What do you do with money in your 20s?

[Alex+R 0]

I don't know if this is something I should be doing now, but I'm in the earlier half of my 20s, and I am thinking it's time to start saving for retirement in case it's a long time before I get a 401K or something. Or maybe it's just time to have money somewhere that will uh, increase the amount of that money. You know, in case something really bad happens someday and I need the nest egg.

I am thinking mutual funds, some sort of annuity type thing, someone suggested life insurance... gah... I'm really clueless.

I don't think I could afford to put more than 50-100 dollars a month into anything.

Does anyone here know anything bout giving financial advice? I just want to look back 40 years from now, as I am sitting by the pool in my Malibu mansion while my butler fetches me another margarita, and thank myself.

Or with the way social security is going, I guess I just want to still be able to afford 400 dollars a month for rent and not end up in the poor house.

[Hilarious Clinton 452]

Stay away from life insurance as an investment (Whole life). Stick to term life insurance for life insurance.

Invest in mutual funds for the long haul. Fidelity is a great stable company. Pick an agressive fund because you are still a long way from retirement.

edit: set up an automatic investment every month so you are not relying on your will power to invest.

Edited September 6, 2006 by LuckyStrike

[Jenn! 918]

edit: set up an automatic investment every month so you are not relying on your will power to invest.

Yes, this is key! I put 5% of my paycheck into my 401K automatically. It's like I never had it. If I had to write a check every month, I'd never save a penny!

[Alex+R 0]

Ok, thanks guys... I'm really clueless, how do you pick an aggressive fund, and where do you go to do this?

[Hilarious Clinton 452]

Mutual Funds with $250 Minimums and Under

[Jenn! 918]

Ok, thanks guys... I'm really clueless, how do you pick an aggressive fund, and where do you go to do this?

I have everything done for me through my company, luckily. If I didn't I'd probably just call one of the big companies for a consultation (http://en.wikipedia.org/wiki/List_of_Investment_Banks). They can take you through things step-by-step, for a fee of course.

[TracyTN 237]

Remember - pay yourself first, no matter what that means. A retirement account or an interest gaining savings account that you literally don't touch. ANYthing to pay yourself first.

[luv2teach77 41]

I'm in a similar situation and recently met with an old school friend of my wife's who is now an independent financial advisor. He was singing the praises of the Roth IRA.

One of the main advantages of a Roth IRA as I understood it is the money you put into it has already been taxed but if you choose to withdraw that money (up to the value of the money you paid into it) you don't pay any federal income tax. You can invest up to $4000 per year which is more than you'd be looking to invest.

This link has some useful info and some more links.

Hope thats given you some info to work with. If you can find an advisor who you feel comfortable with I can highly reccommend talking to someone who knows what they are talking about.

If you're thinking that you won't be paying into a 401K for a while then anything you can do to put some money aside is a good plan. My dad alway tells me that its NEVER too early to start making sensible choices for the future. Good luck !!

Mark

[Hilarious Clinton 452]

Remember - pay yourself first, no matter what that means. A retirement account or an interest gaining savings account that you literally don't touch. ANYthing to pay yourself first.

yes!!!!

[w¡n9Nµ7 §£@¥€r 123]

Lots of good advice on this thread!

[bebop + rocksteady 0]

My college graduation gift from my parents (when I was 21) was an IRA set up with a $500 contribution. Best graduation gift I could have asked for!

Cass (bebop the great)

[Hilarious Clinton 452]

Ok, thanks guys... I'm really clueless, how do you pick an aggressive fund, and where do you go to do this?

Do some research. There are many right answers. Investing is about the long haul. Not quick returns. I like fidelity but they usually have a $2500 minimum investment.

http://www.fool.com/school/basics/basics.htm

[Alex+R 0]

Hm Ok I am reading about the Roth IRA and also about investing in mutual funds. Can you do both? Is that even advantageous? I'm doing some research. But it's so full of stuff that I've never even thought about before that I'm getting a little buried in terminology. I might have to go to one of those financial advisors Jenn mentioned...

[w¡n9Nµ7 §£@¥€r 123]

Hm Ok I am reading about the Roth IRA and also about investing in mutual funds. Can you do both? Is that even advantageous? I'm doing some research. But it's so full of stuff that I've never even thought about before that I'm getting a little buried in terminology. I might have to go to one of those financial advisors Jenn mentioned...

Do both if you can afford it. I don't have any money in IRAs (I should, so far I have everything in 401ks) so I'm not sure about this but I believe an IRA opened with a brokerage will allow you to invest your IRA monies in mutual funds.

[Hilarious Clinton 452]

Hm Ok I am reading about the Roth IRA and also about investing in mutual funds. Can you do both? Is that even advantageous? I'm doing some research. But it's so full of stuff that I've never even thought about before that I'm getting a little buried in terminology. I might have to go to one of those financial advisors Jenn mentioned...

The Roth is highly recommended. And a regular mutual fund is a good place to put extra savings.

Right now you can contribute $4000 annually to a Roth. A spouse can have one too ($4000 also).

"You can establish a Roth IRA by making a regular contribution to a Roth IRA or by converting a traditional IRA to a Roth IRA.

You may be eligible to make a regular contribution to a Roth IRA even if you participate in a retirement plan maintained by your employer. These contributions can be as much as $4,000 for 2006 ($5,000 if you're 50 or older by the end of the year). There are just two requirements. First, you or your spouse must have compensation or alimony income equal to the amount contributed. And second, your modified adjusted gross income can't exceed certain limits. For the maximum contribution, the limits are $95,000 for single individuals and $150,000 for married individuals filing joint returns. The amount you can contribute is reduced gradually and then completely eliminated when your modified adjusted gross income exceeds $110,000 (single) or $160,000 (married filing jointly).

You can convert your regular IRA to a Roth IRA if (a) your modified adjusted gross income is $100,000 or less, and (B) you're single or file jointly with your spouse. You'll have to pay tax in the year of the conversion, but for many people the long-term savings outweigh the conversion tax."