather than an iPhone 7), which could save you $100. Or buy a preowned phone that has been refurbished and inspected by the carrier or manufacturer.

Find the Best Airfare

Scope out the cheapest dates to fly to your destination—or find a destination that fits your price range—using the flexible search features on Kayak and Google Flights. Register for airfare alerts from Airfarewatchdog.com and flight deals from ScottsCheapFlights.com, and skim Twitter for flash sales using the hashtag #airfare. Online travel agencies (OTAs), such as Expedia and Priceline, can piece together cheaper itineraries for international flights using multiple airlines on complex routes. To compare OTA fares with the airlines’ fares or with other OTAs, run your itinerary through Kayak or Momondo. Don’t forget budget airlines, such as Wow Air and Norwegian Air.

Vow to Be Debt-Free

High-interest-rate debt is an obstacle in your path to wealth. One way to attack the problem is to pay down the highest-interest-rate debt first. For example, if you’re carrying a balance on a credit card with a hefty rate, consider transferring the balance to a card such as Chase Slate, which charges a 0% rate for the first 15 months and no transfer fee if you move the balance within 60 days of opening the card. Just be sure to pay it off before interest starts to accrue. Auto and student loans are also candidates for accelerated payoff.

Foster Your Philanthropic Side

Money can’t buy happiness, but studies show that charitable giving can make you happier. Better yet, philanthropy can lower your tax bill. Your donations to a charity or, say, a school are tax-deductible if you itemize, and you’ll get an extra tax break if you give stock, funds or other investments that have appreciated in value. If you bought the investments more than a year ago, you’ll get a tax write-off for the current value of the donation, and you won’t owe capital-gains taxes on the increase in value since purchase.

Use Home Equity Strategically

Thanks to rising home values since the Great Recession, you may be well positioned to borrow against the equity in your home, which can help finance renovations or consolidate other, higher-rate debts. Recently, a home-equity line of credit (HELOC) with a $30,000 limit carried an average 5.1% rate, according to Bankrate.com. HELOCs often come with variable rates, so your payments will increase as interest rates rise. Some lenders allow you to lock in a fixed rate on all or a portion of your HELOC balance, which may be wise if you expect to spend a few years or more paying off the debt. A fixed-rate loan may be a good option if you have a one-time expense.

Give to Charity From Your IRA

Uncle Sam offers an extra incentive to be charitable when it’s time to take required minimum distributions from your IRAs. If you’re 70½ or older, you can transfer up to $100,000 each year tax-free from your IRAs directly to one or more charities. You can make the transfer anytime during the year. And your donation benefits you as well as the charity: The money counts as your RMD but isn’t included in your adjusted gross income. Lower AGI may push you below the threshold for the Medicare high-income surcharge or help make less of your Social Security benefits subject to taxes.

Open a Donor-Advised Fund

If you contribute to a donor-advised fund, you can take a charitable tax deduction for the full amount now but take as much time as you want to decide which charities to support. By making giving a family affair, you can build a charitable fund that lasts for generations and share your philanthropic values with your children and grandchildren. Mutual fund companies, brokerage firms and community foundations offer donor-advised funds. You can open an account at Fidelity or Schwab with $5,000 or at Vanguard with $25,000. You can donate cash, stock or mutual funds, and some donor-advised funds, such as Fidelity’s, even let you contribute real estate or shares of privately held companies.

Pay Off Your Mortgage

If you’re free of other debt and your savings are on track, put extra cash toward your mortgage or refinance into a 15-year mortgage to free up your finances by the time you retire. Patrick Lach, a certified financial planner in Louisville, Ky., offers this example: Say you want to refinance a $200,000 mortgage. With a 30-year loan at a 4.06% fixed rate, your monthly payment would be about $962. With a 15-year mortgage at a 3.2% fixed rate, your payment would be $1,400, but you would save more than $94,000 in interest.

Take Stock of Where You Stand

Estimate the future value of your current savings and see how much more you’ll need to save to hit your retirement goal. You could work with a financial adviser to make a plan, but in the meantime crunch the numbers with an online cal­culator, such as Kiplinger's Retirement Calculator. Our tool lets you factor in such variables as home equity and potential windfalls, such as an inheritance.

Write Down a Retirement Plan

Create a retirement budget, devoting one column to essential costs, such as housing and food, and another to discretionary expenses, including travel and hobbies. Factor in inflation for overall expenses, expected to be 2.4% over the next 20 years, according to the Congressional Budget Office. Consider making a separate calculation for health care costs, which are likely to have a much higher rate of inflation; HealthView Services, which analyzes health costs, projects a 5.1% inflation rate over the next 20 years.

Match expenses to guaranteed income, including any pensions and Social Security payments, plus the annual amount you plan to draw from savings. If there’s a gap, reconcile yourself to spending less—or working longer. Staying in the workforce for a few extra years gives you more time to contribute to your retirement accounts. Plus, you have fewer years to finance once you do retire.

Maximize Social Security

Postponing retirement also helps you delay taking Social Security. For every year after full retirement age (66 or 67, depending on when you were born) that you postpone claiming until you reach age 70, the benefit goes up by 8%. For help deciding when and how to claim benefits, bone up on your options with Kiplinger’s Boomer’s Guide to Social Security, $10. Then consult a financial planner with training in Social Security strategies. Or subscribe to software such as Maximize My Social Security, starting at $40, or Social Security Solutions, starting at $20. These programs run scenarios based on your circumstances and show how different filing strategies affect the total payout.

Tweak Your Investments as You Age

As you approach retirement, aim for a portfolio that generates enough growth to combat inflation but ratchets down risk. A mix of 55% stocks, 40% bonds and 5% cash accomplishes that goal. For more growth, adjust the mix to 60% stocks and 40% bonds and cash; for less risk, go with 60% bonds and cash and 40% stocks.

Supersize Your Retirement Contributions

If you’re 50 or older, you can make catch-up contributions to your IRA and 401(k). In 2017, you can add $6,000 to your 401(k) above the $18,000 annual contribution limit, for a total of $24,000 for the year. You can stash an extra $1,000 in a traditional or Roth IRA beyond the $5,500 annual contribution limit, for a total of $6,500 for the year. If you invest $24,000 in a 401(k) every year starting at age 50, you’ll boost your retirement savings by more than $580,000 by the time you’re 65, assuming your investments return 6% per year. If you invest $6,500 in your IRA during those years, you could amass more than $157,000 in your IRA in 15 years.

If you’re self-employed, you can also step up savings. In 2017, you can contribute up to 20% of your net self-employment income (business income minus half of your self-employment tax) to a SEP-IRA, up to a maximum of $54,000. In a solo 401(k) plan, you can put aside even more money because you can contribute as both an employer and an employee. In 2017, the maximum contribution is $54,000, or $60,000 if you’re 50 or older.

Retire to a Place That’s Healthy, Fun and Tax-Friendly

If you plan to relocate in retirement, scope out a city that boasts an array of opportunities for outdoor activities, restaurants that pique the palate and enough cultural amenities to keep the brain limber. All of our picks have those qualities as well as excellent health care, and they’re located in states with tax policies that are kind to retirees.

Austin, Texas, has outdoorsy options including Zilker Park, a 351-acre green space; Barton Springs Pool, a spring-fed swimming hole; and Lady Bird Lake, where you can go canoeing and kayaking. Downtown, you’ll find a bustling mix of shops, restaurants, taco trucks, barbecue joints, music and film festivals.

Naples, Fla., offers a sophisticated mix of cafés, art galleries and boutiques, as well as beaches and gracious homes in walkable neighborhoods.

Nashville’s music scene lately has competed with the thrum of the city’s construction boom, but you can also find quiet old neighborhoods bordered by parks and greenways. The city is home to Vanderbilt University.

Philadelphia boasts world-class museums such as the Philadelphia Museum of Art and the Barnes Foundation. You can sample meats, cheese and produce at the Ninth Street Italian Market. The Manayunk Canal Towpath connects with 60 miles of trails along the Schuylkill River.

Seattle locals have easy access to the bounty of the Pacific Northwest as well as such urban attractions as the Pike Place Market and the Seattle Opera. Rain happens in Rain City, but mild temperatures let residents enjoy the outdoors year-round.

Create Savings Buckets in Retirement

Talk about a wealth killer: If you’re forced to sell your investments in a bear market, especially at the beginning of retirement, your carefully laid plans for making your savings last the rest of your life could be in jeopardy. To avoid that scenario, create three “buckets” for your savings. The first should hold enough cash, CDs and other short-term investments to cover one to three years of living expenses, after factoring in guaranteed income, such as Social Security. Create a second bucket with slightly riskier investments, such as intermediate-term bond funds and a few diversified stock funds. The third bucket is for long-term growth; fill it with diversified stock and bond funds. As you draw down the first bucket, you eventually refill it with profits from the second bucket, and the second bucket gets refilled with gains from the third.

Cover Long-Term Care

At a median cost of $92,000 a year, a stay in a nursing home can quickly deplete your retirement nest egg. Long-term-care insurance can help preserve your wealth. But the cost of long-term-care insurance has skyrocketed, so most people need to find an affordable way to set up their safety net. First, look up the cost of care in your area (see genworth.com/costofcare) and estimate how much of, say, a three-year stay you could cover with income and savings. Then shop for a policy to cover the gap. You can save money on premiums by lowering the inflation adjustment from 5% to 3%; shortening the benefit period or pooling it with your spouse to use between the two of you; or extending the waiting period from, for

10 Timeless Tips From Knight Kiplinger

Some lessons from our 70 years of giving readers practical advice on how to save, manage, invest and spend their money.

1. Wealth creation isn’t a matter of what you earn. It’s how much of it you save.

2. Your biggest barrier to becoming rich is living like you’re rich before you are.

3. Pay yourself first. Arrange to have your retirement and other savings deducted from your paycheck before the money hits your bank account. If there isn’t enough left over for your bills, cut your spending.

4. No one ever got into trouble by borrowing too little.

5. Conspicuous consumption will make you inconspicuously poor.

6. The key to stock market success isn’t your timing of the market. It’s your time in the market—the longer, the better.

7. Diversify, because every asset has its day in the sun—and its day in the doghouse.

8. Keep a cool head when others are losing theirs. When others are selling investments, it’s usually a good time to buy. The foundations of great fortunes are laid in bear markets, not bull markets.

9. Money can’t buy happiness, but it can make unhappiness easier to bear.

10. Sharing your wealth with others is more fun than spending it on yourself.

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail  info@diversifiedassetmanagement.com.

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.