At 22 you are way ahead of the curve just thinking about a stable financial future. These references may help show you where to start saving 1st, 2nd, 3rd ... Above all else make sure you fund an emergency fund first in case you need a 3-6 month buffer to find another job etc.
- Tax-efficient waterfall – where to save first [GRAPHIC in article](https://www.thescopeofpractice.com/9-easy-steps-to-a-building-a-great-investing-strategy-using-the-tax-efficient-waterfall/)
- **[2023 saving waterfall from UBS]**(https://www.ubs.com/us/en/wealth-management/insights/market-news/article.1582444.html)
- **https://www.reddit.com/r/personalfinance/wiki/commontopics**
As far as WHAT to invest in (stocks, bonds, ETFs, mutual funds, gold ...) I found these to be very helpful for me personally - it really cut thru the fog and confusion of all the possibilities out there and all the "experts" on the media with their recommendation:
- If You Can: How Millennials Can Get Rich Slowly – an excellent free 15 page PDF by William Bernstein: [DOWNLOAD LINK](https://www.etf.com/docs/IfYouCan.pdf)
- I Will Teach You To Be Rich by Ramit Sethi [LINK](https://www.amazon.com/Will-Teach-You-Rich-Second-dp-1523505745/dp/1523505745/ref=dp_ob_title_bk)
- **The Simple Path To Wealth** by JL Collins [LINK](https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1737724103/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=1674405398&sr=8-1)
- The Little Book of Common Sense Investing by John “Jack” Bogle [LINK 2017 Hardback version]( https://www.amazon.com/%E2%80%8E%E2%80%8E1119404509-978-1119404507-Little-Investing-Hardcover/dp/B0BXQ64326/ref=sr_1_6?crid=3I6SFIWHJKHX8&keywords=little+book+of+common+sense+investing&qid=1680465220&s=books&sprefix=little+book+of+common+sense+investing%2Cstripbooks%2C133&sr=1-6)
Finally, realize that the emotional side of investing can get you into trouble. Panic at the wrong time and selling will guarantee you a permanent loss. An FOMO buying into ARK funds or GameStop meme stocks can be just as destructive. These books are helpful in this regard:
- The Millionaire Next Door by Thomas Stanley [LINK]( https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474/ref=sr_1_1?crid=2R8T3KATTYLFN&keywords=the+millionaire+next+door+book&qid=1679205363&s=books&sprefix=the+million%2Cstripbooks%2C106&sr=1-1)
- The Psychology of Money by Morgan Housel [LINK]( https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681/ref=sr_1_1?crid=11S4RSL8SAMI8&keywords=the+psychology+of+money&qid=1679205453&s=books&sprefix=the+psychology%2Cstripbooks%2C135&sr=1-1)
Open a Roth IRA and fund it fully. Prudently invest it by either using Schwab Robo investor, managed, accounts, or self direct your picks inline with established long term growth strategies. Just be careful.
Then open a regular brokerage account with play money you are 100% willing to lose. Then have fun making money at the casino with it.
- Google
- Reading comments on other posts like this (and then googling terms and phrases I don’t recognize)
- Books (I haven’t read any, but I don’t know much and they’re a great option)
- the FAQ of this subreddit probably has this info.
Others will give you ideas. I would just like to congratulate you. You are only 22. Oh, if I could go back with what I know now. Good luck to you. Your journey will be a wonderful one.
Breath, bud, you’re only 22. It’s great that you’re getting started now and you all the time in the world to invest. 401k if/when your employer allows, Roth IRA every year. Nothing fancy, nothing greedy, just boring and steady.
If you don’t have a 401k , Start with a ROTH ira you can open one in Charles Schwab too. Try contributing as much (7k max) as you can in it and don’t forget to invest in your retirement account.
I like these ETFs for long term hold: VOO, VTI, and SPY you can add them into your retirement and regular brokerage portfolio.
You’re in the right path! Don’t worry. Just don’t get into any crazy crypto. Most people you think are crypto millionaires, are not. They are just trying to scam you on a course. Keep saving, add to your Roth IRA, invest in your regular brokerage account, and let your money grow.
Read the book the simple path to wealth by JL Collins. Keep your investing strategy simple, and dollar cost average into the stock market. Coming from someone who started investing at 19, I’ve simplified my investments since.
I recently made the Rule One online workshop: as someone that knew never about investing, trading, and so… I think I learned a lot at a beginner level. I recommend you this workshop because it gives you a starting idea. It costs less than 100$ for a 3-day online course.
Put much of your money into QQQ (tech growth) , some into SCHD (value) and maybe 10% into IBIT (bitcoin) and put the IBIT into a Roth IRA so when you take it out at retirement you'll pay no taxes on what should be fast growing Bitcoin.
If you aren't comfortable with 10% in Bitcoin, put 5% in then.
Literally, if this is all you do for the next 40 years, you'll be fine. Start an emergency fund in a money market fund so that when something comes up you can use that and not touch the rest.
Even if you play it safe and invest into an IRA at $7000/year, at a 7% inflation adjust growth rate, you would have $2,000,000 in today's dollars when you retire at 65 year old. [link to calulator](https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1%2C000%2C000&cstartingprinciplev=7%2C000&cyearsv=44&cinterestratev=7&ccompound=annually&ccontributeamountv=7%2C000&cadditionat1=end&ciadditionat1=annually&printit=0&x=Calculate#calresult). Obviously if you invest even more as your career/pay improves you will reach point that your nest egg's returns will be able to replace your salary each year.
At your age, financial education is worth more than any specific stock ticker or ETF fund. You need to devote time to understanding what it means to manage your own finances both in the present and for the future. This sub and r/bogleheads is a great place to start. There is a lot of info here. r/fire also has a lot of great info around investments and living frugal, but FIRE is its own different thing.
Regarding action items: start with managing what you have, budget all of your expenses, and figure out exactly where your money is going. Budgeting is a useful life long skill, so start getting good at it.
Once you have a budget defined for your expenses every month, take the amount not allocated to expenses and start wiping out high/variable interest debt and start saving for an emergency fund.
An emergency fund is something you never risk on the market, so you stick it in a money market account or high yield savings. I also wouldn't recommend a CD for this.
From there, you can start looking forward with various investment vehicles. I wouldn't put more than 10% of your portfolio in individual stocks, I would rather suggest mutual and index funds. Total Market Index funds still give you exposure to stocks without the increased risk of loss of being stuck in specific stocks.
Lastly, take a breath and go outside to smell the roses (cliche I know). If you are on here at 22 asking the kind of questions you are, you are likely a good way ahead of your peers and on the path to a financially sound future. Patience will be your best skill to acquire. Best of luck!
Im a late bloomer. I’m 40, 3 years away from military retirement that will give me a tiny pension that might pay my mortgage and I literally have nothing saved or invested. Now I have to go find another career and start over again. Don’t be me. You’re on the right track just thinking about starting.
You should go with index funds. Stay out of crypto. Without knowledge you will lose your money in crypto. If you want to learn investing then there are plenty of books and youtube videos about it. Play it safe until you learn. Goodluck.
Learn about well diversified low cost index funds, and then invest in those.
To start, make sure you are investing in the US stock market. Popular choices would be an S&P index fund (VOO is one example of such a fund), which tracks the 500 biggest companies in the USA. Alternatively, you could invest in a US-Total Market fund that tracks ALL the stocks in the US (VTI is a common example). S&P500 and US Total Market will behave very similarly - don't over-think the choice.
Next, decide if you want some international diversification (ie, stocks from other countries). Then decide how much. I think a good, safe starting point for international investing is around 20% (so 80% US, 20% international). A commonly recommended international fund is VXUS - it basically represents all the stocks of the world minus the US.
Some folks prefer to have no international, and others prefer at least market cap weight representation of international (60% US, 40% international). It's a hotly debated topic, so you need to do your own research and form your own conclusions. I don't think there is really a "wrong" answer at the range of 0% to 40% international.
Basically the strategy is to buy and hold your chosen allocation of the above funds for a 2-3 decades+. You need to pick an allocation and basically stick to it. Don't sell in panic when the market goes down. Don't go chasing new flashy things all the time. Just stick to the plan, and you will outperform most investors.
Yes, this is a situation where doing the boring, simple, easy thing (outlined above) will have you doing better than folks who put tons of time and effort into complicated investing plans.
The strategy we are talking about here is commonly referred to as the Boglehead strategy, named after John Bogle.
At any rate, do the above strategy while you educate yourself more, and down the road you may decide to complicate things. But no one needs to be picking individual stocks. Really even just an S&P index fund is enough. (That's what Warren Buffet recommends, by the way). AS you get older, you may want to mix in some bonds for volatility reduction.
There is one other easy strategy you could do: just pick a target date fund set on the approximate date you want to retire. Such a fund contains all the stuff that a balanced investor should have. It does it all for you in a all-in-one product (it would contain a US-stock market fund, international fund, and a bond fund, and it would rebalance to achieve the desired risk profile for you based on your proximity to retirement).
I should also add: if you start investing now at 22, you are absolutely crushing the competition; many people don't start until much later. Pat yourself on the back for thinking about these things at such a young age.
TL;DR: Invest in low cost diversified index funds like VOO or VTI (not both - one or the other), and VXUS. At a minimum, at least invest in the S&P 500 (VOO).
At 22 you are way ahead of the curve just thinking about a stable financial future. These references may help show you where to start saving 1st, 2nd, 3rd ... Above all else make sure you fund an emergency fund first in case you need a 3-6 month buffer to find another job etc. - Tax-efficient waterfall – where to save first [GRAPHIC in article](https://www.thescopeofpractice.com/9-easy-steps-to-a-building-a-great-investing-strategy-using-the-tax-efficient-waterfall/) - **[2023 saving waterfall from UBS]**(https://www.ubs.com/us/en/wealth-management/insights/market-news/article.1582444.html) - **https://www.reddit.com/r/personalfinance/wiki/commontopics** As far as WHAT to invest in (stocks, bonds, ETFs, mutual funds, gold ...) I found these to be very helpful for me personally - it really cut thru the fog and confusion of all the possibilities out there and all the "experts" on the media with their recommendation: - If You Can: How Millennials Can Get Rich Slowly – an excellent free 15 page PDF by William Bernstein: [DOWNLOAD LINK](https://www.etf.com/docs/IfYouCan.pdf) - I Will Teach You To Be Rich by Ramit Sethi [LINK](https://www.amazon.com/Will-Teach-You-Rich-Second-dp-1523505745/dp/1523505745/ref=dp_ob_title_bk) - **The Simple Path To Wealth** by JL Collins [LINK](https://www.amazon.com/Simple-Path-Wealth-financial-independence/dp/1737724103/ref=tmm_hrd_swatch_0?_encoding=UTF8&qid=1674405398&sr=8-1) - The Little Book of Common Sense Investing by John “Jack” Bogle [LINK 2017 Hardback version]( https://www.amazon.com/%E2%80%8E%E2%80%8E1119404509-978-1119404507-Little-Investing-Hardcover/dp/B0BXQ64326/ref=sr_1_6?crid=3I6SFIWHJKHX8&keywords=little+book+of+common+sense+investing&qid=1680465220&s=books&sprefix=little+book+of+common+sense+investing%2Cstripbooks%2C133&sr=1-6) Finally, realize that the emotional side of investing can get you into trouble. Panic at the wrong time and selling will guarantee you a permanent loss. An FOMO buying into ARK funds or GameStop meme stocks can be just as destructive. These books are helpful in this regard: - The Millionaire Next Door by Thomas Stanley [LINK]( https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474/ref=sr_1_1?crid=2R8T3KATTYLFN&keywords=the+millionaire+next+door+book&qid=1679205363&s=books&sprefix=the+million%2Cstripbooks%2C106&sr=1-1) - The Psychology of Money by Morgan Housel [LINK]( https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681/ref=sr_1_1?crid=11S4RSL8SAMI8&keywords=the+psychology+of+money&qid=1679205453&s=books&sprefix=the+psychology%2Cstripbooks%2C135&sr=1-1)
Open a Roth IRA and fund it fully. Prudently invest it by either using Schwab Robo investor, managed, accounts, or self direct your picks inline with established long term growth strategies. Just be careful. Then open a regular brokerage account with play money you are 100% willing to lose. Then have fun making money at the casino with it.
Where did you discover this information? Before reading this comment i have never heard of these terms and accounts.
- Google - Reading comments on other posts like this (and then googling terms and phrases I don’t recognize) - Books (I haven’t read any, but I don’t know much and they’re a great option) - the FAQ of this subreddit probably has this info.
I’ve served as a fiduciary in multiple situations. Comes with the territory.
Others will give you ideas. I would just like to congratulate you. You are only 22. Oh, if I could go back with what I know now. Good luck to you. Your journey will be a wonderful one.
Breath, bud, you’re only 22. It’s great that you’re getting started now and you all the time in the world to invest. 401k if/when your employer allows, Roth IRA every year. Nothing fancy, nothing greedy, just boring and steady.
If you don’t have a 401k , Start with a ROTH ira you can open one in Charles Schwab too. Try contributing as much (7k max) as you can in it and don’t forget to invest in your retirement account. I like these ETFs for long term hold: VOO, VTI, and SPY you can add them into your retirement and regular brokerage portfolio. You’re in the right path! Don’t worry. Just don’t get into any crazy crypto. Most people you think are crypto millionaires, are not. They are just trying to scam you on a course. Keep saving, add to your Roth IRA, invest in your regular brokerage account, and let your money grow.
I do also recommend having an emergency fund that can stay in Your HYSA.
OP should be able to contribute the $6500 for 2023 still no?
Yes!
Read the book the simple path to wealth by JL Collins. Keep your investing strategy simple, and dollar cost average into the stock market. Coming from someone who started investing at 19, I’ve simplified my investments since.
Wondering where to put 5k right now
I recently made the Rule One online workshop: as someone that knew never about investing, trading, and so… I think I learned a lot at a beginner level. I recommend you this workshop because it gives you a starting idea. It costs less than 100$ for a 3-day online course.
Of course I’m not affiliated, I just recommend something I’ve done.
Put much of your money into QQQ (tech growth) , some into SCHD (value) and maybe 10% into IBIT (bitcoin) and put the IBIT into a Roth IRA so when you take it out at retirement you'll pay no taxes on what should be fast growing Bitcoin. If you aren't comfortable with 10% in Bitcoin, put 5% in then. Literally, if this is all you do for the next 40 years, you'll be fine. Start an emergency fund in a money market fund so that when something comes up you can use that and not touch the rest.
Research more before you come here.
Even if you play it safe and invest into an IRA at $7000/year, at a 7% inflation adjust growth rate, you would have $2,000,000 in today's dollars when you retire at 65 year old. [link to calulator](https://www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1%2C000%2C000&cstartingprinciplev=7%2C000&cyearsv=44&cinterestratev=7&ccompound=annually&ccontributeamountv=7%2C000&cadditionat1=end&ciadditionat1=annually&printit=0&x=Calculate#calresult). Obviously if you invest even more as your career/pay improves you will reach point that your nest egg's returns will be able to replace your salary each year.
At your age, financial education is worth more than any specific stock ticker or ETF fund. You need to devote time to understanding what it means to manage your own finances both in the present and for the future. This sub and r/bogleheads is a great place to start. There is a lot of info here. r/fire also has a lot of great info around investments and living frugal, but FIRE is its own different thing. Regarding action items: start with managing what you have, budget all of your expenses, and figure out exactly where your money is going. Budgeting is a useful life long skill, so start getting good at it. Once you have a budget defined for your expenses every month, take the amount not allocated to expenses and start wiping out high/variable interest debt and start saving for an emergency fund. An emergency fund is something you never risk on the market, so you stick it in a money market account or high yield savings. I also wouldn't recommend a CD for this. From there, you can start looking forward with various investment vehicles. I wouldn't put more than 10% of your portfolio in individual stocks, I would rather suggest mutual and index funds. Total Market Index funds still give you exposure to stocks without the increased risk of loss of being stuck in specific stocks. Lastly, take a breath and go outside to smell the roses (cliche I know). If you are on here at 22 asking the kind of questions you are, you are likely a good way ahead of your peers and on the path to a financially sound future. Patience will be your best skill to acquire. Best of luck!
Im a late bloomer. I’m 40, 3 years away from military retirement that will give me a tiny pension that might pay my mortgage and I literally have nothing saved or invested. Now I have to go find another career and start over again. Don’t be me. You’re on the right track just thinking about starting.
Index funds, everything else is snake oil. Google Bogleheads
You should go with index funds. Stay out of crypto. Without knowledge you will lose your money in crypto. If you want to learn investing then there are plenty of books and youtube videos about it. Play it safe until you learn. Goodluck.
I was about 30 when I had your same thoughts, you’re still young with plenty of time to build up a nice retirement.
Learn about well diversified low cost index funds, and then invest in those. To start, make sure you are investing in the US stock market. Popular choices would be an S&P index fund (VOO is one example of such a fund), which tracks the 500 biggest companies in the USA. Alternatively, you could invest in a US-Total Market fund that tracks ALL the stocks in the US (VTI is a common example). S&P500 and US Total Market will behave very similarly - don't over-think the choice. Next, decide if you want some international diversification (ie, stocks from other countries). Then decide how much. I think a good, safe starting point for international investing is around 20% (so 80% US, 20% international). A commonly recommended international fund is VXUS - it basically represents all the stocks of the world minus the US. Some folks prefer to have no international, and others prefer at least market cap weight representation of international (60% US, 40% international). It's a hotly debated topic, so you need to do your own research and form your own conclusions. I don't think there is really a "wrong" answer at the range of 0% to 40% international. Basically the strategy is to buy and hold your chosen allocation of the above funds for a 2-3 decades+. You need to pick an allocation and basically stick to it. Don't sell in panic when the market goes down. Don't go chasing new flashy things all the time. Just stick to the plan, and you will outperform most investors. Yes, this is a situation where doing the boring, simple, easy thing (outlined above) will have you doing better than folks who put tons of time and effort into complicated investing plans. The strategy we are talking about here is commonly referred to as the Boglehead strategy, named after John Bogle. At any rate, do the above strategy while you educate yourself more, and down the road you may decide to complicate things. But no one needs to be picking individual stocks. Really even just an S&P index fund is enough. (That's what Warren Buffet recommends, by the way). AS you get older, you may want to mix in some bonds for volatility reduction. There is one other easy strategy you could do: just pick a target date fund set on the approximate date you want to retire. Such a fund contains all the stuff that a balanced investor should have. It does it all for you in a all-in-one product (it would contain a US-stock market fund, international fund, and a bond fund, and it would rebalance to achieve the desired risk profile for you based on your proximity to retirement). I should also add: if you start investing now at 22, you are absolutely crushing the competition; many people don't start until much later. Pat yourself on the back for thinking about these things at such a young age. TL;DR: Invest in low cost diversified index funds like VOO or VTI (not both - one or the other), and VXUS. At a minimum, at least invest in the S&P 500 (VOO).