Best Long-Term Investments to Make in 2022
As you take steps to meet your financial goals, it is always important to keep in mind long-term planning. Long-term investment planning ignores the daily fluctuations of the market and, instead, focuses on strategic steps that offer significant value over time. These steps seek to maximize tax benefits and use the power of compound interest to help you meet your goals. Learn more about the best long-term investments you should make in 2022. Finding a financial advisor who can offer valuable insights as you make long-term investments is easy with SmartAsset’s matching tool.
Don’t miss out on news that could impact your finances. Get news and tips to make smarter financial decisions with SmartAsset’s semi-weekly email. It’s 100% free and you can unsubscribe at any time. Sign up today.
Best Long-Term Investments for 2022
Each of the eight following long-term investments offers unique benefits for different types of investors. While not all of them will be suitable to every retail investor, adding even one or two of them to your investment portfolio can provide outstanding results over time.
Employer-sponsored retirement plans
Investing for the long-term is incredibly simple with an employer-sponsored retirement plan, like a 401(k), 403(b) or 457. These plans allow eligible employees to contribute money to their accounts automatically from their regular paycheck. You don’t have to remember to make a contribution or where to send the money. The company handles everything for you. Each of these accounts allows investors to contribute up to $20,500 per year (plus $6,000 extra for employees 50 and older).
Some companies also offer to match contributions up to certain limits each pay period. For example, a company with a 100% match up to the first 6% will match every dollar that an employee contributes up to the first 6% every pay period. These matching contributions offer an immediate boost to your account balance and their value compounds over time.
Traditional or Roth IRAs
Contributing to an individual retirement account (IRA) is available to any taxpayer with earned income, like a W-2 paycheck. IRAs offer tax-free growth until you make withdrawals in retirement. Traditional IRAs provide a tax deduction when you meet eligibility requirements, however, withdrawals are considered ordinary income. Roth IRA contributions are made with after-tax money, but all of the money is tax-free in retirement.
IRAs have an annual contribution limit of $6,000, and investors aged 50 or higher can contribute an extra $1,000 each year. Although you must have earned income to be eligible, non-working spouses may also contribute each year if their …….