Divorce can be a financially trying time where one feels that her head is barely above water. There still may be attorney fees to pay along with the cost of buying a new house. Your alimony and child support may not be what you had anticipated. Or you may have received a bid chunk of cash and not sure of how to invest it.
I bought a house during the end of my divorce and my priority was paying off the mortgage, so I would not have to deal with it when my alimony ran out. Look at different policies to ensure that there is not a penalty for paying it off before the fifteen or thirty year loan expires. An acquaintance who had a bad break-up, has a ten percent penalty if she pays off her mortgage early. She did not read the fine print. I paid extra every month and used most of my divorce settlement for paying off the balance. I like having this security.
Meet with a financial planner who charges by the hour and has no vested interest in certain investments. Working with one who only gets commissions may steer you into a plan that pays a high commission to them. This happened to one women who ended up with a lousy annuity and lost a chunk of its value when she dumped it post-divorce. Word of mouth is one way to find reputable financial planners, but check their web sites and the Better Business Bureau to get a fuller picture.
I looked at financial institutions that did not give their CEOs and top echelon multi-million dollar salaries or bonuses. I checked out who has low fees, paid less to administrators, and has been in business for a while. I found Vanguard ticked all of these boxes. Investments that reach a certain dollar amount do not pay, or barely pay, an administrative fee. My divorced friend is quite happy with Charles Schwab and feels she pays less in fees.
My retirement is in two pots, with one being a Target Date for Retirement. Many financial institutions have these plans. They are aggressive in the beginning with more stocks in the portfolio that may earn a higher interest, but are more of a gamble. Later when closer to retirement, the percentage shifts to safer, more conservative investments. The other pot for retirement is my IRA invested into intermediate-term bonds and these have done quite well. An IRA is like an empty suitcase and it is up to you what to pack in it. You could select a money market, bonds, stocks, mutual funds, or a combination. An IRA is the container for various funds and sometimes one’s employer selects the contents, when it is tied to a company. Review what companies and plans work best in your situation.
Keep some cash handy in case you have an emergency or urgent repair bill. Selling your unwanted jewelry is a great way to start your emergency fund! Have that in an account where you are not penalized if it is removed at any time (unlike a cd one). It is hard, but consider having an automatic payment withdrawn from each pay check and put into an account. Even twenty dollars a month accumulates into a small nest egg.
You may want to consider mutual funds as an investment which is comprised of many different types of assets and is managed by an investment company. One has to do good research, because the returns on mutual funds can vary. Unfortunately at this time, interest rates are low on standard bank accounts, cds, and money market ones. Low interest rates hits those of us particularly hard who are in our fifties and sixties. The bottom line is to do your research, look at market trends including with new enterprises as investments, and get guidance from a qualified financial advisor.