Join Early Retirement Today
Thread Tools Search this Thread Display Modes
20 year old starting out investing
Old 07-22-2012, 08:54 PM   #1
Confused about dryer sheets
Join Date: Jul 2012
Location: Wilkes-Barre
Posts: 2
20 year old starting out investing

I am twenty years old, and I would like to start saving for my future. I only work part time because I am still in school, so money is tight. But i know my early 20's is a critical time to start saving for my future. I figured saving small amounts now is potentially better than saving larger amounts as I get older. I am new to the investment world and I am just looking for some guidence/resources, on where I should start. I would really appreciate your insights.

kinney2315 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-22-2012, 09:43 PM   #2
Full time employment: Posting here.
urn2bfree's Avatar
Join Date: Feb 2011
Posts: 730
Anything you can save might be best put in a Roth IRA ( stick with low low cost index funds- generally stocks given your long time frame right now)

urn2bfree is offline   Reply With Quote
Old 07-23-2012, 03:00 AM   #3
Recycles dryer sheets
RISP's Avatar
Join Date: Jul 2012
Posts: 322
Welcome to the board kinney, and congratulations to your smart decision. You are definitely right that starting early will pay off. I suggest you take a look at the recommended reading list here: An updated FIRE recommended reading list (with a military twist)
Read two or three of these books and get a solid understanding of investing before you actually invest in anything. My personal favourites are "The Intelligent Asset Allocator" by William Bernstein and "A Random Walk Down Wall Street" by Burton Malkiel, but there are other good options. This board is a treasure trove of information, too.
Some other good advice:
- Live below your means (LBYM). Save & invest something out of every paycheck. Make sure "lifestyle creep" doesn't eat up all of your salary increases.
- Manage your life, and your finances, yourself. Don't trust banks or advisors.
- Pride yourself in being different from the mainstream. Most people will not understand why you don't get the newest smartphone, the fanciest car, the biggest house you can afford.
- If at all possible, find something that you enjoy doing for a career. Having a job you like is MUCH better than slaving away at a job you hate, just because it pays well.
- Live life to the fullest. It's meant to be enjoyed.
RISP is offline   Reply With Quote
Old 07-24-2012, 06:27 AM   #4
Confused about dryer sheets
Join Date: Jul 2012
Location: Wilkes-Barre
Posts: 2
I appreciate your replies. This may be a stupid question. But in your opinion would it be beneficial for me to take a bit more out in student loans, and have a little more money in a roth IRA? Or should I not trade the debt for the possible benefits down the road. I know the earlier you start the more interest can build. Just a thought. Let me know what you think.
kinney2315 is offline   Reply With Quote
Old 07-24-2012, 06:38 AM   #5
Recycles dryer sheets
RISP's Avatar
Join Date: Jul 2012
Posts: 322
That would be leveraging. I personally would avoid debt at all costs, with the exception of a modest mortgage for your primary residence. YMMV.
RISP is offline   Reply With Quote
Old 07-24-2012, 06:42 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 17,840
I know this may be blasphemy on this forum, but for someone like you at 20 years old, while it is great for you to save some, a more important priority is to obtain a skill and a job and experience to build a career and a reliable income stream. Concentrate on that and building an emergency fund of 3-6 months of living expenses in a taxable account and then worry about retirement savings. Then, if you have access to a 401k through your employer that provides matching funds take full advantage of that.

With respect to your question, if you have fully funded your emergency fund and have extra cash flow then use it for your education to minimize the amount of student loan debt that you will have. Less debt will give you more flexibility later in your 20s.

While in theory your investment return should exceed what you pay in student loan interest, there is a risk that it might not and the base that it would be applied to is likely to be small so it won't make much of a difference.
pb4uski is offline   Reply With Quote
Old 07-24-2012, 11:28 AM   #7
Recycles dryer sheets
Join Date: Oct 2007
Location: San Diego
Posts: 284
I've never kept a 3-6 month emergency fund in a taxable account, I'd rather have as much money as possible working for me. I like having a month or so of expenses in your checking account (overdrafts fees are a waste of money). Then put as much as you can in your Roth. You can always take out the contributions for the Roth if you have a real emergency. (Of course I also have family that I know I could hit up for a few months if needed as well, ymmv).
If I were you, I'd try to get at least $100 a month into the Roth, and if the student loans were cheap enough, I'd use them to make sure I got that much.

It doesn't make much sense to pay 8% in a student loan to make 2-5% in gains, so just be careful what you're paying for.

meekie is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


All times are GMT -6. The time now is 10:01 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.