I'm in my early twenties and I'm looking for ideas to invest in?

Question

I've thought about mutual funds or roth IRA but i'm not sure what's right for me. I just graduated from college and I'm not much a whole lot yet, so I don't have a lot to put away right now. I've also thought about CDS, but I'm not sure if I want that either. Any suggestions?

Answer 1

If you're at a job where the employer matches contributions, put your money into a 401(k). After the contribution cap is reached (where they stop matching), put your money into a Roth IRA. The benefit is that you can take money out after 5 years without penalty up to the amount you put in (a 401(k) is taxed and you're presented with a 10% penalty for taking money out early... and the money you put back in is after-tax dollars and will be retaxed at retirement). The only reason you'd go with a 401(k), really, is if you're getting free money from your employer. For your age, the IRA is the better option. (Plus tax brackets are probably going to increase by the time you retire. By getting taxed now, you don't have to worry about how much you'll have in the future.)

Other than that, a money market account is better than a CD because the interest is comperable and it's highly solvent. (In most cases, as long as you have a minimum of $X, you can take money out to pay your bills.)

There are some tax-exempt bonds that you could invest in, but there are some mutual funds that specialize in this if you can get your hands on one.

It's great that you're thinking about your future at this age. I'm 21 and see most of my peers in credit card debt. (One thing to note: if you have student loans, unless you've managed to get a VERY high-paying job, the interest is tax-deductible. If you set it up so that the payments are automatically drafted from your checking account, you can usually save .25% on the interest and after 4 years of paying on-time, you can drop another 1%!)

At this age, you can afford to have some riskier investments, but stocks with modest growth should make you rich in the long-run. Good luck!

Answer 2

First and foremost cut your burn rate (spending rate).

Do not buy a new car. Drive an old reliable economical car.

Live with your parents or keep your rent expense as low as possible. If you are cute and blonde you can live at my beach house for free (just kidding).

Invest in yourself first. Graduate school for law, medicine or business will get you an excellent return on your time and money.

Go into business for yourself. It is the best way to get rich in the U.S.

Investing in mutual funds is a good idea for a strickly passive investment but outside of an IRA they are taxed.

Financially, the biggest event for you is who (or if) you marry. You can marry more money in an afternoon than you can make in a lifetime. I would advise you to choose a husband with good character rather than on a financial basis.

If you are working, try to live close to work to keep your communting (non dedeuctable) expense low.

Good luck.

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Answer 3

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Answer 4

Once you have decided when and If you are going to invest anything, go to a financial planner and start doing it right.

Answer 5

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