On the bond side, which includes a roughly 10% stake in high-yield debt, the goal is to find attractively priced securities with a disciplined eye on risk management. In the end, only a cool 29 funds, which we’ll describe in detail below, won our Fire Runner “Buy” seal of approval. Some funds are appropriate for aggressive investors; others are geared for moderate savers. Index annuities, also called fixed index annuities, are like a hybrid of fixed and variable annuities. They offer reduced investment growth compared to variable annuities but do come with some protection against market downturns. When you sign up for an index annuity, you will be told the maximum you can gain or lose from it in a given year.

I knew that the average length of a bear market is 289 days, or about 9.6 months. On the other hand, the average length of a bull market is 965 days, or 2.6 years. Investopedia does not provide investment advice; investors should consider their risk tolerance and investment objectives before making investment decisions. If you are self-employed or the owner of a small business, there are additional retirement plan options. For tax year 2025, workers under age 50 can contribute a maximum of $23,500 to a 401(k). Those 50 and older can also include an additional $7,500 catch-up contribution for 2025, which remains the same as 2024. Though there’s no upfront tax break, the funds grow tax-free until retirement, when you can withdraw them tax-free, as long as you’ve had the account for five years.

While the majority of holdings are based in the U.S., 6.9% are in foreign companies. Scott Stratton, CFP and president of Good Life Wealth Management, likes the Vanguard Equity Income Fund Investor Shares (VEIPX). This actively-managed fund gives investors exposure to the stock market while providing them with a source of current income. It will take most people a lifetime of effort to build a solid retirement fund. Knowing how much income you have coming in and what your expenses are, will help you understand your financial situation. The IRS has established annual contribution limits for 401(k)s.

Taking My Passive Income To Work

An IRA can be an excellent tool for retirement savings, especially if you start contributing early and consistently. However, an IRA alone may not be sufficient for retirement, especially if you have ambitious retirement goals or expensive lifestyle expectations. With a Solo 401(k), you can make contributions to the account as both an employer and an employee. This may allow you to contribute more to this retirement than any other as a self-employed person. Only employees make contributions to the account, and there are no filing requirements for the employer.

Tips for Finding the Best Funds for Retirement

• The hard work for affiliate marketers comes in finding the right products to promote, then reaching an interested audience.
• If you’re interested in real estate investing but don’t want to manage a property yourself, a platform like Realty Mogul may be worth considering.
• It’s a great source of passive income because you earn a commission whenever someone uses your referral link to buy the recommended product or service.
• This can include anything from gardening tools to camping gear.

IRAs and 401(k)s are available in “traditional” and “Roth” flavors. Traditional accounts may let you deduct your contributions from your taxes now, deferring income taxes to when you make withdrawals in retirement. The Roth IRA is a powerful retirement account, and it can offer powerful features such as the ability to pass down your nest egg tax-free to your heirs. That’s all part of the reason that many financial planners think the Roth IRA is the best retirement plan around. The traditional IRA allows you to deduct contributions from your taxable income, meaning you won’t pay taxes on them, if your income is below a certain level. Contributions and gains can grow tax-deferred for years before having to pay taxes when you withdraw the money during retirement. Contributions are limited to $6,500 in 2023, though those age 50 or older can add an additional $1,000.

Your money doesn’t risk losing value in these types of interest-based investments the way it does in a stock or fund. Index funds hold a well-rounded selection of many stocks that aim to mirror the performance of a given index, such as the S&P 500. A dividend ETF or index fund will invest in a selection of stocks that pay dividends. Index funds can help balance portfolio risk, as market swings tend to be less volatile across an index compared with individual stocks. Even better, you don’t have to handle the printing, storage or shipping, reducing much of the frustration of selling physical goods. You can take a totally passive approach to the digital products you create, or you can devote time and money to marketing them.

All income sources are important, but for financial freedom, passive income often wins over active income. Active income comes from your current job or business—it’s the pay you get for your ongoing work. Selling digital products is an increasingly popular way to earn passive income. Unlike physical products, digital products are created once and can be sold an unlimited number of times without having to replenish inventory. They can range from music files and digital art to ebooks and software tools.

And if you’re worried about being able to save enough of your earnings to meet your retirement goals, building wealth through passive income is a strategy that might appeal to you, too. With passive income, you can have money coming in even as you pursue your primary job, or if you’re able to build up a solid stream of passive income, you might want to kick back a little. While each method carries its own set of risks and rewards, the key to successful passive income lies in initial strategizing and occasional monitoring. Yes, losses from one passive activity can generally be used to offset income from other passive activities. For example, if you incur a loss from a rental property, that loss can usually be used to offset passive income from a limited partnership.

SIMPLE IRA

Neighbor lets you store people’s extra stuff where you have space for it. As a customer, I’ve bought both smartphone apps and desktop software. If you don’t have the technical chops to build something like this yourself, you could always partner or hire someone who does—or white label software that already exists. The biggest consideration is to do your homework upfront and make sure there’s a hungry market demand for what you’re building. As I can attest, blogs and websites can earn great semi-passive income without your direct involvement.

What is important is that you keep saving, learning, and looking to build wealth for the future. The 401(k) plan is a popular defined-contribution retirement plan offered by many employers. With a traditional 401(k), employees contribute to the plan using pre-tax dollars, some of which may be matched by the employer (sometimes subject to a vesting period). Most, if not all, firms charge fees for transferring accounts, and switching firms repeatedly will reduce your savings. Focus on fees and the range of ETFs and mutual funds that they offer. To that end, even $250 or $500 in a retirement savings plan is a worthwhile start.