I'm 23. Of my savings, what % should go to long term savings (retirement) and what % should go to short term?

Question

I'm self-employed and have a Roth IRA.

Answer 1

First off. Congrats on getting the jump on the Roth. I recommend having your short term amount up to an amount about equal to 6 months of your salary for an emergency fund and then put the rest of whatever you can spare into long term investments. So percentages are useless depending on where you are already. So if you already have 6 months in liquid investments (readily available for cash) then go all long on your savings. unless you are planning for a purchase then save up that amount in a side fund or account. But rule of thumb for long term savings is usually about 10% of your check. But you don't want to have too much in low interest liquid accounts, which is why I say once you reach a certain amount...invest in higher yield longer term investment instruments. Good luck!

Answer 2

Good work. Get 3-6 months savings as an emergency fund then go wild with investments. I'd say 15 percent is a good round number unless you can go more. I'd start putting money in a ROTH IRA and juice up your employer retirement as well. If there is anthing left over, getting some good mutual funds will do you a lot of good. You will be a millionaire several times over if you start this now! Good luck.

Answer 3

Being self employed you have the opportunity to take full advantage of the "simple IRA" (if you are in the USA. Max it out annually. Right now you can put in $10,000.oo or else it just raised to $12,000.oo. Which ever one it it, DO IT !!

If you need a % in mind then save at least 30% for your future. Of course YOUR future is up to you so if you believe only 10% then you better be willing to live off that measly amount in later years. Your IRA is tax deductible so take full advantage of it while self employed !!

Answer 4

You are so young, but this is the time to plan.

I would suggest at least 10% of your income into a Self Employed Retirement Plan, and I would highly recommend contributing the max amount ($4,000) to your ROTH IRA

This strategy will allow you to have tax deferred savings and tax free savings!

Enjoy your Youth

Answer 5

You should be putting away 10% of your income into a savings account. And never touch that money. As of the retirement plan, check out what your company has to offer and look at the retirement steps to see where you want to be. Depending on what you want when you retire is what you will need to put away.

I've got a better idea though....play the lotto!!! Just kidding!

Answer 6

1% to 2% for long term 5% to 10% for short term

Answer 7

What ever you can afford and feel comfortable with.