Anaya_1de
New Poster
Cash: $ 0.45
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Joined: 17 Feb 2007
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Hi everyone,
I'm 23 and I want to get started on saving for retirement. Unfortunately I don't know a lot about all the different options out there. Are there maybe any good how-to books out there? I just want to learn as much as I can about it.
I don't have a whole lot of money to spare but I think I could invest about $200/ month. Where would be the best place to take that to? I was thinking about investing in a Roth IRA from Fidelity (possibly the freedom fund?). But I'm not sure if that's the best option for me or if there are any other places where my money will earn more.
Any help would be highly appreciated!
Thank you!
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Sat Feb 17, 2007 5:04 pm |
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Kiaser
Senior Member
Cash: $ 43.05
Posts: 209
Joined: 12 Apr 2006
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Retirement financing is easy, and you pretty much hit it right on with an IRA... Just like Coaster said, don't forget the emergency fund.
Here are the basic steps for financial security in order of most important or "needs to be done" before the next step is taken:
1) Create an emergency fund. It should consist of AT LEAST six months of cash reserves to pay for ALL expenses without help from ANY other income (such as if you lost your job or ability to work). As you financial obligations grow throughout your life (mortgages, kids, etc) so should your emergency fund to match. For someone who is married with kids, has a house payment, and many other obligations I recommend at least two years of emergency funds. A good supplement with emergency funds is life insurance policies but ONLY if you have others that depend on your ability to work (wife, kids, etc). Keep the money in a liquid account that gains interest, but not a checking or savings account, something like a money market account. I suggest Vanguard Prime Money Market.
2) Setup individual retirement fund. Roth or tradititional, it all depends on your situation. Contribute the maximum amount EVERY YEAR before money goes elsewhere.
3) Setup other retirement funds that are tax benefitial or comes with free money. If your company offers a retirement plan that they match funds (401k), then contribute to that. Keep note to only fund it to what the company will match. NEVER give up free money.
The rest of your money should go to other investment opportunities, such as real estate or other mutual funds. It'll help diversify.
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Sun Feb 18, 2007 3:50 am |
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No-Brainer
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Location: Oregon USA
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That must be the ultra-conservative approach if I ever heard one. Two years of cash reserve? I don't even have that much now and I'm already retired.
It's cash flow that you need to protect in my opinion, not cash reserve. If you can do that and no matter what happens you will have enough coming in to cover your needs, then put your money to work instead of leaving it in some reserve account.
That's just my opinion, but I've been through it and came out fine.
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Sun Feb 18, 2007 4:25 pm |
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oldguy
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Location: arizona
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I'm with no-brainer. I don't have an emergency fund, haven't had a savings account since about 1975. I use a credit card for emergencies, then I sell some stock to pay the CC. I have never liked the idea of having a savings account just sitting there - I want my money to be working for me.
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Sun Feb 18, 2007 4:52 pm |
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Anaya_1de
New Poster
Cash: $ 0.45
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Joined: 17 Feb 2007
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Thank you for all your answers,
I actually think it's a really good idea to have an emergency savings stash. I already have a money market account but I think I will stock it up a little more. So that I have at least 6 months worth of living expenses. You never know what can happen.
But I still have a question about the Roth IRA. Opening a Roth IRA account is the easiest part but don't you have to choose your own stocks where you want your money invested in? How can I learn about how that works and which stocks to pick? Because I'm pretty clueless about stocks and investing 
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Mon Feb 19, 2007 5:49 pm |
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Kiaser
Senior Member
Cash: $ 43.05
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Joined: 12 Apr 2006
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quote:
Originally posted by No-Brainer
That must be the ultra-conservative approach if I ever heard one. Two years of cash reserve? I don't even have that much now and I'm already retired.
It's cash flow that you need to protect in my opinion, not cash reserve. If you can do that and no matter what happens you will have enough coming in to cover your needs, then put your money to work instead of leaving it in some reserve account.
That's just my opinion, but I've been through it and came out fine.
It is a little overboard but I always say two years because it's better to have overkill than underfund. Really, two years would only be for someone that has many financial obligations (family and kids that rely solely on one persons income, etc). For myself I only keep 6 months. And besides, I'm not saying to put ALL his money into that forever, just to build it up to a confortable spot then start investing for cash flow.
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Tue Feb 20, 2007 4:47 pm |
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