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If you don't have an emergency fund of between $6,000-$10,000 in a regular savings or money market account, that should be the first thing you work on. I cannot stress how important it is to long-term financial success that you have immediate access to enough cash to support you for 3-6 months if something unexpected happens and you become unemployed or otherwise need a large amount of money fast. Too many people treat credit cards as their emergency fund, and they pay for that mistake the rest of their lives.
The second thing you should be doing is saving for retirement with an IRA or a 401k (or similar retirement fund). I'm not going to go into all the intricacies of that, because there are plenty of resources like fool.com that will do a much better job. You do want to retire, right? The days of a company pension and a gold watch when you turn 65 are over, so you have to take care of yourself. If you want to live comfortably in retirement, the time to start saving for that is now.
RUNN1NGMAN on
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Inquisitor772 x Penny Arcade Fight Club ChampionA fixed point in space and timeRegistered Userregular
edited March 2009
As RUNN1NGMAN said, start putting away money in a nest egg (sounds like you already have quite a bit saved up). I would put about half in a recurring CD, and half in a savings account, then leave them alone. You'll want to take out the interest you ear every once in a while so you can put it to other uses, but other than that, just save that money for a rainy day. (Imagine getting fired right now through no fault of your own.)
I know you said you don't want to, but given the economy, now is the perfect time to be investing for your retirement. Find out how much your company matches, and max that out. Seriously, max it out. Put it in a moderate-to-aggressive fund portfolio, and max out your matching. As you get older you'll want to start funneling that money into more stable, low-yield investments, but for now being aggressive is fine because you don't need the money, and you won't touch it until many, many years down the line (so you don't care about daily or even yearly fluctuations). Seriously, there's no such thing as too soon to be saving for retirement. $20 invested now will give you a much higher return than even $100 just a few years from now.
Honestly, that's all you really need to do. If you have other concerns, like saving for a house or a car, starting a fund for your kid's college education (do that the moment you know you'll have kids, not when they turn 12), etc. all of those things require different planning. But ultimately, they all result in the same two rules:
1) Don't spend money you don't have
2) Either save so you can spend it all without using credit (e.g., vacations), or plan your budget for regular payments for necessary large purchases (e.g., a house)
If you're hell-bent on just trying to find something with a higher return, you can try to find a bond or longer-term CD, but there's not a whole lot out there that are better than those two in the short term, because everything else comes with the risk that you'll actually lose money over the short term (i.e., less than five years). There's really no such thing as a free lunch. Higher yields come with higher risk, and the short term is more prone to variation.
First: If you have any credit debt, pay that down. Credit interest rates are high compared to any investment you might make.
Second: If your company does any sort of 401(k) match, max that (to the point where you get the most match, no more.) If you're young, put all 401(k) money into an index fund. Minimal fees, best return over the very long term.
Yeah, the market took a fucking dive over the last 10 months. But that's good, if you're young. You're buying cheap. I think most people expect the market to come back. The market crash really only hurts people that are near retirement and don't have the years to make back the recent short term losses.
You will NOT beat the return on company matched 401(k) investments unless you win the lottery. An instant 100% return is so great.
Next: Build an emergency fund. Aim for 3-6 months of typical expenses. Savings accounts are mediocre for this, a decent CD is safe and will give somewhat better interest rates.
Past that: You have a couple of options. Look into opening a Roth IRA. Do a bit of standard non-retirement investing (I'd still recommend index funds). Buy some real estate (if you have cash right now, the real estate market is so depressed that you can find some epic deals. I'm getting a condo at a steal right now.)
Posts
The second thing you should be doing is saving for retirement with an IRA or a 401k (or similar retirement fund). I'm not going to go into all the intricacies of that, because there are plenty of resources like fool.com that will do a much better job. You do want to retire, right? The days of a company pension and a gold watch when you turn 65 are over, so you have to take care of yourself. If you want to live comfortably in retirement, the time to start saving for that is now.
I know you said you don't want to, but given the economy, now is the perfect time to be investing for your retirement. Find out how much your company matches, and max that out. Seriously, max it out. Put it in a moderate-to-aggressive fund portfolio, and max out your matching. As you get older you'll want to start funneling that money into more stable, low-yield investments, but for now being aggressive is fine because you don't need the money, and you won't touch it until many, many years down the line (so you don't care about daily or even yearly fluctuations). Seriously, there's no such thing as too soon to be saving for retirement. $20 invested now will give you a much higher return than even $100 just a few years from now.
Honestly, that's all you really need to do. If you have other concerns, like saving for a house or a car, starting a fund for your kid's college education (do that the moment you know you'll have kids, not when they turn 12), etc. all of those things require different planning. But ultimately, they all result in the same two rules:
1) Don't spend money you don't have
2) Either save so you can spend it all without using credit (e.g., vacations), or plan your budget for regular payments for necessary large purchases (e.g., a house)
If you're hell-bent on just trying to find something with a higher return, you can try to find a bond or longer-term CD, but there's not a whole lot out there that are better than those two in the short term, because everything else comes with the risk that you'll actually lose money over the short term (i.e., less than five years). There's really no such thing as a free lunch. Higher yields come with higher risk, and the short term is more prone to variation.
Second: If your company does any sort of 401(k) match, max that (to the point where you get the most match, no more.) If you're young, put all 401(k) money into an index fund. Minimal fees, best return over the very long term.
Yeah, the market took a fucking dive over the last 10 months. But that's good, if you're young. You're buying cheap. I think most people expect the market to come back. The market crash really only hurts people that are near retirement and don't have the years to make back the recent short term losses.
You will NOT beat the return on company matched 401(k) investments unless you win the lottery. An instant 100% return is so great.
Next: Build an emergency fund. Aim for 3-6 months of typical expenses. Savings accounts are mediocre for this, a decent CD is safe and will give somewhat better interest rates.
Past that: You have a couple of options. Look into opening a Roth IRA. Do a bit of standard non-retirement investing (I'd still recommend index funds). Buy some real estate (if you have cash right now, the real estate market is so depressed that you can find some epic deals. I'm getting a condo at a steal right now.)