The Daily Deduction

Turning Summer Job Cash into Summer Dividends – 1 of 2

8-22-2013_moneytree 

Are you currently earning money at your part-time or full-time summer job? Don’t look at those wages as just spending money—you worked hard for it! Make a few smart moves with your money and learn to invest it for the future.  eSmart Tax has a few beginning investor tips to share:

While the market may be scary, set aside a fixed amount of money every paycheck so you can invest.;

This practice will help you establish a habit of saving and investing. Low-cost mutual funds and ETFs that track popular market indexes like the Dow or the S&P 500 are good choices for this strategy, but you can do this with just about any kind of investment. By investing the same amount every month, you will learn a key concept: if shares are cheaper, you'll buy more of them. When prices rise, you end up with fewer shares.

Reinvest your dividends. 

The best market choices pay reliable and growing dividends. Reinvest the quarterly dividends you receive to buy additional shares of stock.

Make smart investment choices to reduce the amount of tax you pay on your investments. 

Capital gains taxes can chip away at the money you make from investing, so it’s essential to know tax rules on investments.

IRAs and employer-sponsored retirement plans like 401(k)s, can shelter large amounts of income from taxes as long as you don’t withdraw money from that account early. With some retirement accounts, you'll have to pay taxes when you withdraw money in retirement, but Roth IRAs and 401(k)s make that income tax-free.

Posted To: The Daily Deduction By: Lauryn on 8/22/2013 01:25:00 AM
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