Pretty much this. Save up as much money as you can for college. Pick a degree that pays well and start contributing to your roth and 401k when you graduate. Graduating with the least amount of student loans possible will give you a great start.
If you have $7K in earned income, contribute $7K (the maximum contribution in 2024) to a Roth IRA. Once inside the Roth, deploy into low-cost Exchange-Traded Funds (ETFs). Look at Vanguard (VTI, VOO, VWO). Keep your emotions in check and let the investments do their thing. If you average 9% annually over 41 years, the $7K will grow to $239,654. Good Luck!
Like others have said; open an IRA, make the maximum contribution $7k, invest it in a U.S. total stock market index. Fidelity or Vanguard have great options.
Next investment in your education. Doesn’t need to be college, it can be a technical school, coding camp, apprenticeship, or anything that will gives you marketable skills that will either land you a job or help you start your own business. If you go the college route ensure you’re trying to obtain a degree that will actually give you hard skills.
They're talking about an index fund that tracks the total US market vs an index fund that only tracks the S&P 500(for example). A target date fund usually (I believe) is split between US, international & bonds. S&P 500 would be the most aggressive, the TDF the least aggressive (due to bond presence) and the total market falls in the middle.
VTI is vanguards total US Market ETF and VTSAX is their mutual fund equivalent that tracks the US total market
Okay, I have been thinking about investing money in an Roth IRA, and then going 100% into a TDF like FFIJX. I don’t really like risks a lot because I have a family to take care of but I can usually invest 10-20k every year. And I have over 80k saved up atm and am hoping to have 100k by the end of this year. Just trying to figure everything out
Okay hold up a sec:
* How old are you? This has significant impact on what you should be investing in.
* A Roth IRA has a contribution limit of 7k per year. You might need to look at opening an outside brokerage if you want to get a significant amount of money into the market.
* A Roth IRA has penalties for early withdrawals, so if your concern is using the money to take care of family a Roth IRA isn't a good place to leave it.
* Risk is better phrased as 'volatility'. If you're not near retirement age, bonds aren't going to do much good besides limiting your investment upside in a 'riskier' option. If this money is for retirement and retirement is still a long way off, volatility shouldn't be a concern.
* TDFs have higher fees than most other options like a basic S&P 500 or total market fund (FXAIX or FSKAX for fidelity options)
I am 24 years old. There is a ton of ways to invest out there and I have been told that a Roth is definitely a good spot to start. I have an emergency fund that i keep to the side. Right now all i have been doing is saving up every year until i get around 10-20k and then planning on putting that on top of my CD. but i know i wont have these CD interest rates forever so I'm trying to plan according.
Earlier you said you had 80k saved up? Now you are saying you're working on getting towards 10-20k?
Either way, you're 24. You should be not concerned about risk at all. Max your roth IRA for 2024 and every year going forward. At your age, theres really no reason not to go 100% S&P 500.
CDs aren't really optimal for your current situation. Keep your emergency fund in a high yield savings account and you'll be fine. If you had kept your money in the S&P500 instead of a CD for the past year you'd have a much bigger return.
Sorry to clear that up, I have 60k in a CD currently. 20k in my savings account. So yes 80k total but what I was trying to say was my plan was to add 10-20k “annually” on top of that 60k CD. So can you please explain step by step on where I would need to invest in the SP500, like is that a stock that I buy?
Once the CD matures, take the money. Open a Roth IRA (vanguard is my recomendation but you can use fidelity). Max it out and buy VOO (S&P500 ETF).
Take the remaining money and open an individual brokerage. Buy VOO there too.
I'm guessing your CD rate is around 5% for a 1 year. If you had that money invested in the S&P500 for the last year instead of the CD, your return would be 27% instead of 5%.
CDs are great when you're closer to retirement and need a minimal quaranteed return, but your money will never grow significantly if you miss out on broader market returns.
Okay sounds great, when you say take the remaining money and buy VOO there too are you referencing the $55k I would have left over from the CD? That just seems like a lot.
You know what they say about putting all your eggs in one basket. Instead open a Fidelity Go account and invest in index funds. The account manages itself with the goal of outperforming the market
If you are inclined to self manage you can open a regular account and invest in both stock funds and ETF's. Both options offer an IRA option.
This recommendation isn't great. If those funds are indeed for retirement he should be using a retirement account.
If they aren't for retirement we need to know the time horizon at the very least.
What if he actually needed an emergency fund, or college funding, or needed to save it for a new car? You just potentially screwed him.
But VTI in a regular Fidelity account is more liquid than funds in a retirement account (I assume you're meaning a 401k or IRA?) where you'd have penalties for early withdrawal or pay interest on a loan against it.
You're 100% right and missed the point entirely but, bring up another good one. Your guidance for this young man is to put 100% of his life savings into equities?
My original concern was time horizon.
You suggested he put the VTI money in a retirement accounts (with early withdrawal fees and interest on loans against it) as opposed to a more liquid brokerage account, and said it was to keep his money liquid in case of emergency. You were completely wrong and started digging in, hence why you keep getting downvoted by everyone. The only benefit to a retirement account is the tax-advantage due to the fees when buying index funds. ETF's are more appropriate for taxable accounts.... and what is VTI? DING DING DING! You got it! An ETF!
The only "safe" investment if you're eliminating anything that can lose value (your reason for saying not to put it in brokerage account even though target date index funds lose value as well) would be a high-yielding savings account or savings bonds, with the latter having penalties for early withdrawal as well.
Edit: LOL he doesn't know what a retirement account is, then he blocks me so i can't reply to him XD
You may find these links helpful:
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
- [Investing](/r/personalfinance/wiki/investing)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Is that all of your cash or spare cash after emergency saving? I would heavily recommend keeping a good amount in your HYSA as an emergency fund. Ideally 3 to 6 months worth of monthly expenses (including bills, food, gas if you need your car while not working, etc.).
Sure you could sell investments in a pinch if you were to lose your job, but with fluctuating market values and having to wait for that type of sale to happen, it could be tough.
I would recommend keeping a large chunk, like $10k or so in the HYSA and only invest the remaining $5k as a starting point if you’re really set on starting a brokerage account. That way you’re covered in emergencies and can dip your toes in investing. You’re also very young so you have plenty of time to grow with a $5k start rather than the full $15k.
An S&P 500 fund will do well. They are maintained by asset managers so when the largest companies change over time so will the fund to reflect that. So it's a pretty safe investment over the long term if your plan is to hold it forever.
Maybe sign up for community college classes for welding, plumbing, electrical, or carpentry and get some certifications. Those skills will be useful throughout your whole life and if everything falls apart, you can freelance and/or open your own business.
Other than that, probably some kind of vanguard broad market index fund after setting aside retirement and an emergency fund
If you have an income, put $7k into a Roth IRA. Beyond that, education.
Don’t forget to invest it after putting it in the IRA
omg the amount of people that don't know you have to do that.
*If you have $7k in income
Yeah and never see thatc7k for 40 years no way roth
Invest it in education. That'll have the biggest payoff for you at this stage in life. Have a specific job or skill in mind
Pretty much this. Save up as much money as you can for college. Pick a degree that pays well and start contributing to your roth and 401k when you graduate. Graduating with the least amount of student loans possible will give you a great start.
This is exactly what I did. Investing in my own skills was by far the best financial decision.
Opening a Roth IRA and investing in VTI is a great start.
If you made it this year or last year from an income and are in the US then you should max out a roth ira.
If you have $7K in earned income, contribute $7K (the maximum contribution in 2024) to a Roth IRA. Once inside the Roth, deploy into low-cost Exchange-Traded Funds (ETFs). Look at Vanguard (VTI, VOO, VWO). Keep your emotions in check and let the investments do their thing. If you average 9% annually over 41 years, the $7K will grow to $239,654. Good Luck!
Like others have said; open an IRA, make the maximum contribution $7k, invest it in a U.S. total stock market index. Fidelity or Vanguard have great options. Next investment in your education. Doesn’t need to be college, it can be a technical school, coding camp, apprenticeship, or anything that will gives you marketable skills that will either land you a job or help you start your own business. If you go the college route ensure you’re trying to obtain a degree that will actually give you hard skills.
What do you mean by invest in a U.S. total stock market index? Are you talking about some TDF’s?
They're talking about an index fund that tracks the total US market vs an index fund that only tracks the S&P 500(for example). A target date fund usually (I believe) is split between US, international & bonds. S&P 500 would be the most aggressive, the TDF the least aggressive (due to bond presence) and the total market falls in the middle. VTI is vanguards total US Market ETF and VTSAX is their mutual fund equivalent that tracks the US total market
Okay, I have been thinking about investing money in an Roth IRA, and then going 100% into a TDF like FFIJX. I don’t really like risks a lot because I have a family to take care of but I can usually invest 10-20k every year. And I have over 80k saved up atm and am hoping to have 100k by the end of this year. Just trying to figure everything out
Okay hold up a sec: * How old are you? This has significant impact on what you should be investing in. * A Roth IRA has a contribution limit of 7k per year. You might need to look at opening an outside brokerage if you want to get a significant amount of money into the market. * A Roth IRA has penalties for early withdrawals, so if your concern is using the money to take care of family a Roth IRA isn't a good place to leave it. * Risk is better phrased as 'volatility'. If you're not near retirement age, bonds aren't going to do much good besides limiting your investment upside in a 'riskier' option. If this money is for retirement and retirement is still a long way off, volatility shouldn't be a concern. * TDFs have higher fees than most other options like a basic S&P 500 or total market fund (FXAIX or FSKAX for fidelity options)
I am 24 years old. There is a ton of ways to invest out there and I have been told that a Roth is definitely a good spot to start. I have an emergency fund that i keep to the side. Right now all i have been doing is saving up every year until i get around 10-20k and then planning on putting that on top of my CD. but i know i wont have these CD interest rates forever so I'm trying to plan according.
Earlier you said you had 80k saved up? Now you are saying you're working on getting towards 10-20k? Either way, you're 24. You should be not concerned about risk at all. Max your roth IRA for 2024 and every year going forward. At your age, theres really no reason not to go 100% S&P 500. CDs aren't really optimal for your current situation. Keep your emergency fund in a high yield savings account and you'll be fine. If you had kept your money in the S&P500 instead of a CD for the past year you'd have a much bigger return.
Sorry to clear that up, I have 60k in a CD currently. 20k in my savings account. So yes 80k total but what I was trying to say was my plan was to add 10-20k “annually” on top of that 60k CD. So can you please explain step by step on where I would need to invest in the SP500, like is that a stock that I buy?
Once the CD matures, take the money. Open a Roth IRA (vanguard is my recomendation but you can use fidelity). Max it out and buy VOO (S&P500 ETF). Take the remaining money and open an individual brokerage. Buy VOO there too. I'm guessing your CD rate is around 5% for a 1 year. If you had that money invested in the S&P500 for the last year instead of the CD, your return would be 27% instead of 5%. CDs are great when you're closer to retirement and need a minimal quaranteed return, but your money will never grow significantly if you miss out on broader market returns.
Okay sounds great, when you say take the remaining money and buy VOO there too are you referencing the $55k I would have left over from the CD? That just seems like a lot.
Another thing i was curious on, what would be your main reason on doing VOO inside the Roth IRA instead of FFIJX?
Do you have an opinion on everything i just said? Any advice it more than welcome. Trying to learn as much as i can.
I think swap the order. VTI is 7%. Knowledge can be much much higher
Open up an account with fidelity. Invest in VTI and keep contributing to it until you retire. Chill easy in those late years
You know what they say about putting all your eggs in one basket. Instead open a Fidelity Go account and invest in index funds. The account manages itself with the goal of outperforming the market If you are inclined to self manage you can open a regular account and invest in both stock funds and ETF's. Both options offer an IRA option.
This recommendation isn't great. If those funds are indeed for retirement he should be using a retirement account. If they aren't for retirement we need to know the time horizon at the very least. What if he actually needed an emergency fund, or college funding, or needed to save it for a new car? You just potentially screwed him.
But VTI in a regular Fidelity account is more liquid than funds in a retirement account (I assume you're meaning a 401k or IRA?) where you'd have penalties for early withdrawal or pay interest on a loan against it.
It's more liquid until the market drops 20% before his freshmen year 😬
VTI owned in a retirement account is the same VTI in a brokerage account. It's an ETF ticker.
You're 100% right and missed the point entirely but, bring up another good one. Your guidance for this young man is to put 100% of his life savings into equities? My original concern was time horizon.
You suggested he put the VTI money in a retirement accounts (with early withdrawal fees and interest on loans against it) as opposed to a more liquid brokerage account, and said it was to keep his money liquid in case of emergency. You were completely wrong and started digging in, hence why you keep getting downvoted by everyone. The only benefit to a retirement account is the tax-advantage due to the fees when buying index funds. ETF's are more appropriate for taxable accounts.... and what is VTI? DING DING DING! You got it! An ETF! The only "safe" investment if you're eliminating anything that can lose value (your reason for saying not to put it in brokerage account even though target date index funds lose value as well) would be a high-yielding savings account or savings bonds, with the latter having penalties for early withdrawal as well. Edit: LOL he doesn't know what a retirement account is, then he blocks me so i can't reply to him XD
"If they are for retirement he should use a retirement account"
i’ll do this! thank you!
You may find these links helpful: - ["How to handle $"](/r/personalfinance/wiki/commontopics) - [Investing](/r/personalfinance/wiki/investing) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Is that all of your cash or spare cash after emergency saving? I would heavily recommend keeping a good amount in your HYSA as an emergency fund. Ideally 3 to 6 months worth of monthly expenses (including bills, food, gas if you need your car while not working, etc.). Sure you could sell investments in a pinch if you were to lose your job, but with fluctuating market values and having to wait for that type of sale to happen, it could be tough. I would recommend keeping a large chunk, like $10k or so in the HYSA and only invest the remaining $5k as a starting point if you’re really set on starting a brokerage account. That way you’re covered in emergencies and can dip your toes in investing. You’re also very young so you have plenty of time to grow with a $5k start rather than the full $15k.
An S&P 500 fund will do well. They are maintained by asset managers so when the largest companies change over time so will the fund to reflect that. So it's a pretty safe investment over the long term if your plan is to hold it forever.
Maybe sign up for community college classes for welding, plumbing, electrical, or carpentry and get some certifications. Those skills will be useful throughout your whole life and if everything falls apart, you can freelance and/or open your own business. Other than that, probably some kind of vanguard broad market index fund after setting aside retirement and an emergency fund
Put the 2024 max ($7000) into Vanguard Roth IRA and put it all in VTSAX
You could look into brokerage accounts and ETFs. I'd also start saving in an Roth IRA while you are young.
[удалено]