32 looking to start saving

[felnor]

I am 32 and have a 401k with my part time job which I am planning to roll into my full time job when I qualify for it. It is only about 2k in it right now. I just got out of debt and am looking to save for my future. I haven't really thought of a retirement age before. I don't really know much but my Brother told me this would be a great place to ask for advice. Right now I can prob spare 400 to 500 a month to invest. I wasn't sure if I should look into cds or such. Also I can start a new 401k with my new employer which will match 5 percent.

[FI by 2024]

Welcome!

Do you have an emergency fund? If not I'd prioritize that. Probably in a money market fund to start, you don't want to tie up all of your emergency fund in CDs and then have to pay fees if there is an emergency.

After you have a month's or two worth of expenses saved in your emergency fund, you could start splitting your money between the 401K and building up the emergency fund. Try to avoid consumer debt in the future, I'm sure you realize it isn't fun to pay off.

Can you provide more details about yourself? Goals? Housing situation? Family situation? Age?


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[felnor]

I am 32. I rent a two bed room apartment with an ok rent of 425 for where I live. I am single so I don't have any dependents. I'd like to buy a house some day but am more worried about being able to retire. I just started a new job as a bank teller but with my education and work ethic and work experience in management I should be able to move my way up and make more money down the road. If I was able to get a house I know it would be more expensive but was hoping to still have my roommate who could pay rent which would help with the mortgage.

[Big_Hitter]

sounds like you need to take full advantage of that 5% 401k match


what is the vesting period?

[DrRoy]

Save the emergency fund.
Pay off any high interest debt.
Get your full 401K match. That is free money, and guaranteed return.
At your age, you should invest a high % in equities, not CD's, which often pay less than inflation. If the market declines, you will buy more shares, and you have lots of time for later gains.
I would suggest that you look into good books on personal financial management and investing. You can read reviews to find books that seem good for you, then get what you can from the library if you don't want to buy them.

[Walt34]

Welcome to the forum!

You are wiser than most to start thinking about retirement at 32 although you have some catching up to do. If $400-$500/month is what you can do then do that by all means.

I agree on making the emergency fund the immediate priority if you don't already have one. You rent, so you don't have to think about housing breakdowns (that's the landlord's problem, or should be) but if you own a car they are subject to expensive repairs and you need to have the cash on hand for when the transmission falls out. And while 32-year-olds are generally healthy, you are not immune from a medical emergency that can turn into a financial emergency too.

After you have that fund built up then start throwing money at the retirement fund.

[Big_Hitter]

Quote:

Originally Posted by DrRoy I would suggest that you look into good books on personal financial management and investing.

I like this one (but man, it got expensive) - it was required reading at the academy

http://www.amazon.com/Investments-10.../dp/0077861671

[2017ish]

Quote:

Originally Posted by Big_Hitter I like this one (but man, it got expensive) - it was required reading at the academy Robot Check

If you drop back to the eighth edition, which really isn't that old, it is a lot cheaper--especially if you grab the "international edition." You avoid the people buying it for classes that way. (On past experience, the international eds. are fine.)

Just search amazon for "Investments eighth edition." (Ninth was still pricey.)

And, OP, welcome to the forum!

[Big_Hitter]

Quote:

Originally Posted by 2017ish If you drop back to the eighth edition, which really isn't that old, it is a lot cheaper--especially if you grab the "international edition."

just looked on my bookshelf and I have the 3rd edition

[pb4uski]

It makes the most sense to save in an IRA or a 401k if you are in a high tax bracket. If you are not in a high tax bracket, then taxable savings (like a mutual fund account) makes more sense because the money is less restricted, especially since you may want to buy a home someday.

So first, save what you need to in your employer's 401k to maximize the match. Roll your prior employer 401k into an IRA. Take full advantage of the Saver's Tax Credit if you qualify, which it sounds like you might. Under this government program, they essentially pay you to save. See link below.

At your young age, invest in stocks (aka equities). They will be volatile but will grow over time and time is on your side.

I think the book is for more advanced study... just start off reading Kiplinger's Personal Finance magazine every month... subscribe for $12 for a year or get it at your local library.

https://turbotax.intuit.com/tax-tool.../INF15617.html

[felnor]

I just wanted to say thanks for the advice. Its very much appreciated. I will try and keep you guys updated on how I am doing down the road.

[Hamlet]

This is my younger brother.

Glad you made it. These boards are a great resource.

Read up. The bullet points--

1. Spend less than you make. I think you've got that down.
2. Make sure you have an emergency fund.
3. After that invest your monthly surplus, mostly in stocks while you are young, preferably with low cost index funds or ETFs. Vanguard funds are a good place to start.

You'll find a lot of different approaches here, but don't worry about getting things exactly right. Sometimes the worry about doing things perfectly will delay people. Good enough is good enough.

[Big_Hitter]

Quote:

Originally Posted by pb4uski I think the book is for more advanced study...

yes but if you can do all the problems in the book you will have an excellent chance of passing part 1 of the CFA exam, plus, you will know more than 90+% of all practicing FAs

[mickeyd]

Welcome here FI by 2024,

Live Below Your Means (LBYM) and all will be well at the end.

[FI by 2024]

Appreciate it mickeyd! But I've been a member for awhile. The OP is felnor. I'm sure he appreciates it too :-)


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