1. Help your cash work harder
An important question to ask yourself is “how hard is my money working for me?” which means how much interest is your cash actually earning? Keeping your money in cash may seem like a great way to avoid losing it in a stock market downturn, but holding cash raises your risk of losing money in other ways. According to the FDIC, holding cash in a traditional checking or savings account currently earns you less than 1%—significantly less than 1%.1
There are many different account options that may help increase your interest rate on short-term savings, like a high-yield savings account, a money market account, or a brokerage account just to name a few. Whichever account you choose depends on your personal goals, timeline, and accessibility. You worked hard for your money, so it’s important that it also works really hard for you. Try Fidelity's Account Selector tool to explore which account may work best for you.
2. Understand asset allocation and diversification
Understanding these two common principles can be important, because they tend to influence how your portfolio performs over the long term. There is no specific ratio, universal formula, or one-size-fits-all approach to where to keep your assets (allocation) or how to divide them (diversification). There are so many variables that are personal, like your goals, lifestyle, and current financial situation. It’s important to outline your goals and have a financial plan in place, so you can make well-informed decisions that suit you.
Ask yourself: What’s important to you? What is your current financial position? What may your future needs be? Do you want to retire early? Have you established emergency savings? Are you saving for education, a wedding, a house, or something else specific?
If you’re not sure where to start, that’s OK. Working with a financial professional can help guide you, so you can feel confident in your next steps. No matter how old you are or what your goals are, the key is to have a plan and take action as early as you can. Sometimes a conversation is just what you need to get started (or keep going). Call us anytime for free at 1-800-FIDELITY (800-343-3548).
3. Consider using a health savings account (HSA) as a tax-smart investment strategy
Investing in an HSA can be considered beneficial from a tax perspective since an HSA is triple tax advantaged,3 which means:
- Your contributions reduce your taxable income.
- Your contributions are not taxed while they are in the account—even if they earn interest or investment returns.
- You won't owe taxes when you take money out—as long as the money is used for qualified medical expenses.4
So basically, as long as you’re using your HSA funds for medical expenses, you typically don’t have to pay taxes. These 3 reasons are why HSAs can provide more tax advantages than traditional retirement accounts, like 401(k)s or IRAs. And unlike an FSA (flexible spending account), an HSA’s balance is not “use it or lose it.” Instead, your HSA contributions can accumulate interest year after year. You also have the ability to invest your HSA contributions to help your money potentially grow even more over time.
As we think about retirement, one of women's biggest expenses may be health care costs, so it may make sense to save in an HSA account. Plus, many employers offer a company contribution to HSA accounts, so make sure to look into that benefit as well. Note; You typically need to be enrolled in an eligible health plan to open an HSA. Use our HSA calculator to help estimate your health care expenses and your savings potential and consider the Fidelity HSA®.
4. Supplement retirement savings with an individual retirement account (IRA)
There are 2 main types of IRAs: Traditional or Roth. And yes, you may be able to contribute to both types. But should you contribute to both depends on where you stand for the year. Here are some things to consider:
- You can contribute for the previous year until the tax-filing deadline in April.
- You can contribute for the current year at any point throughout the year.
- There are yearly contribution limits across IRAs.
- For example, in 2025 you can only contribute $7,000 total (or $8,000 for those age 50 or older) to either a traditional IRA, a Roth IRA, or a combination of both—not $7,000 in each account.
- Roth IRA accounts have income requirements.5
If you’re able and eligible, contributing to both a traditional and a Roth IRA can give you taxable and tax-free withdrawal6 options in retirement. Financial professionals call this tax diversification, and it may be a smart strategy when you’re unsure of what your tax picture will look like in retirement.
But taxes may not be the whole story when deciding between a traditional or Roth IRA—or a combination of both. Reducing your current taxable income through IRA contributions may also help with things like qualifying for student financial aid and various tax credits and deductions.
As with other financial decisions, choosing which IRA is right for you or deciding whether or not to convert your account(s) depends on your personal situation and goals and can also have tax implications. Consider working with a financial professional and a tax professional to make sure you understand your options and are prepared for the outcome. Also try our IRA Contribution Calculator to see how much you may be able to contribute.
5. Automate your investing with a robo advisor
A robo advisor, or digital advisor, is considered a managed account, which means professionals manage your investments on your behalf. However, with a robo advisor, there’s limited human involvement. Instead, a robo advisor is a digital financial service that uses technology to help automate investing. This automated investing is based on a series of initial startup questions that outline factors like risk tolerance, timeline, etc., and align to the overall investment strategy for your account.
Robo advisors are often more affordable than other traditional investment management due to their automized nature and minimal human involvement. They may also be a good starting point for beginner investors who aren’t confident making decisions or for those investors looking for a less time-consuming, hands-off approach. There are also hybrid robo advisor options, like Fidelity Go®, that combine robo advisory with access to live, personal financial coaching.7
All investing involves risk and the potential to lose money due to the inevitable fluctuations of the market. And not all robo advisory services are alike. Some may not be the right fit for every investor, and there are many factors to consider, like financial guidance options, advisory fees, investment minimums, and investment types available.
Looking to invest on your own or work with a financial professional instead? There are plenty of ways to work with us.