Kamcord co-founder · Featured on Business Insider · Updated 11y ·
- The single most important thing to do at 22 with regards to investing is to open a Roth IRA account and make the maximum yearly contribution. Investing 5k every year should lead to well over a million of tax free money at age 60. You can open a Roth IRA account and pick how you want to invest at any brokerage firm like Vanguard, Fidelity etc.
- If your company has a 401K matching program, take advantage of that. If not, decide if you want to do 401K and how much to put into it.
- Open a savings account at Emigrant, ING, AllyBank etc. and get the 1-2% interest that they provide instead of having your money sit in a traditional Bank of America account and collect negligible interest. I'd suggest putting 20-25% of your saving in cash regardless of your investment strategy.
- Take your remaining savings and invest it in index funds. Maybe 1 US index fund and 1 international index fund for starters. The simplest and arguably best way to invest to do so at fixed intervals (maybe once a month) into a pool of index funds. Vanguard has some pretty standard and inexpensive options here.
- If you find that you can't seem to get yourself to follow the stock market at least a couple times a week, stick with the periodic index fund investing approach. If you are pretty savvy about following the market, you may consider diversifying a small amount of money into some bond funds, sector funds like HealthCare, specific foreign funds like BIK (BRIC countries), FHKCX (China) etc, or a real-estate fund if you don't own any property.
- I'd stay away from individual stocks for the most part - everyone thinks they have a unique angle on a company but the market is often way ahead of you :) Picking the right individual stocks gives you the most bragging rights in social circles though!
- For your specific example in this question, looks like you are looking at about 30K/year post tax and expenses. Maybe put 7.5K in cash at a 1-2% interest place, 15K in a couple index funds, 7.5K in some more specific funds.
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