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@Anonymous wrote:
@800ficogirl wrote:
Ann that's still really good. How old are you? As you reduce your debt and save your short term savings could become emergency fund, and emergency fund retirement. If you have a company matching 401K plan you should really consider jumping on that fast. If not (like me 😢) consider an Roth IRA and CDs.. If you have military affiliations NFCU has good rates.I am 32, which is entirely too old to be living life without a retirement plan. I have bought so many books and such but I really just don't understand investing so I don't want to jump into it yet. I work for a small law firm that does not offer a 401k. They do have a profit sharing plan but I won't qualify to join that until I have been there for two years (which will be in a couple of months). I feel pretty good about my student loan. It started at around 8k last January so I have paid half of it off in the last year. I think I will be able to knock it out in the next year or two while still contributing a good amount to my emergency savings. I can't decide on what amount I am comfortable with in my savings. I guess ideally you want as much as possible in the emergency fund. But when do you stop saving for emergencies and start saving for a house or other large things?
This is my issue about some of the savings advice being doled out -- they have people parcelling out their savings. Sure it makes it easier for people to allocate funds for each goal, but then some people, specially those who aren't inclined to savings, think that once they reach their "goal" (i.e. 6 months' emergency savings), they can more freely spend. In reality, savings is a marathon and should be a life-long habit. If you have extra money after your necessities and current bills are taken care of, put it in savings. If you don't have any extra money to save, adjust your spending and lifestyle so that you do.
The first accounts you should fund are those that give you a tax benefit either today (tax-deductible IRAs, 401k) or in the future (Roth IRAs) - choosing which one will depend on your situation. If your salary is fairly low compared to what you expect you will be making in 10-20 years, then funding a Roth now (when you will pay lower taxes) will be better than later (when you are paying higher taxes).
Once you've maximized the tax-advantaged plans put money in accounts that can grow over time. Do not chase individual stocks unless you have a true understanding of a sector and the market's view of that sector. Do not use the excuse of "not understanding investing" to delay saving money. Open accounts with a discount brokerage firms (Vanguard, Fidelity, Schwab, etc...) and buy target funds (for example Vanguard Target Retirement 2050). You can leave your money there or move it once you gain knowledge of your investment choices. The thing you must watch out for even at the very beginning is the amount of fees the funds charge -- the firms I mentioned have good low-fee options (less than 0.1%).
I am 24, and married. Me and my wife have about 5 months of expenses saved and plan to up it to at least 6 this year. Her company offers a pension plan but I am comply on my own. Luckily our only debt is her student loan that is the average price of a car from a dealer at 31k. We are both doing Roth IRAs to the max which can also be looked at as an emergency fund because contributions can be withdrawn at any time tax and penalty free (but can not be put back i).. As far as our investment plan we use a low cost broker (Vanguard) and invest only in index fund, this is an extremely simple approach and I would be happy to give advice to anyone willing to listen. If you feel overwhelmed by stocks the best thing you can do is just go in a target retirement fund that is set for the age you want to retire. So if it's 2015 and you want to work 30 years look for a 2045 fund, if you want a more aggressive allocation just bump the year out to a later date like the 2055 fund. If doing it yourself please use a low cost broker though and not a bank or insurance company, you will earn more because you pay less in fees.
Our goal for 2016 is to start saving up to buy a car with hopefully no financing and to contribute to a 529 for our someday child or to further our own education.
The advice that Bureau just gave you is very sound.
Not all "target" funds are equally good. With some, the expense ratio is too high. But Vanguard makes some extremely low expense target funds. And Vanguard in general is one of the best places you could be if you ever decide to branch off into more sophisticated investment strategies.
I would strongly urge you to read a good book on investment. This would be a perfect start for you. The author is very trustworthy. And the book is free on the author's website.
Delighted to hear your opinion, TP! I am a huge Bernstein fan. He's been making the case for intelligent investing by the ordinary man on the street for longer than anyone else I know.
Once a person feels comfortable with If You Can, his book The Investor's Manifesto is an awesome second step.
@Anonymous wrote:I am 24, and married. Me and my wife have about 5 months of expenses saved and plan to up it to at least 6 this year. Her company offers a pension plan but I am comply on my own. Luckily our only debt is her student loan that is the average price of a car from a dealer at 31k. We are both doing Roth IRAs to the max which can also be looked at as an emergency fund because contributions can be withdrawn at any time tax and penalty free (but can not be put back i).. As far as our investment plan we use a low cost broker (Vanguard) and invest only in index fund, this is an extremely simple approach and I would be happy to give advice to anyone willing to listen. If you feel overwhelmed by stocks the best thing you can do is just go in a target retirement fund that is set for the age you want to retire. So if it's 2015 and you want to work 30 years look for a 2045 fund, if you want a more aggressive allocation just bump the year out to a later date like the 2055 fund. If doing it yourself please use a low cost broker though and not a bank or insurance company, you will earn more because you pay less in fees.
Our goal for 2016 is to start saving up to buy a car with hopefully no financing and to contribute to a 529 for our someday child or to further our own education.
I've been thinking about getting an account with Fidelity or Vanguard (probably a Roth IRA - my job does offer a 401(k) with match up to 4%, but I just haven't gotten around to really look into it - yes, I know that I've losing free money) but I honestly don't know where to start or what to do. I will take any advice.
@Callandra wrote:I've been thinking about getting an account with Fidelity or Vanguard (probably a Roth IRA - my job does offer a 401(k) with match up to 4%, but I just haven't gotten around to really look into it - yes, I know that I've losing free money) but I honestly don't know where to start or what to do. I will take any advice.
First thing to do is collect that free money! If you have to, put in the minimum amount to get the entire 401k match.
Then read that 16 page book written by William J Bernstein that I and GuyInDixie recommend (here is a link to the pdf file: https://www.etf.com/docs/IfYouCan.pdf ) It's called If You Can How Millennials Can Get Rich Slowly. It will tell you the simplest, easiest, more effective way to invest your money and the advice is not just for young people. PLEEEEEASE download it and read it. It will answer a lot of your questions in a straightforward, no bs fashion.
Then open that Roth IRA (and regular IRA) with a discount broker. Fidelity and Vanguard are good, as is Schwab. All three have very low cost mutual funds as well as many other investment options.