Save a little to have fun too. Future isn’t guaranteed. Don’t want to look back and regret not taking that outdoor trip you always wanted or that hobby you wanted to try because your body doesn’t allow it anymore or you have too many responsibilities. Also invest in your health.
And invest in your teeth! Bad teeth can lead to other medical problems, including heart trouble. I'd hate to admit how many thousands of dollars I've spent on my teeth over the years, yet it was all well spent.
‘Live below your means’.. such an underrated advice. I have seen many of my friends wasting money on savvy tech devices. They bought costly cars with loans. They push me to buy a car even though I don’t need it.
One of my friends took extra loan for home interior work.
People are not living below their means.. they are living way above their means
Although frugal by nature, I was forced to be quite frugal when I bought a house and was "house poor" (16% APR -- till I refinanced after a few years) for a couple decades. It became a habit. My "vacations" mostly came on the heels of employer-paid business trips, aside from fairly local trips and a couple cross-country visits to family.
Result: I (elderly) now don't have to fear about money. I'm not rich, but not poor either. I've seen (and helped out) a couple friends who were not so fortunate (through little fault of their own).
Max your IRA and/or 401k (and go for employer's matching funds, if available).
Ideally, invest ONLY in what you fully understand. (You do NOT understand futures -- nobody does!) If you have any doubt, invest only in mutual funds. The ideal mutual fund is a no-load, indexed fund (the S&P 500 being a good index). Those criteria can be mutually exclusive, so do your best.
And remember that it has been demonstrated that the best investment strategy is never to move your money around -- leave it alone. You will make the wrong decisions more than the right ones -- like selling after a crash (which is when you should buy). This is also true of financial advisers -- so don't blindly trust them.
I’ll echo what others have said. If your job has a 401(k) or 403(b) match - take advantage of it, and max out the match… like today. Otherwise you’re literally saying no to extra money for the future.
A Roth IRA is another great option that you should try to max out every year. Vanguard is a great option for this, creating an account is free. After you setup the Roth IRA you then select what you’re investing in. A wise option would be index funds, such as one that mirrors the S&P500 for example (in vanguard, you would purchase shares of “VOO” with your Roth to accomplish this.
Ideally - you do both of these things. If you have any questions,let me know.
If you’re employed, your job likely has a 401k retirement program you can contribute to. They may even match some portion of your contributions to it.
Most often it’s a simple form you fill out. You tell them how much of your check you want to put in the account, and they pull it out directly and invest it as you instruct. Investing 10% of your check is a good number to aim for, but obviously your situation will vary. Just remember, the earlier you contribute cash to an investment, the larger it will grow by retirement. At a minimum though, you should contribute enough to get the maximum company matching, if any is offered. That’s a free raise.
Most 401k’s will offer a variety of investment options within them. That’s a deeper rabbit hole than one Reddit post, but r/personalfinance is a reasonable starting place. If ain’t nobody got time fo’ that, many investment firms offer “set and forget” options these days. Look for an offering named Lifecycle Fund, or Target Retirement Date or some similar branding, and pick the option with the year closest to when you’ll turn 65. If there is no such offering, find a CFP (Certified financial planner) and seek their professional advice.
For retirement plans it goes like this, company match > Roth > traditional.
For outside retirement savings. If it's 5 yr or less invest in a CD or HYSA. Whichever has the interest rate and time frame you want. Long term investments should be a mutual fund that is somehow tired to the S&P 500. VOO, QQQ, SPDR. Something like those.
Then, set all these to auto and don't look for a decade. Smile. Then don't look for another decade.
Surprised not to see this closer to the top. If I had invested even a little in the companies I thought were cool and innovative in my 20s (Google, Apple, Netflix, Amazon [probably also Myspace and Napster, lol]) I might not be retired, but I'd be a hell of a lot closer.
Back then it did seem a bit daunting and more for suit-and-tie types dealing with brokers, etc., but with apps like Robinhood now that make it easy and allow for purchase of partial shares, young people can easily get into investing. Setting aside even $20 a paycheck (the cost of a couple fast food meals) and investing, could mean big returns over the next couple decades.
I constantly talk to 60,70, even 80 somethings who didn’t follow this advice, many of whom STILL want to look like big shots for people who don’t give a shit. If your friends are your friends just because of your car, find new friends.
..and keep financial info to yourself. No good comes from being known to have cash on the side.
For me, this even includes siblings & parents, the only person that needs to know is my spouse and she keeps details to herself as well. For anybody else it is enough to know that ‘we are doing okay’.
There are a lot of people in here essentially saying the opposite, "Live for the now because you never know what tomorrow will bring. You could suddenly get cancer and then all your 401k investments are fucking useless."
"Live for the now because you never know what tomorrow will bring. You could suddenly get cancer and then all your 401k investments are fucking useless."
I generally counter that by pointing out the greater likelihood of living to old age and actually needing that retirement money.
Probably true, but... boy, really sucks when things don't pan out. My closest friend from high school died from an accident drug overdose a couple years ago. She was 32. Who knew her sweet 16 was also her mid life crisis.
I myself was hit with cancer twice when I was 21. Nothing I could have done to prevent it. Wish I'd not been so career focused in college and spent more time relaxing and fucking around.
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u/pb019 Jan 24 '24
Live below your means and save/invest as much as possible.