Stephanie has just turned 21 and wants to invest 15% of her income into mutual funds. She earns an annual salary of $23,500. She has $22,000 in debt from her car and has no savings. What steps would you tell Stephanie to take?
2007-03-08 08:27:55 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
If her company has an 401K available...she shoud look into that. a lot of companies will match contributions you make up to about 6 %. ( thats extra money) Also all 401k contributions are taken out pretax so you benefit from lowering the amount of taxes you have to pay. The 15% should not be a problem for her as long as she maintains an adequate income to provide food, lodging and clothing, as well as a percentage for incidentals and be able to service her debt on the car.
2007-03-08 08:35:47 · answer #1 · answered by wbaker777 7 · 2⤊ 0⤋
I would tell Stephanie to save some cash first. Once she has 3-6 months worth of cash in a savings account I would tell her to open a Roth IRA and start an automatic investment program with a broad market index fund like the Vanguard Total Market.
2007-03-08 16:36:22 · answer #2 · answered by BosCFA 5 · 1⤊ 1⤋
Get rid of that ridiculously high car debt first. She owes nearly one year income on a depreciating asset. Then get familiar with Morning Star. They rate funds. It can be found in any good library.
2007-03-08 16:46:56 · answer #3 · answered by rhymingron 6 · 0⤊ 1⤋
Sell the car and save up to $11,750.00 (So you can survive up to a year with half your salary)
You can also apply for more credit cards until you have at least $11,750 in credit lines. (Those credit lines are only used when you are unemployed)
You also need to open a bank account and save at least half your salary until you have enough to pay the minimum payments of every credit card for a year.
If you don't have a house then save at least 50% of your salary for a down payment.
2007-03-08 18:50:08 · answer #4 · answered by Anonymous · 0⤊ 1⤋