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- 1). Save 10 percent of your after-tax income in your working years and invest it wisely. Get started as soon as you can.
- 2). Buy the best house you can afford. Its value likely will beat or keep pace with inflation over the long term, and interest on the mortgage is tax-deductible.
- 3). Invest in a variety of stocks, with a goal of getting average annual returns of at least 12 percent.
- 4). Take full advantage of tax-deferred retirement offerings such as 401(k) plans, individual retirement accounts and Keogh plans.
- 5). Pay off your home mortgage before you retire. One strategy is to make two extra payments on the principal each year, knocking seven or eight years off a 30-year mortgage.
- 6). Adjust your investment portfolio as inflation rises and falls. In times of rising inflation, real estate and precious metals tend to do well, though they also tend to be risky. When the inflation rate is dropping, stocks tend to perform better.
- 7). Avoid investing in anything that has a lower rate of return than an insured certificate of deposit at your bank.
- 8). Consider putting a portion of your savings into a mutual fund that is indexed to the inflation rate. Such funds are guaranteed to keep pace with inflation if held for the long term.
- 9). Avoid heavy investments in bonds. Historically, they have performed below the average interest on a bank account.
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