WHAT IS A GOOD FINANCIAL STATEGY FOR SOMEONE IN THERE 20s , SO THEY ARE STABLE IN THE FUTURE?

Answer 1

First, above all else, live beneath your means. That means getting a Ford or Toyota rather than a Lexus or BMW. It means not getting the boats, time shares, fancy clothes, etc. that your friends may be getting. You don't have to live like you're poor, but realize that all spending on all those things will prevent you from achieving important financial goals. I'm guessing you already know this.

Secondly, avoid debt at all costs, unless it is to purchase an asset that will grow in value, or help you earn income.

As someone else mentioned - Pay Yourself First. That means take the first 10% of your pay and have it put into a tax-deferred retirement account like a 401(k). Doing it this way means the money is invested even before you or Uncle Sam can get your hands on it. You'll probably want to arrange saving another 5 to 10% also to be deducted from your paycheck automatically, for saving for a rainy day, downpayment on a home, that boat you always wanted, future investments, etc. It's important that you make these deductions automatic, so they come first, rather than you saving on what's left over every month. You then live on the remaining 80% to 85%.

For retirement, invest it in high quality, no-load (no commission), low cost mutual funds. Hopefully, your retirement plan is run by a company offering these funds, like Vanguard, Fidelity, or T. Rowe Price. By low cost, I mean annual expenses being less than 1%, preferrably down around .50% if you are so lucky.

A smart way to do this without spending a lot of time and effort is to invest in Targeted Retirement Funds, where the fund company actually diversifies your investments for you, based on your anticipated retirement date. Look for funds with a year in the name, like Target 2045 or Freedom 2040.

Also, you need to buy your own home soon. Owning your own home has historically been the biggest driver of wealth in this country more than anything else. There are myriad federal, state and local programs to help the first time homebuyer get in with below market interest rates or little down payment. I know from first hand experience about this. When I bought 2 1/2 years ago, I got assistance with closing costs, plus a 30 year fixed interest rate about 1% below market rate. A good mortgage broker can find these programs. If they don't, you need a different mortgage broker.

If you have to lower your retirement contributions to make the payments, I would do so. Your income will grow in the next few years, and you can devote the raises to increasing the contributions again.

Then keep saving for a rainy day, large purchases and future investments.

If you do this now, if you live below your means throughout your life, if you buy a home, if you save 15% to 20% of your income, you'll be wealthy by your 50's.

To learn more, and to get really psyched about doing this, I highly recommend Automatic Milliionaire by David Bach.

I've also started a blog with Personal Finance tips. Maybe you'll find it useful.

Answer 2

Limiting debt and saving for your retirement will get you on a good start for your future. If you are a hands-off investor, look at a life-cycle fund. Getting started now will make it much easier to accumulate enough to retire comfortably.
If you do not already have a bachelor's degree, it is definitely worth investing your time and money.

Buying a house is a good idea if you are looking at living in it for a 5 year time frame, and have the savings for a 20% down payment. If you are not at that point yet, this is a great time to put the money you usually save by renting towards your retirement.

Answer 3

In my opinion, a good thing to to do might be to consolidate all your loans (if you have any); get them paid off then start saving for a home. Renting is what can put many of us young folks into a bind. Many young people don't realize how feasible home ownership can actually be. Having a good job and your debt under control are great starting steps.

So my advice is....
1. Consolidate your loans. (student loans, credit cards, etc)
2. Meet with a mortgage lender to figure out a plan of attack towards home ownership.

Hope this helps. All The Best!

-Todd Knows Stuff

Answer 4

Never mind the 401 and IRA accounts. They will never be what they used to be. Lots of money flowing out of the country and it's not coming back. The stock market is more volitile than ever. Certificates of Deposit are becoming very popular now and have started picking up. Shop around and you can find some that are yielding 5% which is pretty good for a safe investment. As they mature you can renew it or invest in something else.

Answer 5

Good for you for thinking ahead; my biggest "if only" is if only I'd started thinking about money in my 20s, I'd be less insecure about my future now.

You can speak with a financial counselor about specific ways to invest (risk vs. security--you can take higher risks at your age), but bottom line, it's "pay yourself first": Put money into savings or investments (that you promise not to touch) before you pay for anything else.

Something as simple as a high-interest savings account (which are hard to find) or various types of IRAs would be good starts.

Answer 6

Well me being in my 20 the best answer for this question is to invest in your education. trust me I have work in a corporate environment, and to move up you need a degree. Unless your dad is the CEO. Also, I would invest in some type of technical training for information technology field. This pays really well. plus I would look into to stocks talk to you bank or credit union to set you up in a plan.