As the saying goes, the best time to start saving for your retirement is in your early 20s, but the second-best time is right now. If you’re looking to begin saving for your retirement, starting an IRA is a solid way to begin your planning.

However, the prospect of opening up an IRA can seem intimidating. Here’s some information to help you through the process.

• Know how much risk you’re willing to take: Like any kind of investment, it’s important to be honest with yourself about the sort of risk tolerance you have. This will determine how you make up your portfolio and how aggressive you’ll be with the kinds of investments you make. If you have more stocks or stock mutual funds, it’s more likely to go up over time than a portfolio that’s mostly filled with bonds, but there will also be a lot more volatility in the short term. Bonds are less volatile, but have a lower return on investment over a longer period of time. You need to be willing to weather the storms the market provides to an extent, but that doesn’t mean you should be completely aggressive.
• Consider when you plan to retire: The longer you have before you retire, the more you’re able to get away with taking some larger risks. If you’ve got at least a couple decades before you’ll realistically be able to retire, that means you’ll be able to put more of your money into stocks (or stock mutual funds).
• Try beginning with an index fund: People who are just getting started with an IRA should put some serious consideration into beginning with an index fund with low annual fees. Select a reliable index fund tied to the S&P 500 Index, and this will at least give you a reliable place to begin your investing.
• Don’t let the money collect dust: It’s not just enough to contribute money to your IRA—you also have to make sure that contribution is getting invested. Some studies have found that investors often make contributions to their IRAs near the deadline and then allow the funds to just sit in a money market for several months without actually doing anything with it. This defeats the purpose of having an investment account to begin with. If you really want to be able to meet your savings and growth goals over time, you need to stay on top of your investments. The compounding value of your investments is worth being prompt with your investing rather than waiting until the last minute.

These are just a few tips that can help you through the process of beginning your IRA planning. For more information, we encourage you to contact an estate planning attorney at Baker Law Group, P.C. today.