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Financial experts suggest 'playing it safe' with stock investments and savings, amid inflation

Posted at 6:42 PM, Jun 15, 2022
and last updated 2022-06-15 18:42:41-04

BUFFALO, N.Y. (WKBW) — Inflation and gas prices are just some of the factors making it tougher for so many people to make ends meet.

A recent Lending Club study found more than 60% of Americans live paycheck to paycheck.

When it comes to investments and savings, financial experts explained that "playing it safe" is the best thing to do right now, amid a choppy market.

"Just kind of hiding out in value names or just kind of dividend payers, just because history does tell us that they do perform a lot better and hedge against volatility a lot better than your typical growth stocks," Sgroi Financial research and investment development director, Vincent Scarsella said.

Sgroi Financial Research and investment development director, Vincent Scarsella said we are currently in a "bear market", which is when a market experiences prolonged price declines because people are hesitant to invest.

He said, you can, just wait this out.

"You do get some of the best days in the market when you are in these bear markets, so just stay invested, know the market is going to come back at some point," Scarsella said. "But when you look back at the full history of the market, if you do have a longer than 10 or 15-year time arise on this money, you should be okay. History shows us, I don't know the exact number but, you have around an 80% chance of making money."

If your company does not offer a 401k, there are a variety of things you can still do to invest for retirement.

The first is an IRA, also known as a "Traditional IRA".

"You're not allowed to put as much in per year, as a 401K but, you are allowed to put $6,000 or $7,000 in there depending on age. That's one good way to start for retirement," Scarsella said.

For example, if you make $50,000 a year and you put $6,000 into your traditional IRA. The IRS will only tax you at $44,000 for that year. You'll be taxed on that $6,000 when you retire and want to take that money out.

Another option is what is called a "Roth IRA", which kind of does the opposite when it comes to taxed money.

"If you are under certain income limits, you are actually allowed to start that Roth IRA," he said.

For example, you made $50,000 a year and you invest $6,000 into the Roth IRA. The IRS said you made $50,000 this year, so you invest with "after tax money". When you retire, and you want to take that money out, it is actually tax free.

"It's kind of out-of-sight-out-of-mind, and then once you do go to retire, in 30-40 years whatever it may be. If you're putting $6,00 in and you're getting 6%-7% returns, or whatever it may be, that's a nice number for you to have. That's a nice number for you to have when you do end up retiring," Scarsella said.

More information on knowing the different between an IRA vs. a Roth IRA can be found here.