Author Topic: No mortgage or rent at 24... what would you do?  (Read 1579 times)

tiffany24

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No mortgage or rent at 24... what would you do?
« on: April 04, 2016, 05:33:36 PM »
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« Last Edit: August 22, 2016, 07:32:30 AM by tiffany24 »

nereo

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Re: No mortgage or rent at 24... what would you do?
« Reply #1 on: April 04, 2016, 05:42:53 PM »
First - great job so far!

Absolutely take full advantage of your tax-advantaged account.  THat means you should be contributing $18k to your 401(k), $5500 to an IRA (probaby traditional with your earnings) and your HSA (which you are already maxing out).

Whatever is left over I'd invest into a low-cost index fund, such as Vanguards total market index.  Yes, it sounds boring, but it is a great strategy.

Finally - I would invest most of that $27k you have sitting in a savings account.  The term "high-interest" is a misnomer.  Chances are you are getting somewhere less than 2% per year (probably much less).

Read JL Collin's stock series for some good advice: http://jlcollinsnh.com/stock-series/

dess1313

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Re: No mortgage or rent at 24... what would you do?
« Reply #2 on: April 04, 2016, 11:25:27 PM »
I would recomend the bogleheads guide to investing.  It really helped me understand more about things.  Good job on savings.  Also consider the millionaire teacher as another good book.  I have ebooks if youre interested in reading them.

MustacheAndaHalf

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Re: No mortgage or rent at 24... what would you do?
« Reply #3 on: April 05, 2016, 12:30:46 AM »
There are two key things about mutual funds: what they contain, and how much they charge you in annual expenses (the "expense ratio").  Your early investment goal should be matching the market.  An index fund that matches the market beats a majority of active funds each year, and 80%+ of active funds over 3-5 year time frames.  It's simply too hard to predict exactly what one company will do, let alone 10 or 100 companies.  Reading about it could be some of the most valuable reading you'll do if it improves your retirement results.

Second key thing is expense ratios.  It's hard to predict which fund will do best next year, but an expense ratio predicts something very precisely: how much of your money will be used up by the fund.  Low expense ratio funds tend to outperform high expense ratio funds.  If they held the same stocks, the lower cost fund lets you keep more of your money.  (It doesn't hurt they also tend to be index funds, which don't try to outguess the market's prices and weights).

I'll end with a message from the U.S. Securities and Exchange Commission (SEC):
https://www.sec.gov/answers/mperf.htm
"This year's top-performing mutual funds aren't necessarily going to be next year's best performers. Itís not uncommon for a fund to have better-than-average performance one year and mediocre or below-average performance the following year. That's why the SEC requires funds to tell investors that a fund's past performance does not necessarily predict future results. You can learn what factors to consider before investing in a mutual fund by reading Mutual Fund Investing: Look at More Than a Mutual Fund's Past Performance."
https://www.sec.gov/answers/mperf.htm