nruva, if I gave you $10k, how would you invest that.
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Assuming you have no debt, 6 months worth of expenses in a savings account, then invest.What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.
What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.
nruva, if I gave you $10k, how would you invest that.
What do you guys recommend on how much savings should a person have at the age 25, 30, 35, 40yrs old etc...
Since banks dont give you shit on interest anymore, it looks like i have to start investing in stocks/mutual funds. How much should i be putting into those compare to savings account.
I started maxing Roth IRA around 6 years ago at 22 and more recently started doing a 401k through work for 10% of my paycheck with my work doing a 4% match. I'm curious on some alternatives since these are retirement accounts maybe taking that 6% extra from the 401k and putting it into something that would be in an account that I could borrow off of whenever I decide to make a house purchase or something. Thinking of just doing something easy like transferring 300 a month to savings, but i'm curious on some other low maintenance options.
I would argue that if you don't have enough liquid cash to make the down payment you probably shouldn't be purchasing a home. Also, do the math before borrowing against your 401k, the lost money is a hell of a lot more expensive than you think when looking at a 30 year timeline.
If you have no 401K you can contribute to a Tradition IRA. I believe the cap for this year is 12,000 and will probably go up for 2015.
As far as how much you need to retire, the easiest way is to figure out your annual expenses (or your projected annual expenses at retirement). Then save about 25x that amount minimum. This should allow you to withdraw 3-4% of your money each year to cover your expenses and if the markets perform to average you won't really touch the principal balance of your accounts. This way you could theoretically live 100 years in retirement unless the market totally tanks. In which case everyone is fucked anyway.
Back when I got into this, RabbitTroop recommended GNUcash. It is free accounting software that I've used for just about 2 full years now and I have a much better idea of where my money goes and then I can decide whether or not i want to make cuts in any given category.
And just to add to the opinions about how much cash reserves/emergency account to have. We keep about 3 months worth of regular expenses, but since we are a dual income household and it is extremely unlikely that we'll both lose our jobs at the same time, this is more like 6 months expenses. If things looked really dire, we could easily make cuts as well to stretch the amount to a year. I feel like that's plenty, although I also make sure to budget cash amounts for projected large expenses like replacing a car in the near future or the A/C in the house.
Setting up a monthly bank transfer to a savings might do the trick just to keep it away from me, just wondering if there's something better to let the money grow while I wait.
Traditional IRA? I thought the most you can contribute is $5,500 & that's for combine of Traditional & Roth? Are you talking about a different IRA? Also saving 25x amount of yearly expenses seem pretty impossible. Say my yearly expense is $40,000 a year, i would need to save 1 million. Im probably misunderstanding what you're saying.
A Traditional IRA is made with pre-tax earnings. You set up the account and then you notify payroll about the details and it gets deducted from your paycheck. I'm not 100% on that info because I've never had to do it, but I do know that you can put in 12k pre-tax as well as 5500 post tax for the Roth.
As for how much you need to save, yes it can seem daunting, but get started. If you have a 20-30 year timeline, and you can even conservatively expect 5% growth each year, your money will grow. As the balance grows, the earnings grow. Then you can even factor in whatever Social Security this generation might actually end up with and you might find yourself ahead in retirement.
The easiest way to do it is to set a percentage of your income aside now and as you make more money, don't change your percentages. Or conversely, spend only a set amount and anything extra goes to savings. Your contributions will increase.
Pretty sure that a certain member that started this thread told me something along the lines of "You can always spend more, the trick is what you save." The point being, whether you make 20k or 200k if you are saving nothing, you're always living paycheck to paycheck, spending what you bring in. Pay yourself first, put at least 20% of your income away first and treat those accounts as totally off limits. Obviously if disaster strikes it is there, but you don't want to look at a 25k investment account and think that you could just about buy a Euro Kizuna right about now.
There are a lot of stereotypical money advice phrases in this post. The point is, whatever you do, start saving now.
Do you have a link that shows you can contribute $12,000? Everything i see says $5,500 & i think that's what the bank told me too when i did my Roth last year. This would be great if i can do this, more money go to somewhere instead of video games.
One last thing i dont understand is that 5% growth each year comment. How does your money grow, is it from all the investments or savings? The most i ever got in my savings was less then 1% a year. I used to get about 4% on CDs a decade ago.
This all good info, i wish my mindset was like this when i got out of highschool. Instead of buying stupid shit, i could of been saving for the future & ahead of the game.
I mentioned in the other thread I don't do stocks (shares we call them here) I have always been more into property. The property market here in Sydney has been extremely strong over the last 18 months - 20-30% increases across the board.
A thousand years ago this place has nothing but Native Americans. Today what's left of them runs the casino business.