2006-09-25 12:18:18 · 9 answers · asked by axelf57 1 in Business & Finance ➔ Personal Finance
First, get a decent education, then get a job!! Keep your resume up to date, as you never know when opportunities may present themselves. If you're 26, you may be up to speed on these points already.
Then ditch your credit cards. Learn to live within your means, preferably BELOW your means. Stop thinking spend-spend-spend, which is how most 26-year-olds think.
Next, get your Roth IRA fully funded for the year. And every year from now on. When you withdraw the money upon retirement, everything in the account is TAX FREE!!!
Between 26 and 66, you have 40 years to build up your account. You will retire as a millionaire if you follow this advice. Also, buying a home is financially smarter than renting. That is many Americans' greatest financial asset. And children are very expensive, so think twice about that. I'm not saying don't have kids, just to think through the consequences.
2006-09-25 12:34:46 · answer #1 · answered by Carlos R 5 · 0⤊ 0⤋
Don't waste your time investing in individual stocks... instead, grab a no-load mutual fund (like the Vanguard 500). At your age, you can afford to take on more risk, so don't be shy. On average, it only takes 10 years to recover bad losses, but the gains can be huge in the long term.
Channel your investment funds through a Roth IRA. The deposits are not tax deductible, but the capital gains and interest payments are. You can contribute up to $4,000 per year.
If you have the option for a matching 401(k), then deposit as much as you can. It is free money from your employer.
According to my handy financial calculator, if you deposit this much every year for 34 years and invest it at 10%, you can retire at age 60 with $1.08M in the bank.
If you continue to invest the residual at a safer 5%, you can pull $72,000 out every year for 25 years (until you are 85)!
2006-09-25 20:02:23 · answer #2 · answered by easyrhinohl 2 · 0⤊ 0⤋
Set financial goals; examples: totally debt-free by age X, $1 million in savings in 30 years, etc. Then plan how to achieve them. A good financial planner can help you here, though if he merely offers to help you lower your debt payments, fire him/her and get someone else.
Regardless of what you do, you should start a retirement account (if you haven't already), and put in the maximum amount each year. Had I learned this at age 18 instead of age 25, I'd have a 6-figure net worth by now (I'm 28, almost 29).
2006-09-25 19:31:32 · answer #3 · answered by The_Mystic 3 · 0⤊ 0⤋
Invest in a Roth IRA, and contribute to it regularly. I have mine through T. Rowe Price, and its doing quite well. You can take out the money for your first home, but personally I'm just going to leave it in until I'm 59.5 and use it towards retirement. Also, take advantage of your company's 401(K), and roll it over if you ever leave. The main thing is is to contribute money regularly, and leave it alone until you retire. Otherwise, you get hit with massive taxes. Good luck!
2006-09-25 19:35:17 · answer #4 · answered by atomicfrog81 3 · 0⤊ 0⤋
Putting at least $5K per year in the 401K and investing in stocks and bonds. It takes a lot more money when your 36 then when you are 26 to reach the goal.
2006-09-26 16:10:18 · answer #5 · answered by Steve R 6 · 0⤊ 0⤋
You should be earning good money, saving and making good investments. Keep your eyes open for the occasional really good deal and go for it if the risk is manageable.
2006-09-25 19:26:45 · answer #6 · answered by Lee 4 · 0⤊ 0⤋
Keeping your credit in good shape.
Contribute to your 401K at your job.
Avoid getting too deep into debt.
2006-09-25 19:27:09 · answer #7 · answered by First Lady 7 · 0⤊ 0⤋
Get married and have 6 kids
2006-09-29 08:54:04 · answer #8 · answered by Anonymous · 0⤊ 0⤋
maxing out a 401K if you have one at work. buying your first home. eliminating any credit card debt for starters
2006-09-25 19:25:52 · answer #9 · answered by Anonymous · 0⤊ 0⤋