What direction should I head to retire by 35-40?

[SquareSphere]

Right now I'm 23, still in college, no debt except student loans which I will not have to start paying for another two years. I have an emergency fund built up and all my bills add up to $650 a month and I bring home $700 a week after taxes.

I'm saving at least $1,000 a month and sometimes more so would like some advice/insight on if you were in my shoes what investment strategy would you use so that I could possibly retire early and maybe even provide a little additional income along the way. I don't plan on getting married or having children so I don't need to take that kind of stuff in to my decision.

[Mazzinator]

First off, congrats!!

Second, don't worry about getting married/having kids. BUT, plans change my friend ;-)

Third, student loans suck ass. I would "save" money to pay those off. You can "save" money in many different places. Learn everything you can about these. And pay these off asap! How does the interest collect on these. What is the interest rate? When does it capitalize?

Starting off with debt will put you far behind the power curve. Yes, you want to invest properly, but not if you are loosing tons of money by paying interest every month!

Great job starting so young!!! Good luck!

[arebelspy]

To directly answer "What direction should I head to retire by 35-40?": Save as much as you can, as often as you can.

With a short time to FI, your savings rate matters MUCH more than your investing "direction."

I'm saving at least $1,000 a month and sometimes more so would like some advice/insight on if you were in my shoes what investment strategy would you use so that I could possibly retire early and maybe even provide a little additional income along the way.

The latter part of this last sentence is exactly the wrong mindset (no offense).  If you're wanting to invest for FI, invest for FI.  If you want to invest for additional income so you can buy more trinkets in your late 20s/early 30s, that's different.

To achieve FI in your 30s you need to be dedicated to letting your investments compound, but (more importantly, as above) also dedicated to adding as much as possible to them.  Having them "provide a little additional income" means you are taking from them, not adding from them. Which means you won't hit FI that quickly.

A completely fine thing to do for many people, but contrary to the original question you were asking.

Since you seem to also be asking investing advice, it sounds like the best thing for you to do would be start reading some investing books (say, A Random Walk Down Wall Street and The Four Pillars of Investing).

And to directly answer what I would be doing in your shoes (besides my natural answer of Real Estate, though I'm getting away from that based on opportunity), personally I would be 100% equities.  No good reason, IMO, to be anything else at 23 looking to be aggressive with saving and investing for the next 15 years.

Best of luck!

[GreenGuava]

no debt except student loans which I will not have to start paying for another two years.

This expression has lots of meanings.  Do you have no debt except a small amount of low-interest student loans, such as a few thousand dollars at under 2%?  Or do you have six figures at 7%?  Both scenarios fit into what you just said, and are very different scenarios.

For that matter, are payments not due for another two years, or does interest not accumulate until then?

[SquareSphere]

Thanks for all the insight, advice and reading material :)


As for my student loans I currently owe $20,000 between Sallie Mae and EdFinancial, I'm not sure how much the Interest Rate on the SallieMae loans are because their system is down right now. Almost $4,000 of the loans are through EdFinancial and these are at 6.8% Interest and I will not have to begin paying on these and they do not compound interest until I'm done with my degree. I've been thinking of beginning to save and begin paying the last two years out of pocket and stop getting loans for school. This is only $6,000 a year so that's about half of what I save yearly.

One of my employers offers tuition reimbursement so I'm considering looking in to this further but not sure if I'll qualify since I'm part time there. I guess at this point I'm more concerned about Financial Independence because to be honest I make plenty of money now and am able to cover all my expenses and still save without getting in a bind.

[matchewed]

Seriously if you're making plenty of money and can afford to not take loans to pay for school - then don't take loans to pay for school. Part of trying to FIRE is dependent on eliminating debt. Don't just consider looking into tuition reimbursement do it. The worst that can happen is they say you are ineligible and you are then exactly where you left off.

The path to financial independence part arebelspy covered already.

[mugwump]

You're off to a great start. Considering you will presumably start a career in two years, I would concentrate on saving money and avoiding more student loans.  If the loans you have now are truly interest-free until you have to start paying them off, save the money in a bank account.  If you don't take out any new loans and continue to save at the rate you have been, you should have about $12,000 saved up.  That's a good nest egg for moving or an emergency fund, or paying off the loans you already have.

Once you get a job, you will have plenty of time to invest for FI.  But first concentrate on finding a career you can enjoy for 10-20 years.