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Want to manage my $$$ better
bigpanda
Registered User regular
Registered User regular
So I'm at the point where I want to start investing my money. I'd like to know more about what I can and can't write off during tax time/throughout the year so I'm thinking of getting an accountant. I'd also like to start investing my money but don't feel I know enough about it to get into the game. Should I hire someone to manage my cash or should I learn and do it myself (I'm talking about things like establishing a plan to get out of debt/invest for the future/be able to buy a house in a few more years or sooner if I move back to the midwest/etc.).
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The best investment you can make right now is paying down all high-interest debt. Since you don't own a house, the only part of that debt that would be tax-deductible would be the interest on student loans. If you have low-interest student loans (anything currently 4% or below, I'd say) make minimum payments, because you can stick the money you'd otherwise be spending on paying down that loan in a CD at 5% interest, and all the interest on that loan is tax-deductible. Typically, you want to avoid stocks for short-term investments, because while they've got a better interest rate overall, it's a rollercoaster, where you can actually lose money, versus the security of a CD or savings account, which are actually giving pretty decent rates right now.
Most tax-deferred accounts probably aren't going to be worth your while, unless you're making a lot of money, because of the lower interest rates they pay. If your income isn't in the six-figures, they're probably not worth looking at.
If you really want a good retirement investment, though, Roth IRAs are the way to go. The principle you invest in traditional IRAs are tax-deductible, but the interest they make is only tax-deferred (i.e. you pay the taxes on that interest when you withdraw it). With Roth IRAs, your investment isn't tax deductible, but the interest is tax-free (unless you withdraw early). Actually, I think you can use the money in a Roth IRA to pay for a house, though with a short-term goal like that, it's probably not worth setting one up.
Definitely talk to an accountant or financial planner, though. They can probably set you up with a tax-deferred account for saving up for the house, specifically.
I had done a little bit of research regarding ROTH IRA's and thought those might be my best choice. I'm still pretty green to all of this kind of stuff so I think I'm going to look into getting a financial planner/accountant. Just need to find someone experienced and that I trust and can afford. Any idea on what they typically charge?
I found this way to save money and it has worked really well for me. I originally had opened a savings account with my bank, and had online access to it. Only problem is I kept transferring money out of it for crap I really didn't need (I don't have a lot of self control) About two or three years ago I set up just a savings account at another bank and used my direct deposit option to put $100 of each paycheck in that account, and the rest into my main checking account. I elected not to have a card\online access to it. All I get is monthly statements which shows nothing but deposits, which makes me pretty happy
Make sure to shop around for CD's. Rates are finally getting competitve for them…you usually have to deposit a fairly large amount to get anything decent though.
To the OP: shop around for your financial planner, see what people are charging. Also, ask friends and coworkers who they use, and if they're happy with them.
The others have given some good advice, and a Roth IRA is always a good way to go. As far as what you can write off during tax time, you probably don't need to worry about that now. If you don't currently own a house, odds are you'll be using the standard deduction. Anyway, just wanted to throw that out there.
Does your employer offer a matching 401(k) plan? If so, you should be putting enough in to max out their contribution, but no more than that. If you are already doing that, then I would suggest getting a Roth IRA. You are allowed to contribute $4000/year into one of those, and if you have the ability, you should max out that contribution, too.
If you still have money left over after that to invest, you should look into an S&P 500 Index Fund. As far as stocks go, index funds are a relatively safe long term investment. Just be sure to buy it from a broker with a low maintainance fee. You should be able to get one for around 0.2%.
Remeber that your first investment priority should be retirement. Buying a house or car may be coming up sooner, but you can get loans to pay for those. You can't really do that with retirement. And with 401(k) and Roth IRAs, you can borrow or take out money for a first time home purchase, although you shouldn't touch that money unless you really need it.
Budec, you just inspired me to re-start my excel budget spreadsheet. It's a total pain in the ass for me to keep going, but I really really am going to try this time.
While I'm in here, I've got a money question for y'all. I've had a credit card for about a year and a half,(Still have yet to pay a dime of interest
This card is my only current line of credit, btw.
I'm sure you have a better rating if you've paid all your bills on time.
I did the free yearly check online and it didn't give me my "number". The credit report was just a detailed summary of my bank accounts, loans, etc etc. If I wanted the actual number, I would have had to pay like 5 or 10 bucks.
Your credit rating is not the end-all and be-all of getting a loan or whatever. The best thing to do is just keep it to one or two credit cards, and if you apply for any more, cancel an old one.