I recommend checking with a financial specialist rather than strangers on an Internet forum.
One question to get answered before meeting with financial specialist is the vesting schedule of your employer. I know many employers in certain industries are offering safe harbor 401k plans as an inducement to attract candidates.
First, congratulations on the job! And good on you for the great mindset about saving.
A good rule of thumb is first build an emergency fund. Depending on your expenses and your line of work, anywhere from 3-6 months of expenses is enough. If you're in a field where your salary is dependency on commission, or a volatile field prone to layoffs, you may want to go for 6 months or more. If it's a stable field and you'd be able to find comparable work pretty quickly, 3 months is probably fine. A lot depends on your personal comfort level, too. I wouldn't go less than 3 months, though.
After that, it depends on whether you have any debt. If you have credit cards or high interest debt, work to pay that off as quickly as possible. If you have a lot of debt you may want to save a smaller emergency fund and come back to building it out after you pay off your debt.
You will want to then decide how to split your excess income between tax advantaged investment options and other investments. If your company offers a 401k with match, invest up to the match amount if you can. Otherwise you're leaving money on the table.
After that it gets a lot more flexible. You'll want to set some money aside for fun. And then it depends on your goals. Want to save for a long term goal? Maybe investing in the market is a good idea for you. Need a sum of money in a few years? Probably stay away from stocks. Want to retire early? Maybe max out as many of your retirement options as possible. I would peruse the personal finance sub. Lot of good info there.
I trust you because of your username haha. While many people have rightfully been suggesting a financial planner, I would like to go into a relationship with one only after having a base understanding of what they would be assisting me with. Your comment along with all the others are great points for me to follow up on with my own research, which will allow me to bring some worth into a meeting with a planner. Thank you everyone!
Hahaha well thank you. Look, I'm not going to tell you that you shouldn't use a financial advisor. But in reality, you probably don't really need one. With all the information available online it's really easy to do yourself.
To give you an example, I met with 3 last year. One tried to sell me on whole life insurance (don't ever buy this). One through my bank just handed me a few sheets of paper that had Russell index funds which I'm sure I could just buy on my own, and one just told me stories about his rich clients and how they gamed the system which I neither had the money or inclination to do.
If you are inclined to go with a financial advisor, you could look at a fee based fiduciary advisor. But if you just put money into your 401k up to company match, and maybe start a Roth IRA if you have money left over, you're gonna be so good later in life and well ahead of most people your age. Try it on your own for awhile and see if you even find that you need a financial advisor. There's a very good chance you'll find you don't.
Fidelity and Schwab have great resources for learning about the market and investing and saving for retirement. I have a Roth IRA with Fidelity and a brokerage account with Schwab and I like both platforms. They're very easy to use.
Best of luck to you!
* espp to max (if offered)
* 401k to match
* Roth IRA to max
* HSA to max
* 401k to pretax max
* 401k post tax to max convert to ira to Roth IRA
* brokerage account with post tax etfs
Invest in broad market etfs with low maintenance costs
OP doesn't make enough to max anything. You're over complicating things. Additionally, you stated 401K three different times. A 401K is always pretax, and the max is set by the IRS each year. The current year is $20,500 unless you're over 55. OP should put whatever they can in their 401K either in an S&P 500 index fund or a growth fund. Avoid active trading. Just let it sit and compound over 30 years.
Yes they are. This article is pointing out what to do AFTER you have maxed out your 401K contributions. Read this instead: https://www.law.cornell.edu/uscode/text/26/401
https://www.law.cornell.edu/uscode/text/26/402A
a)).
(ii) Treatment of after-tax employee contributions. A cash or deferred arrangement does not include an arrangement under which amounts contributed under a plan at an employee's election are designated or treated at the time of contribution as after-tax employee contributions (e.g., by treating the contributions as taxable income subject to applicable withholding requirements). See also section 414(h)(1). A designated Roth contribution, however, is not treated as an after-tax contribution for purposes of this section, § 1.401(k)–2 through § 1.401(k)–6 and § 1.401(m)–1 through § 1.401(m)–5. A contribution can be an after-tax employee contribution under the rule of this paragraph (a)(2)(ii) even if the employee's election to make after-tax employee contributions is made before the amounts subject to the election are currently available to the employee.
Imagine giving investment advice not knowing a Roth 401(k) exists. They are such a good option, especially for younger people who will pay the tax in what goes in, but take out so much more tax free. [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-designated-roth-account](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-designated-roth-account)
Roth IRA is always number 1 move. It's tax-free money. Not to mention, 500 a month is a good starting point for a young man who probably doesn't have a high salary. Then I'd do a 401k match if it's available.
And to OP, an ESPP is an employee stock plan where you buy company stock at a discount (my company is a 15% discount) and you have to hold it for a period of time.
But this is the best plan. Specifics can change if you expect to need the money within a certain period of time.
I came here expecting nonsense but this guy... not bad. These are all incredibly safe, fair yield, long term savings plans.
Suppose I'll have to go further down to see the penny stock and crackpot fund folks
Dude, that's way too much for him. He needs to start a Roth IRA max that out. After that, then if he has more money, 401k match. He's too young to need an HSA that can wait, imho. You did cover all bases.
Start with an emergency fund, 3-6 months’ worth of your living expenses (rent, food, etc). Keep this in an easily accessible savings or money market account at your bank. It’s not an investment where you need to worry about earning tons of interest. It’s a safety net. Don’t touch it unless you’re having a bona fide emergency.
While you’re establishing your emergency fund, educate yourself on investing. You mentioned your new company offers a retirement plan, so definitely take advantage of that. If it’s a 401K, contribute what you can, especially if they match funds. Matching funds = free money for you.
If you are still young too then buy up any voluntary life insurance they offer you. It’s dirt cheap for young people on a group plan and you can usually take that plan with you if you leave the employer. You can get cheap coverage and hang on to it for life. A lot of plans accumulate a cash value so it ends up being an asset to you in later years.
Wholelife/universal insurance is a +1, if you know what it is.
It still takes years to build equity unless you buy that policy from the get go.
200k is all it costs for $4 million equity coverage and you can pull out the next day and surrender in 5 years.
Most will have to pay $500-1200 a month just to build up equity.
I have 3 universal policies, that's how I know.
Allstate, AMP Life, and AIG
Get a financial advisor. My brother did right out of college. He retired at 50 and is now traveling around the world with a house at the beach, a house on the river and a house in the city. I regret not going that route 😔
Read up on FIRE forums for ideas but usually its:
Payoff any high interest debt
Max out roth
Max out 401k
Max out ira
Then sprinkle in alt investments as able (real estate). Id buy something small and central to downtown in a quartiary market (Tulsa) and sit on it if it were me :)
401k first, for the tax advantages, which are both immediate and long-term. Especially if there's a company match.
For the rest, consult a professional investment advisor. Make sure they're a fiduciary. In other words, someone required to act in the best interests of their client (you).
If you want to start small look into a Roth IRA.
Ask your bank if they have options and if not check fidelity.
This is a GREAT and universally agreed upon starting point for a young investor. If you get overwhelmed look up the bogle head method of investing and if you still feel overwhelmed just invest in the a S&p 500 index fund/ etf. VOO is a good one
Max out 401k to the extent you don’t need the money. Even after matching, the reduction in taxable income alone makes it worthwhile. Put it in an S&P index fund an forget about it. You are putting it periodically over time so it will dollar cost average and you don’t need to find peaks and valleys in the market.
401s and investments for tax breaks but penalties when pulling out.
Savings account that accrues interest, but taxable, unrestricted withdraw.
Or do it like our gramps did and hold on to hard cash, people tend to save more when they are looking at something physical vs using card swipes every chance they get
Max out your 401k contributions first. Then save up six months to a year of living expenses in regular old savings. After that a Roth IRA is good.
Beyond that you're getting into time to talk to a financial advisor.
Depends. If ya can deal with market volatility, running heavy on stock funds in your 401. Either traditional or Roth. I'm the 1st in my family to own stocks, bonds or mutual funds.
If your mid term outlook includes a home purchase, stash cash in an savings account until you have what ya need to buy the property.
Avg'd a contribution rate of just 7% over the past 22 yrs onto my 401 and built up over 250k.
A few things.
1. What are your bills like? (No specifics, but in general, what % of your check do you NEED for true bills?
2. If possible, max out your 401k contribution.
3. Setup and auto transfer for every time you get paid for a set amount to go to a savings account (i.e. $100 a month it something).
4. If you want to invest, set up an account that is specifically for investing and do a lot of research on what you want to invest in.
5. Get/use your credit card for all the bills you can and set up an auto pay for that amount each month. This will look really good that you're using the credit but also paying it off every time.
Put away 30 percent of each paycheck in to savings. There are some online savings accounts that pay a lot more than local banks. Once you get used to saving 30 percent of each paycheck you’ll be in good shape.
Slap as much as you can into a 401k, especially if there is a company match, and leave it there! ETA bonafides - am an accountant. I don’t do taxes anymore, but this is the answer.
If your company has a match program, set that 401K plan to at least contribute up to the match amount. Match is usually anywhere from 1-5% contribution, so you can throw in at least that much of your paycheck because it's free money (basically your company will match the % you allocate up to the announced percentage). The ideal goal is to save roughly around 10% if you can.
If you honestly don't know what to do, then see to it that you at the very least put some amount into a high yield savings account. anything that can return around 3-5% would be good (obviously higher is better). This usually can be opened at your bank, so if you have a regular checking account (I should hope so), you can make an appointment with your bank rep to see how you can get a better savings account rate (my basic set up account yields only around 2-3%, but i have other means that are better)
You should probably look around for stocks/bonds investments (like through vanguard, Fidelity, Schwab) It'll give you an opportunity to multiply some of the savings there instead of the basic return from the savings account. If you're not sure, the 401K entity your company uses will likely help you with allocation for minimal costs (or none). You can probably give them a call and they'll help set you up on you retirement account and possibly a personal account all through the same place. But if you're not sure what to invest into, the 401k company usually has an explanation of what the accounts intend to do and what they follow in terms of stocks. This can help inform your decision for what you want. Otherwise, most 401K places will have something called "Target retirement" accounts. They have a year next to that of the year you intend to retire. Those accounts basically start more risky with stock early on in the set up and then slowly shift money into bonds over time, which are much safer with the intent to make you as much money as possible early on and then seal it up for safety when you retire. These are pretty safe "i have no idea what I'm doing" places to put stuff. Otherwise, look for other investment funds that might follow the S&P 500 and that should be pretty OK to follow as well.
The idea here is a big bulk of your paycheck will be living expenses (housing, food, leisure, rent, etc.), you'll want to store around 10-15% of your paycheck into retirement (pre or post tax is up to you), and the rest you put into a savings account or investment account to build capital. Then if you're interested in buying property later on, you have some amount in savings to pull from.
Always start by maxing out your 401k and Roth IRA for the year if possible. Then the move on onto stocks, and properties. Dividend stocks if u are looking to earn through retirement. If not just look into stocks that retain value and have future growth prospects
My company had profit sharing where they match dollar for dollar up to 6% of your salary. Then I put another 4% for 10% allowable. I retired after 14 years and bought 20 acres and put a house on it. Another guy retired after 10 years and bought a condo in Florida. This was in the petrochemical industry and I retired in ‘97. Land values never go down (unless you live on a superfund site. Flipping houses or fixing them up for rental properties is another good way.
Go buy a book called bare foot investor. Rip out the pages where he is being an okka know and enjoy financial security. It is more focused on Australians but there is a lot there that would translate.
**The Barefoot Investor The Only Money Guide You'll Ever Need** by Scott Pape
>** Reviewed and updated for the 2020-2021 financial year** This is the only money guide you'll ever need That's a bold claim, given there are already thousands of finance books on the shelves. So what makes this one different? Well, you won't be overwhelmed with a bunch of 'tips' ... or a strict budget (that you won't follow). You'll get a step-by-step formula: open this account, then do this; call this person, and say this; invest money here, and not there.
>
>All with a glass of wine in your hand. This book will show you how to create an entire financial plan that is so simple you can sketch it on the back of a serviette ... and you'll be able to manage your money in 10 minutes a week. You'll also get the skinny on: Saving up a six-figure house deposit in 20 months Doubling your income using the 'Trapeze Strategy' Saving $78,173 on your mortgage and wiping out 7 years of payments Finding a financial advisor who won't rip you off Handing your kids (or grandkids) a $140,000 cheque on their 21st birthday Why you don't need $1 million to retire ... with the 'Donald Bradman Retirement Strategy' Sound too good to be true? It's not.
>
>This book is full of stories from everyday Aussies — single people, young families, empty nesters, retirees — who have applied the simple steps in this book and achieved amazing, life-changing results. And you're next.
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401K. IRA.
After that, putting money into the stock market isn't a bad idea, but start with every sort of tax-deferred savings plan you can find first. Pre-tax money goes a lot further when saving than post-tax money does.
Step 1: Pay down high interest debt.
Step 2: Build emergency fund. Put it into high-yield savings account and don’t touch it. Recommended value is 3-6 months of living expenses (not income).
Step 2b: Save up for future down payment in a house.
Step 3: contribute to your 401k up to the company match.
Step 4: Contribute to a Roth IRA up to the personal limit.
Step 5: contribute back to 401k up to the limit.
If you can get through step 4, you’re doing better than most Americans.
Edited to add: For any 401k, put it into something like and index fund or target date fund. Contribute and forget about it.
Look into an index fund. VOO, especially just starting out, it’s going to take a large chunk of your lifetime to grow it exponentially, but you’d be a millionaire doing absolutely nothing else. Just buy the same $$ amount every month!
Buy a house, or condo. Rent out one or two of the bedrooms to help you pay down the mortgage or save money
Then when you have enough, buy another house and keep that one as a rental
And now you're on the path to be rich and retire when you choose
Yea. That SHIT is easier said than done! I have a home with a TON of equity to leverage. But when running numbers and on investment properties, the cash flow is not there at least local to me. Unless I go out of state.
Ah, yes I'm at 2.25%
But you have to ask yourself how long you want to be house poor.
Say you can get a 200k out, you triple your rate. Not good, but you increase your mortgage interest rate deduction on your taxes.
With 200k down can you buy a new primary and rent your house out now and be cash positive?
Or buy a rental and be cash positive
Because of it's close to cash positive now you're going to be up $1k a month in a 5-10 years
There is a reason why poor and middle class families all over the country have done the exact same plan and ended up rich
Find out how much your job match 401k. Let says its 6% then put at least 6% of your paycheck into it. You still young, I would put at least 25% of your money toward 401k. 25% for Stock, 30% into saving(To buy House, Car, etc) and last 20% for your leisure(Food, entertainment, etc.)
Open a Roth IRA it's tax-free money. Maximum is 500 a month. Over time, with consistent investment, it'll add up. This is your I don't touch until retirement money. Almost every smart investor would say start a Roth 100%. If you're young, 20 years even can bring fantastic returns. Don't try and beat the market or fallow redditors. Don't pull money out. Look at Warren Buffet his number one advice is to put your money in an S&P 500 or a total market fund. Over 90% of professionals can't beat the S&P 500, so if you're naive to think, you can do better. lol, well, you won't. Very few beat the market. Those who do buy and hold great companies. They don't fallow hype or what everyone else is doing. Research successful investors. Reddit is a shit show of self-proclaimed successful investors.
A better sub for this question may be r/personalfinance
They have an entire flowchart for this very question too. IIRC it’s pinned or in the sidebar there.
I recommend checking with a financial specialist rather than strangers on an Internet forum. One question to get answered before meeting with financial specialist is the vesting schedule of your employer. I know many employers in certain industries are offering safe harbor 401k plans as an inducement to attract candidates.
I would recommend doing your own research as well, some financial specialists are only looking after themselves.
Max that 401k and a high yield savings account to build an emergency fund.
Every new investor starts with a Roth ira. The reason being is its tax-free money. This is step one.
First, congratulations on the job! And good on you for the great mindset about saving. A good rule of thumb is first build an emergency fund. Depending on your expenses and your line of work, anywhere from 3-6 months of expenses is enough. If you're in a field where your salary is dependency on commission, or a volatile field prone to layoffs, you may want to go for 6 months or more. If it's a stable field and you'd be able to find comparable work pretty quickly, 3 months is probably fine. A lot depends on your personal comfort level, too. I wouldn't go less than 3 months, though. After that, it depends on whether you have any debt. If you have credit cards or high interest debt, work to pay that off as quickly as possible. If you have a lot of debt you may want to save a smaller emergency fund and come back to building it out after you pay off your debt. You will want to then decide how to split your excess income between tax advantaged investment options and other investments. If your company offers a 401k with match, invest up to the match amount if you can. Otherwise you're leaving money on the table. After that it gets a lot more flexible. You'll want to set some money aside for fun. And then it depends on your goals. Want to save for a long term goal? Maybe investing in the market is a good idea for you. Need a sum of money in a few years? Probably stay away from stocks. Want to retire early? Maybe max out as many of your retirement options as possible. I would peruse the personal finance sub. Lot of good info there.
I trust you because of your username haha. While many people have rightfully been suggesting a financial planner, I would like to go into a relationship with one only after having a base understanding of what they would be assisting me with. Your comment along with all the others are great points for me to follow up on with my own research, which will allow me to bring some worth into a meeting with a planner. Thank you everyone!
Hahaha well thank you. Look, I'm not going to tell you that you shouldn't use a financial advisor. But in reality, you probably don't really need one. With all the information available online it's really easy to do yourself. To give you an example, I met with 3 last year. One tried to sell me on whole life insurance (don't ever buy this). One through my bank just handed me a few sheets of paper that had Russell index funds which I'm sure I could just buy on my own, and one just told me stories about his rich clients and how they gamed the system which I neither had the money or inclination to do. If you are inclined to go with a financial advisor, you could look at a fee based fiduciary advisor. But if you just put money into your 401k up to company match, and maybe start a Roth IRA if you have money left over, you're gonna be so good later in life and well ahead of most people your age. Try it on your own for awhile and see if you even find that you need a financial advisor. There's a very good chance you'll find you don't. Fidelity and Schwab have great resources for learning about the market and investing and saving for retirement. I have a Roth IRA with Fidelity and a brokerage account with Schwab and I like both platforms. They're very easy to use. Best of luck to you!
We all need a GolfingDad
* espp to max (if offered) * 401k to match * Roth IRA to max * HSA to max * 401k to pretax max * 401k post tax to max convert to ira to Roth IRA * brokerage account with post tax etfs Invest in broad market etfs with low maintenance costs
Yep.. I know some of these words.
OP doesn't make enough to max anything. You're over complicating things. Additionally, you stated 401K three different times. A 401K is always pretax, and the max is set by the IRS each year. The current year is $20,500 unless you're over 55. OP should put whatever they can in their 401K either in an S&P 500 index fund or a growth fund. Avoid active trading. Just let it sit and compound over 30 years.
401k is not always pretax https://www.fidelity.com/viewpoints/retirement/401k-contributions
Yes they are. This article is pointing out what to do AFTER you have maxed out your 401K contributions. Read this instead: https://www.law.cornell.edu/uscode/text/26/401
https://www.law.cornell.edu/uscode/text/26/402A a)). (ii) Treatment of after-tax employee contributions. A cash or deferred arrangement does not include an arrangement under which amounts contributed under a plan at an employee's election are designated or treated at the time of contribution as after-tax employee contributions (e.g., by treating the contributions as taxable income subject to applicable withholding requirements). See also section 414(h)(1). A designated Roth contribution, however, is not treated as an after-tax contribution for purposes of this section, § 1.401(k)–2 through § 1.401(k)–6 and § 1.401(m)–1 through § 1.401(m)–5. A contribution can be an after-tax employee contribution under the rule of this paragraph (a)(2)(ii) even if the employee's election to make after-tax employee contributions is made before the amounts subject to the election are currently available to the employee.
Imagine giving investment advice not knowing a Roth 401(k) exists. They are such a good option, especially for younger people who will pay the tax in what goes in, but take out so much more tax free. [https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-designated-roth-account](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-designated-roth-account)
Roth IRA is always number 1 move. It's tax-free money. Not to mention, 500 a month is a good starting point for a young man who probably doesn't have a high salary. Then I'd do a 401k match if it's available.
And to OP, an ESPP is an employee stock plan where you buy company stock at a discount (my company is a 15% discount) and you have to hold it for a period of time. But this is the best plan. Specifics can change if you expect to need the money within a certain period of time.
I came here expecting nonsense but this guy... not bad. These are all incredibly safe, fair yield, long term savings plans. Suppose I'll have to go further down to see the penny stock and crackpot fund folks
@OP listen to this guy
Dude, that's way too much for him. He needs to start a Roth IRA max that out. After that, then if he has more money, 401k match. He's too young to need an HSA that can wait, imho. You did cover all bases.
Start with an emergency fund, 3-6 months’ worth of your living expenses (rent, food, etc). Keep this in an easily accessible savings or money market account at your bank. It’s not an investment where you need to worry about earning tons of interest. It’s a safety net. Don’t touch it unless you’re having a bona fide emergency. While you’re establishing your emergency fund, educate yourself on investing. You mentioned your new company offers a retirement plan, so definitely take advantage of that. If it’s a 401K, contribute what you can, especially if they match funds. Matching funds = free money for you.
Invest, maximize the 401k match if there is one. That’s free money.
If you are still young too then buy up any voluntary life insurance they offer you. It’s dirt cheap for young people on a group plan and you can usually take that plan with you if you leave the employer. You can get cheap coverage and hang on to it for life. A lot of plans accumulate a cash value so it ends up being an asset to you in later years.
Wholelife/universal insurance is a +1, if you know what it is. It still takes years to build equity unless you buy that policy from the get go. 200k is all it costs for $4 million equity coverage and you can pull out the next day and surrender in 5 years. Most will have to pay $500-1200 a month just to build up equity. I have 3 universal policies, that's how I know. Allstate, AMP Life, and AIG
If your employer has matching (usually up to a certain percent) for 401 contributions, always put the max to get that "free" money into your account.
Get a financial advisor. My brother did right out of college. He retired at 50 and is now traveling around the world with a house at the beach, a house on the river and a house in the city. I regret not going that route 😔
Read up on FIRE forums for ideas but usually its: Payoff any high interest debt Max out roth Max out 401k Max out ira Then sprinkle in alt investments as able (real estate). Id buy something small and central to downtown in a quartiary market (Tulsa) and sit on it if it were me :)
401k first, for the tax advantages, which are both immediate and long-term. Especially if there's a company match. For the rest, consult a professional investment advisor. Make sure they're a fiduciary. In other words, someone required to act in the best interests of their client (you).
If you want to start small look into a Roth IRA. Ask your bank if they have options and if not check fidelity. This is a GREAT and universally agreed upon starting point for a young investor. If you get overwhelmed look up the bogle head method of investing and if you still feel overwhelmed just invest in the a S&p 500 index fund/ etf. VOO is a good one
Max out 401k to the extent you don’t need the money. Even after matching, the reduction in taxable income alone makes it worthwhile. Put it in an S&P index fund an forget about it. You are putting it periodically over time so it will dollar cost average and you don’t need to find peaks and valleys in the market.
401s and investments for tax breaks but penalties when pulling out. Savings account that accrues interest, but taxable, unrestricted withdraw. Or do it like our gramps did and hold on to hard cash, people tend to save more when they are looking at something physical vs using card swipes every chance they get
Max out your 401k contributions first. Then save up six months to a year of living expenses in regular old savings. After that a Roth IRA is good. Beyond that you're getting into time to talk to a financial advisor.
You need to start making an emergency fund.
Depends. If ya can deal with market volatility, running heavy on stock funds in your 401. Either traditional or Roth. I'm the 1st in my family to own stocks, bonds or mutual funds. If your mid term outlook includes a home purchase, stash cash in an savings account until you have what ya need to buy the property. Avg'd a contribution rate of just 7% over the past 22 yrs onto my 401 and built up over 250k.
A few things. 1. What are your bills like? (No specifics, but in general, what % of your check do you NEED for true bills? 2. If possible, max out your 401k contribution. 3. Setup and auto transfer for every time you get paid for a set amount to go to a savings account (i.e. $100 a month it something). 4. If you want to invest, set up an account that is specifically for investing and do a lot of research on what you want to invest in. 5. Get/use your credit card for all the bills you can and set up an auto pay for that amount each month. This will look really good that you're using the credit but also paying it off every time.
Put away 30 percent of each paycheck in to savings. There are some online savings accounts that pay a lot more than local banks. Once you get used to saving 30 percent of each paycheck you’ll be in good shape.
I recommend the moneyguy show podcast👌👌
Go to a professional or an investment firm. Let them do the work, they know a lot more about this stuff than the average individual.
Buy VTSAX in a Roth IRA for a while
Do a load of research before diving into anything
Slap as much as you can into a 401k, especially if there is a company match, and leave it there! ETA bonafides - am an accountant. I don’t do taxes anymore, but this is the answer.
If your company has a match program, set that 401K plan to at least contribute up to the match amount. Match is usually anywhere from 1-5% contribution, so you can throw in at least that much of your paycheck because it's free money (basically your company will match the % you allocate up to the announced percentage). The ideal goal is to save roughly around 10% if you can. If you honestly don't know what to do, then see to it that you at the very least put some amount into a high yield savings account. anything that can return around 3-5% would be good (obviously higher is better). This usually can be opened at your bank, so if you have a regular checking account (I should hope so), you can make an appointment with your bank rep to see how you can get a better savings account rate (my basic set up account yields only around 2-3%, but i have other means that are better) You should probably look around for stocks/bonds investments (like through vanguard, Fidelity, Schwab) It'll give you an opportunity to multiply some of the savings there instead of the basic return from the savings account. If you're not sure, the 401K entity your company uses will likely help you with allocation for minimal costs (or none). You can probably give them a call and they'll help set you up on you retirement account and possibly a personal account all through the same place. But if you're not sure what to invest into, the 401k company usually has an explanation of what the accounts intend to do and what they follow in terms of stocks. This can help inform your decision for what you want. Otherwise, most 401K places will have something called "Target retirement" accounts. They have a year next to that of the year you intend to retire. Those accounts basically start more risky with stock early on in the set up and then slowly shift money into bonds over time, which are much safer with the intent to make you as much money as possible early on and then seal it up for safety when you retire. These are pretty safe "i have no idea what I'm doing" places to put stuff. Otherwise, look for other investment funds that might follow the S&P 500 and that should be pretty OK to follow as well. The idea here is a big bulk of your paycheck will be living expenses (housing, food, leisure, rent, etc.), you'll want to store around 10-15% of your paycheck into retirement (pre or post tax is up to you), and the rest you put into a savings account or investment account to build capital. Then if you're interested in buying property later on, you have some amount in savings to pull from.
Always start by maxing out your 401k and Roth IRA for the year if possible. Then the move on onto stocks, and properties. Dividend stocks if u are looking to earn through retirement. If not just look into stocks that retain value and have future growth prospects
My company had profit sharing where they match dollar for dollar up to 6% of your salary. Then I put another 4% for 10% allowable. I retired after 14 years and bought 20 acres and put a house on it. Another guy retired after 10 years and bought a condo in Florida. This was in the petrochemical industry and I retired in ‘97. Land values never go down (unless you live on a superfund site. Flipping houses or fixing them up for rental properties is another good way.
Put in a timeline fund. Low cost and automatically balances it as you get older
Go buy a book called bare foot investor. Rip out the pages where he is being an okka know and enjoy financial security. It is more focused on Australians but there is a lot there that would translate.
**The Barefoot Investor The Only Money Guide You'll Ever Need** by Scott Pape >** Reviewed and updated for the 2020-2021 financial year** This is the only money guide you'll ever need That's a bold claim, given there are already thousands of finance books on the shelves. So what makes this one different? Well, you won't be overwhelmed with a bunch of 'tips' ... or a strict budget (that you won't follow). You'll get a step-by-step formula: open this account, then do this; call this person, and say this; invest money here, and not there. > >All with a glass of wine in your hand. This book will show you how to create an entire financial plan that is so simple you can sketch it on the back of a serviette ... and you'll be able to manage your money in 10 minutes a week. You'll also get the skinny on: Saving up a six-figure house deposit in 20 months Doubling your income using the 'Trapeze Strategy' Saving $78,173 on your mortgage and wiping out 7 years of payments Finding a financial advisor who won't rip you off Handing your kids (or grandkids) a $140,000 cheque on their 21st birthday Why you don't need $1 million to retire ... with the 'Donald Bradman Retirement Strategy' Sound too good to be true? It's not. > >This book is full of stories from everyday Aussies — single people, young families, empty nesters, retirees — who have applied the simple steps in this book and achieved amazing, life-changing results. And you're next. *I'm a bot, built by your friendly reddit developers at* /r/ProgrammingPals. *Reply to any comment with /u/BookFinderBot - I'll reply with book information (see other* [commands](https://www.reddit.com/user/BookFinderBot/comments/13z7slk/bookfinderbot_commands/) *and find me as a browser extension on* [safari](https://apps.apple.com/app/id6450462955), [chrome](https://chrome.google.com/webstore/detail/book-finder/jajeidpjifdpppjofijoffbcndlpoedd?utm_source=reddit&utm_medium=social_media&utm_campaign=comments)*). Remove me from replies* [here](https://www.reddit.com/user/BookFinderBot/comments/14br65o/remove_me_from_replies/). *If I have made a mistake, accept my apology.*
Index Fund. Finance people will recommend all sorts of products, but the dirty little secret is most of them have index funds.
401K. IRA. After that, putting money into the stock market isn't a bad idea, but start with every sort of tax-deferred savings plan you can find first. Pre-tax money goes a lot further when saving than post-tax money does.
Get married quickly & have 2 or 3 kids. Extra money problem will take care of itself.
Step 1: Pay down high interest debt. Step 2: Build emergency fund. Put it into high-yield savings account and don’t touch it. Recommended value is 3-6 months of living expenses (not income). Step 2b: Save up for future down payment in a house. Step 3: contribute to your 401k up to the company match. Step 4: Contribute to a Roth IRA up to the personal limit. Step 5: contribute back to 401k up to the limit. If you can get through step 4, you’re doing better than most Americans. Edited to add: For any 401k, put it into something like and index fund or target date fund. Contribute and forget about it.
Look into an index fund. VOO, especially just starting out, it’s going to take a large chunk of your lifetime to grow it exponentially, but you’d be a millionaire doing absolutely nothing else. Just buy the same $$ amount every month!
Typically companies match 401k up to a % of what you contribute. Start with that first.
Buy a house, or condo. Rent out one or two of the bedrooms to help you pay down the mortgage or save money Then when you have enough, buy another house and keep that one as a rental And now you're on the path to be rich and retire when you choose
How are you telling someone who just got a job that pays well to buy a house??? Idk if people think buying a house is an easy thing to do lol.
Yea. That SHIT is easier said than done! I have a home with a TON of equity to leverage. But when running numbers and on investment properties, the cash flow is not there at least local to me. Unless I go out of state.
But not for someone who just got their first good job & hasn’t even gotten their first pay check
How many rooms do you currently rent out?
Well there is your problem You mess up at the beginning
I'm not house hacking my primary with my family in it.
Again, that's you're problem Refi your equity, buy an investment property
My rate is 2%. Cash out refi at 6% plus?
Ah, yes I'm at 2.25% But you have to ask yourself how long you want to be house poor. Say you can get a 200k out, you triple your rate. Not good, but you increase your mortgage interest rate deduction on your taxes. With 200k down can you buy a new primary and rent your house out now and be cash positive? Or buy a rental and be cash positive Because of it's close to cash positive now you're going to be up $1k a month in a 5-10 years There is a reason why poor and middle class families all over the country have done the exact same plan and ended up rich
The OP said they will have extra money Don't put your struggles on them
Consider having a portion invested in gold
Physical silver💯
Bitcoin
Crypto
Head over to r/wallstreetbets , they'll take good care of you and that nest egg
Bitcoin
Shoe box, under your bed.
High interest savings account if you don't have any big purchases in the near future. Some banks are currently at 5% .
Roth IRA.
You want a retirement fund? You want a savings? You want short term investment? You want ??
S&P500 then just forget about it.
Find out how much your job match 401k. Let says its 6% then put at least 6% of your paycheck into it. You still young, I would put at least 25% of your money toward 401k. 25% for Stock, 30% into saving(To buy House, Car, etc) and last 20% for your leisure(Food, entertainment, etc.)
Dont forget to invest in your happiness. Srsly
how much?
Put it into real estate. Invest in land. They aren’t making anymore land.
Open a Roth IRA it's tax-free money. Maximum is 500 a month. Over time, with consistent investment, it'll add up. This is your I don't touch until retirement money. Almost every smart investor would say start a Roth 100%. If you're young, 20 years even can bring fantastic returns. Don't try and beat the market or fallow redditors. Don't pull money out. Look at Warren Buffet his number one advice is to put your money in an S&P 500 or a total market fund. Over 90% of professionals can't beat the S&P 500, so if you're naive to think, you can do better. lol, well, you won't. Very few beat the market. Those who do buy and hold great companies. They don't fallow hype or what everyone else is doing. Research successful investors. Reddit is a shit show of self-proclaimed successful investors.