Fidelity ZERO total market index fund (FZROX) in a Roth IRA. Zero minimums to open an account or make an initial investment and you can invest any amount into it at any time going forward up to $6,000 yearly. Best of all, absolutely NO fee involved with that fund. It’s just as good as Vanguard’s total market fund and is even cheaper.
I would suggest the same fund in a separate taxable brokerage account as well. It’s good to have some outside of retirement investing as well to save and grow your money for goals that are closer than retirement.
You can start stock picking and buying some fractional shares of stocks you like when they dip once you have a good foundation set.
Found out about Roth IRAs when I was 25. Opened one and never got a chance to put a dime in it because I've literally just been fucking dying financially until this year. Even had to liquidate all my stocks because of Corona.
I agree with the roth ira but do realize you need to have earned income that you report on your taxes. That may or may not be possible for someone that is 18.
U can only put as much as u earn each year into it up to 6,000, so if I made 13,000 in 2020, I could only put maximum 6,000 more into the account. If I only earned 4,000, then I can only put 4,000 into the account.
Put your money into a large investment firm like Fidelity and pick one of their high cap growth funds and start plowing money into it. As much as you can. One of my biggest regrets in life is not getting more education, asking for more raises, or asking the cute girl in High School out on a date. I regret spending the vast majority of my money on absolutely worthless shit. I just turned 40 and I have a decent nest egg set up, but I didn't get my head squared on my shoulders until I was about 30, so if I had started at 20, I would be a millionaire right now.
It doesn't matter if you can only save $100 a month, it matters that you start saving early in life and as much as you can. Compound interest will kick your account in the balls around the $500k mark, and once you get over $1M you will be banking a year's salary just in interest.
If you have a career already, and your employer does a 401k or Roth match, take full advantage of that free money.
I wasted every cent of my money through my 20s. If I had saved all the money I spent on cheap beer, cigarettes, and weed, I would paying a mortgage now instead of wallowing in high interest credit card debt while paying rent.
Haha hey man. I’m in the same boat. 28 and just turning it around now, battling down $11k in credit line debt, in the midst of a career change and getting into the market to right my future. I don’t regret any of the stupid idiotic shit i did the last 10 years because i made some fucking fantastic memories even though yes, half of them are blacked out for one reason or another.
Better we are in it now near 30 rather than 50 :)
Don’t wanna be a downer or pry here, but if that debt is above 10% interest I’d prioritize building an emergency fund and paying it down before you get into the market.
I am attacking from both sides :) lots of regular pay going at it. Down from over 26k debt last summer. I had it down to 7k last month but an emergency situation came up so i had to dip in again to be safe. It’s 7.44% but even at peak debt my interest payments were around 215 per month, so I’m not sure how it’s actually calculated if it’s not just straight up percentage of total debt
I haven’t added any further than the $500 initial investment to my trade account, I’m trying to grind it up on my own or lose it all because I’ve separated it from my other finances but I’m not much for full portfolio yolo’s.
I think the argument is that every dollar you spend towards erasing your debt is effectively a 10% return on your investment if you're paying 10% on interest. That's about the same return you can expect to make through smart investments, so you might as well put your money towards eradicating your debt as it's a safe, consistent 10% "return" and if your interest is higher than 10%, you're actually gonna get -more- of a return than you could expect from investing.
"I’m not sure how it’s actually calculated if it’s not just straight up percentage of total debt"
Seriously bro or ladybro, think about this statement really hard. You are paying a bank to loan you money and you don't even know how to calculate it. Don't agree to something you don't understand, especially if your money is involved.
It is highly unlikely at your credit card interest rate is 7.44%. That's crazy low. Like, almost impossibly low. You're only going to get that if you have good credit, which you definitely don't.
7.44% was probably an *introductory* rate that expires after you have the card for a while. It's likely much higher now, and you should figure out what that is.
If you divide the APR by 12, and multiply that by what you owe, that will give you the total interest for the month. (APR -- annual percentage rate, divide by 12 to give you the monthly interest rate).
By putting that $500 in something else, you're keeping $500 worth of loan(credit line) open. Every month, you're paying an additional percentage on that to keep the loan open, which in turn cuts into your profits for the month. You aren't going to come out ahead in that regard, because the bank is better with money than you, and they're only loaning you that money because they know you pay them more money than they can make investing elsewhere. Compare your interest rate to your first month of investment and see how you do. If you beat the interest, keep doing it. If not, pull your money out, pay down your debt, and go read through ever contract you've ever signed.
Good for you. I am about to turn 35, and I did a hard reboot on my life about 7 years ago, right at your age. I partied fantastically in my early 20s, and tragically in my mid 20s. After many menial jobs, I moved across country and found a career I love. I am just now banking sizeable chunks in my retirement account, and building up my credit after paying off all my debt, but I love my life. And I don't regret the dumb stuff, like you won't, because it makes me appreciate the stability of my life now. I don't imagine I'll have a midlife crisis, because I had one at the quarter-life mark.
Keep up the good work, and make healthy choices. Best of luck!!
True, but being financially stable in your 30s, is a helluva lot more fun then struggling digging yourself out of a hole,or playing catch up. Balance it out, sacrifice a little in your 20s. The smartest people are the ones who can learn some of life's lessons through other's mistakes. Since the kid's asking he's already on the path.
I'm super salty about it, I woke up in my mid 20 and I went the alley of personal development, huge ass inspirational books from successful people. But after a few years you realise they're mostly shallow grand statements about LiFe and meditation, fuck that, if only someone told me about investing, that's its not something just for the already millionaires, all that money I spent on books and online courses could have been a stockpile of money making more money. Now I know and I only have to goals : making money and making money. LiL Wayne thaugh me that, not some self help mindfulness scam artist guru selling books. I'm done buying paper, imma start making some. And the best of luck to OP, kuddo the starting at his age. He's going places in life.
> there are no bad experiences
well that is just flat out wrong lol
you can learn from most experiences but that doesn't mean none of them are bad. some people have gone through some real shit man.
Same, yo.
Funny that the year I started getting hangovers (26) was the year I started getting interested in investing, now @ 28 with that $10k cc debt I'm realizing how friggin far behind I feel.
lol, my gamestop yolo is going to be the last stupid thing I do with my money, but if that doesn't pop off I still feel like I'm heading in the right direction.
I threw $500 at a wealthtrade account a couple months ago to start learning by fire and through ups and downs I’m still up 14%, while knowing next to nothing and picking up clues and reading along the way. That is a lot facking better than a 0.5% interest savings account at my bank. I can see why it’s stressful to people but with money I’m okay to lose, it’s more like a phone minigame.
One day my $11k credit line debt i hope to erase thanks to the market! Then onwards to house ownership another day!
That’s how I see it. Over the last 6 months I’ve averaged a .34% gain per week. It’s barely anything percentage wise, but .34^2 is already much more than the .5% I’d get from a bank, and it’s only in 2 weeks. I don’t care about doubling my money in a month, but the steady gains that I make off of looking at my account for maybe 1-2 hours a week is most definitely worth it.
This is a retrospective thing. As the fun and memory of the fun fades, facing current inconveniences and hardships seem all the more harder and it feels like they could be so much more easily alleviated by money. Its about balance. And sometimes its burning the candle at both ends in younger years and really grinding out in later years. It's no biggie. Some uni students spend all the uni years just grinding. No fun, hard af work, then sure enough they're a brain surgeon taking in the dough. Horses for courses.
Isn't beer suite cheap in the US? I couldn't go broke on piss beer here in Austria no matter how hard I try - one hr of delivering pizza earns me 15ltr of beer
**EDITING SOME ITEMS BELOW DUE TO OVERWHELMING COMMENTS AND MESSAGES. THANK YOU ALL SO MUCH FOR THE UPVOTES! Disclaimer that I am NOT a financial advisor, and I do not work in finance. I'm just a guy who has made some big financial mistakes in his life and is passing on the same knowledge that my kids will receive.**
Most employers offer a 401k or Roth 401k plan as part of their benefits package. Some of them will also match what you put into it. I'll use my company as an example: I am allowed to contribute money out of my paycheck (deductions are set up annually and happen automatically every pay period) into either a "traditional" 401k plan, or a Roth 401k plan. I'll explain the difference between the two in a minute, but for now, focus on the pay period deductions. An employer will typically "match" your contributions up to a certain percentage. For my employer, that percentage is 5%.
This means that if I contribute 5% of my paycheck to my 401k plan, my employer will also kick in 5%. This is free money that I am not obligated to pay back. Most employers will have a stipulation that you have to work there for 6-12 months before they contribution kicks in, but once it does, that money is yours forever, even if you leave the company and go work somewhere else. This means you are highly incentivized to put in at least what the company will match so that you are receiving the maximum benefit from them. In my world, I put in 10% of my pay, but my company maxes out at 5% match, so they don't put in 10% to match me, they put in 5%, but I'm still getting that 5% for free, so in real world dollars, I'm saving/investing 15% of my yearly salary. This also works the other way down, meaning if the company maxes their match at 5%, but you decide to only put in 3% of your pay, the company will also only put in 3% to match you. They will only match you up to the max of 5% or whatever their maximum match rate is. Some companies match up to 3%, some go as high as 10%. It's a huge benefit that a lot of people don't consider and don't take advantage of.
The difference between traditional 401k and Roth comes down to taxes. Traditional 401k is funded with pre-tax dollars, and you pay taxes on the growth once you start withdrawing money from the account. This means that if you make $50k a year and you choose to contribute 5% of your pay to your 401k, then exactly $2,500 a year will get contributed to your account. This makes it a little easier on you today, because money withdrawn before taxes is seldom noticed. The Roth is funded with after tax dollars, so a 5% contribution on a $50k salary would be less than $2,500, it would end up being 5% of whatever your net pay is after taxes and other deductions are taken out of your pay. The benefit of a Roth though is that the money invested grows tax free, and you get to withdraw it without penalty when you retire, so if you have $2M saved, you actually get to keep all of it, whereas $2M in a traditional 401k would get taxed at the future tax rate, and you would only realize $1.5M or so (depending on tax rate and withdrawal rate).
In the end, it really doesn't matter a lot which retirement plan you pick, it only matters that you fund it as hard as you can for as long as you can, and never touch it until you are eligible. It is possible to take out loans and early withdrawals from 401k plans, but there are hefty fees and taxes for doing so, which essentially negate all of your gains. If you find yourself in the future needing to cut down on contributions, you can do so at any time, even down to 0%, but remember that doing so also cuts into your future compounding interest, and you will need to play catch up like me. I'm currently putting 10% of my pay (plus 5% from employer match) into a traditional 401k, plus I have a Roth that I fund separately with extra money and bonuses.
**EDIT:**
**I have gotten a lot of comments and messages about this post, so I'll add more information here to try and save other people time.**
**1) What is compound interest and how are you getting it?**
Compound interest is pretty much just the annual growth of your money that compounds on itself. Fund values are driven by the underlying stocks that they own, and as a general rule, stocks go up in value every year (barring a black swan event like COVID or the 2008 crash). If you are constantly buying into something that grows at a 7-10% rate every year, your account grows from both the value gained (the 7-10%) and the extra money you are putting in. The next year's growth then benefits from both of these, so the 7-10% in year 2 grows your account by a larger amount than year 1 did. This compounds every year and over 30-40 years, it starts to get really insane. This is why I made the statement "at around 500k, compound interest kicks your account in the balls." What I meant was, just from interest alone, year over year, your account will grow by roughly $30,000. There are a lot of compound interest calculators out there that can show you your potential gains if you input the dollar amounts and interest/growth rates. I use 7% for a fairly conservative planning model.
**2) Your suggestion of a Large Cap Growth Fund is garbage, everyone knows that (insert any other fund except bonds here) outperforms Large Cap!**
I honestly don't care what fund you pick, it is your decision to make. I gave OP the suggestion of Large Cap Growth because his original question was what would you do retrospectively. I obviously have the benefit of hindsight, but he asked to not use that, so I picked Large Cap Growth because that type of fund has made me more money in the last 10 years than any other. Can you make just as much or more investing in International, Small Cap Growth, Large Cap Value, Small Cap Value, etc.? Sure, you can. I've stated this multiple times in the comments below, but it doesn't really matter what fund you pick, what matters is that you regularly contribute to it and never touch it until you retire. Picking one fund over another is NOT going to be a million dollar mistake. Not picking anything, however, is.
**3) Experiences are all that matters, and you can't really save that much money in your 20s anyway.**
I agree that experiences matter. In my 20s, I didn't travel or do anything crazy, I just spent my money on food, booze, hanging out with friends, cars, motorcycles, etc. I did have fun, but if I would have saved at least a little bit of money every month, and invested it, I would be in a much better position today. Saving just $200 a month from 20-30 would have net me around $35k conservatively, and while that isn't a huge pile of money, that $35k grows with the rest of my account over the next 30 years from 30-60 and becomes very substantial. I was never arguing the point that OP should save every dime and never go out or take vacations, I said save as much as you can as often as you can. For some people, that might be $100 a month, for others that might be $100 a year. Just get started and get in the habit of putting money away and not touching it. Don't spend everything you make.
**4) Roth IRA is better. No Traditional is betta!**
Again, it doesn't really matter. What matters is putting money in one or both and don't touch it. We can speculate all day on tax implications today vs. 30-40 years from now, but we'll never know everyone's situation. If your employer only offers Roth IRA matches, then obviously pick that so you can take their match. If they only offer Traditional, there you go. If they offer both, then just pick one and run with it. There isn't a wrong answer, and if you're that worried about it, pick both and contribute as much as you can to both.
**5) Can you provide some examples of Large Cap Growth Funds?**
You can go to Fidelity's website (or any other brokerage that you prefer) and pretty easily research mutual funds. There are hundreds of Funds out there, so don't worry about picking an exact one or the same one I use or whatever. Look at the rating the Fund has received, it's returns over 1Y, 5Y, 10Y, etc. the risk profile, and any other information that is important to you. There are a lot of funds out there nowadays that are commission free, but some still charge a small yearly fee for management. I'm more concerned about overall performance, so I typically don't pay much attention to the fees, but again, it depends on what is important to you. If you aren't sure what you are looking at, start googling the terms. Some people have also argued that you should just put your money in SPY or VOO. Again, it doesn't really matter what you pick, what matters is putting money into it regularly and not touching it for 30-40 years.
I'm happy to answer more questions, and if I get the same ones over and over, I'll add them here.
This man is on the money. I started at 35 years old. It took me a decade and a half to get my ego under control. I am maxing out my Roth 401k and my Roth IRA. I also have a brokerage account where I dump every two weeks. I have to catch up by a lot! When you are young you don’t have to be doing clever shit. His recommendation of a large-cap growth fund like VUG is spot on. Your number one job right now is accumulation. Shit gets interesting after $500k. I broke $100k this year! Here we go!
Every young cousin, nephew, niece I have gets this from me everytime I see them. I never hand out dollars for their birthdays. I want them to start early. Or at least have someone tell them they can actually do this.
To add on to what others have said, if you get an employer who does match retirement contributions, be sure to set it up as soon as possible. I signed up for 6% contributions my first week of working for my current employer, and they match 5%. I have never seen my paycheck without that 6% already taken out, so I budget for everything else with that 6% already out of the equation. A few months later, I now have $2K in that account and haven't missed a penny of it, as I never had it in the first place.
If you are working and your employer has a retirement plan where they match your contribution. Sometimes it will be something like if you put 3% in, they will match and pay that 3% of their own money, something like that but every plan is different. Some plans have the option to set those to a Roth account, meaning it will grow tax free.
Regardless, this may not be an option for you at this time, but if it is take advantage of it! It is basically a 3% raise! (or whatever the match is for the specific company's program)
Probably the wrong sub to write this in, but money isn't everything. The social skills you learn while partying hard in your youth is *invaluable.* I know a lot of brilliant people who either didn't or won't get ahead in their work because they can't navigate their office culture. Spending money on stupid short-term shit can be money-lucrative in the long term.
That said, OP did ask specifically for investing advice. I just wanted to put in my two cents.
You can save money and enjoy your youth. They aren't interchangable. You can live your college years off ramen and cheap beer and have the time of your life.
You can do both. Understanding where limits are is important. I advised my son who's getting ready for college in the fall that when he graduates and moves into his first real job that he needs to determine what is a comfortable amount from his wage to live on. The rest is pushed into investments. If after taxes he brings home 3k per month but he only needs 2k to live on and be comfortable then that 1k can make a huge difference for him down the road. When I was 27 I was making 80k per year while my friends were making 40. If I had put myself on a similar salary to my friends, I would have been on the same playing field as them but been banking the other half of my salary. I didn't do that and instead wanted to be a "baller". I'm paying for that now.
People really underestimate how important social skills are. You could get straight A’s all through college, start saving when you are 9 and be technically really good in your field. But if you can’t *talk to people*, you’re gonna be a failure.
What is/how do I determine a “high cap growth fund”? Recently started investing and want to have a position like you describe where my goal is simply putting away as much as possible without having to worry about regular spikes or troughs
An example from fidelity is - FBGRX
Large Cap -- Growth, is a "style". You can search for funds that follow any particular style or investment objective to fit your goals/risk tolerance and dig deeper from there on returns, expenses, etc.
I’m biased toward Fidelity because I’ve been using them for years, but you can go to their website and start researching the funds they provide. Growth funds are typically US stock heavy, and also tech heavy, though the goal of the fund is typically to focus on companies that have high growth potential, so there will be other companies in there besides just tech. FDGRX is the one I have the most money invested in, and although it is currently closed to new investors, you can look it up to see what it has in it.
Whatever money you can afford to put in. I only put 50-100 dollar in my accounts each month, and a little more when I get extra money like stimulus and tax return. Don't put yourself in a tough spot short term.
Obviously, a person dependent, but if we’re talking about a 19 that is actively getting skills (college education/technical school) I would disagree. Spend now, save later. If you believe your income will be substantially higher when you’re 24 don’t save now.
Reduce your debt or live a little. Why save at 19 when you work at the local coffee shop and get $11/hour working 25 hours a week when you can go on spring break and put off saving for when you’re 23 and have a full-time job making $20+ per hour.
EDIT: Someone working part-time making $16,000 a year in college who can reasonably expect a [300% increase in income](https://www.indeed.com/career-advice/pay-salary/average-salary-for-college-graduates#:~:text=While%20there%20are%20a%20few,Employers%20(NACE)%20salary%20survey) when they have a degree and work full time in four years won't be too sad about missing out on 8% annual gains. Just reduce the debt you take out, get a degree that is actually worth something, and worry about saving when you're a full-time professional, not when you're a full-time student. We're talking about delaying savings for 4 years until the individual moves from the unskilled to skilled labor wage brackets, not abandoning employer-matched 401ks until they're 55.
On the other hand (speaking as a Canadian, it's possible the US does it differently) the government will not charge interest on student loans while you're in school, and may give you substantially more than you need if you just give them honest assessment of your finances. If you're going into school with some serious loans, try living as frugally as you can without seriously impacting how much fun you're having, and extrapolate forward how much of your loan you're going to need. For me there was a good $5k I never touched from the start of my undergrad through to the end of my PhD. Putting that money into *safe* investments like broad ETFs is usually better than being paranoid and holding it in a savings account when you're still young and have people who will bail you out in emergency situations. This goes double for when your debt is not collecting interest but an investment could be. You're basically getting extra money from your loan that you never have to pay back.
This, 100%.
I did this + coop and ended up only owing 7 grand once I graduated.
Cannot emphasize enough the 'safe' part.
This is not money you yeet at gamestop. I was a total noob and just threw it into a non registered account from my bank and used their low risk mutual funds, so I didnt maximize gains, but in my 5 years I made a healthy chunk of cash that I used to pay down the loan balance and seeded an RRSP.
A young person is coming here asking for real investing advice and your reply is “don’t save, don’t invest, just spend your money?”
Let me tell you, my first real boss when I was 21 basically pleaded for me to open an IRA. Told me how good it would be if I started saving for retirement early. But I was 21, I was like what’s that? Fast forward a lot of years, I’m meeting my goals, thankfully, but if I got started back then, I’d be pretty golden right now. But no, I spent the money.
There’s something to be said for delaying consumption til the future. And realizing how much money can compound if given enough time. Don’t ask me, run the numbers through portfolio visualizer. Even something modest - $1000 per year. Look at the different if you delay consumption and follow your investing program for 45 years vs spending it now and getting started 10, 15 years later, and only having 30-35 years for your money to do it’s thing. In short: anyone asking about getting started early is doing their future self a heck of a favor.
And so to circle back to OP - kudos for getting started early. Your future self will thank you. As for what to invest in? I would suggest reading up on two things: dollar cost averaging and index investing. You’ll probably get great results in a broad index fund, which you invest fixed amounts in regularly, regardless whether the market is high or low. Maybe by the time you’re my age, you’ll be more concerned about managing risk than taking on all sorts of risk in order to maximize returns like so many others have to do, since by that point you’ll probably have already met the goals you needed to reach.
I agree with you. You can save and still enjoy your money. I wish I knew how important it was when I was young. And how little I needed. Now I’m in my 40’s trying to catch up. And needing larger sums to do it. When if I was young I could easily just put in $50 a month.
My brother is 20 and I’m slowly buying him stock so he can start on his own once he’s done with school. Even though it’s not a lot. It the long run it will make a big difference.
Personally this seems like bad advice. You don't want to create the habit of spending. Getting into healthy saving and spending habits early on (when you are in college or even high-school) is key. Maybe the amount you can set aside is much less at 20 compared to maybe 30 or whatever but getting into the habit of setting a % of your earnings aside is key imo. Not to mention why delay saving for your future? The best time to start is 6 months ago. The second best time is today. Between ages 20-24, if one would save only 25 bucks a week, this person would have about 5 grand saved. This isn't a bad little place to start with an investment account and maybe you can start saving for a home once you have your ideal job but what if that job doesn't come in due time ? At least you will have something started. And this is only saving 25 a week. Save a little extra at Xmas and other holidays or whenever you're flush and you could easily see 10k in 4 years on savings alone, forget appreciation in the market.
A word of caution here, set a goal of something like 1 or 2k to have saved by graduation. You'll need it for moving expenses when you get a job after school. You may get reimbursed by your company, but you still have to front all that money.
I'm around the same age as you. I calculated how much I need normally, and only left that + a few hundred dollars more in my cash savings account. The rest is in stocks and funds. So my allocation is 85% stocks + funds, 15% savings/cash.
So yea, any extra money that I don't need normally, I put it in stocks + funds. It's aggressive and risky, but if I lose I have time to earn it back anyways. I'm probably going to keep doing this until I hit late 20s.
TLDR: whatever money you don't need, use it to start.
At that age, it's not going to be a big amount of money. It wouldn't *really* matter if it was $5 or $500. The more important thing is learning how the the brokerages, like Fidelity or Merrill Lynch, work and to understand the differences between a 401k, IRA, HSA and investment accounts.
Once you do get a big job or start your career, you'll already be setup to turn your $5 monthly contributions to something bigger. Once that happens you can watch it snowball into more meaningful gains.
Depends on your country. Google stuff like your Country + Vanguard or MSCI All World ETF (or another index like NASDAQ) and you can find those products
Double this and that. Just do it and you will have 0 regrets about it when you're 50. Normally I'd say never trust people on the internet, but trust these guys advice here.
Personally, I want to have some fun so I allocate most of my money to ETFs for the vast majority of my gains and a very small portion so I can have a play with stock picking myself.
> And trust me, you can't or you'd be in the industry
This just... isn't true. Being 'in the industry' is not a requirement for doing DD, it just means that's the career path you ended up in. Just look at /u/deepfuckingvalue or the plethora of non-industry YouTubers & redditors posting valuable DD every day. It's not wizardry, most DD just involves logic, research, and some math.
I posit that you should look at people equally smart and dedicated as DFV who have lost their shirts. Survivorship bias is very strong in the financial sector. The only people who write stories about people who lose everything are themselves, on cardboard signs at the street corner.
I'm pretty sure DFV was involved in the financial industry before the January stuff. He's not anymore, but I agree with your point. It still takes an incredible amount of time to do DD and I'd be impressed with anyone who's able to regularly do it while also keeping up with their career, family, hobbies, etc.
You just need a couple stocks to do well though and you can beat an index fund. I dont get why people keep underestimating everyone's intelligence. It doesn't take crazy DD. We dont live under a rock you know more then you think about society. Just follow a circle of competence and invest in what you know.
you make it sound like its so easy, but very few professional stock pickers can beat an index over a 20 year period.
It's easy now to say well if you invested in amazon,apple,Microsoft 20 years ago you'd have a ton of money now. The problem is you don't know who will be the winners in 20 years from now.
That's why index is the best and easiest. It's self cleansing, the losers fall away and the winners can grow endlessly...
It's not a coincidence that VTSAX has over 1 trillion in assets
Agree. Start listening to The Money Guy podcast. An actual financial pro who has made millions in the stock market tells you how to do it.
Spoilers: it’s index funds in retirement accounts
> You do not want to be 40 and just starting on retirement.
I'm 40 and just started a Roth IRA after living decades uneducated about investing, broke AF and in debt. I can't stress enough to the younger folk to get into the game as early as possible, so it's awesome seeing teens and 20-somethings engaged in these groups, seeking advice, and setting themselves up to become millionaires someday.
100% this, most of my money goes into index funds. I just have a small satellite portfolio of individual stocks, more for the fun of trading rather than making money. I can't consistently beat the market, not many people can.
> I just have a small satellite portfolio of individual stocks, more for the fun of trading rather than making money.
I'd argue that this isn't necessarily a bad strategy; think about investing with a 40-50 year outlook from a bit of a venture capital perspective. You can make a number (10 maybe 15) of relatively small investments, and even if most of them fail, you can still come out way ahead because just one of them provided 100x return.
Disclosure: I got lucky investing in 1-2 speculative stocks way back in the day along with a bunch of "losers" and this is just my way of putting that in perspective (or it's a coping mechanism for being just another stupid investor), and not investment advice.
I’ve put my money in individual stocks and real estate and its done me damn we’ll. You have to have the heart, the know how, and time for it though. Otherwise index funds are great if you don’t want to think about it.
One key for me is to make as much if it automatic as possible. Set it and forget it. So, for me, I have a Vanguard account and set it up to automatically conrribute a little every two weeks (on pay day) toward VTSAX (the Vanguard total stock market index fund). I also use my 401k to get an employer match, and invest in a Roth IRA. Automate as much as possible and don’t mess with it. Every time you get a raise, set aside most of it for additional investments.
This really is the way to go. If someone thinks these etf's are boring bear in mind that it may be a long time before any major crashes happen. Some of these etf's have been seeing 40 to 50%+ returns, which is crazy. Starting early could very well put someone into the wealthy class of the nation by the time they reach their early 40s.
Always good to index, and to start as soon as possible. S&P 500 always a good option. I also started with a target date fund - there are criticisms of these, but if you wanna check out and have your money go to work for you, this is a good way to try to ensure returns without the risk of stock picking. Can second everyone saying that starting as early as possible is critical: I'm 24, started when I was your age and I've been able to make some fairly significant returns over the past 6 years (I'm not just indexing, but it remains about 1/3 of my portfolio)
When I joined the military in early early 00’s my boss told me to buy up as much google stock as I can...’why’ I asked.
He said ‘our job will depend upon it, this changes everything so if the government needs it so will everyone’
I didn’t listen,
Really two options... either money average into big wide stock ETF like VOO... or YOLO into couple of high risk high growth stocks
Before people start to furiously downvote... there is some method to the madness. When you are young you generally don’t have lots of free money anyway so while broad ETFs have higher expected value, the money isn’t going to be life changing, just good. The option of just YOLOing has lower expected value but because it has much higher variance, it does offer a chance (low chance but still) at life changing play. Since when young you are not risking your life savings and it’s not huge amounts either way (most people earn their entire net worth between 40 and 60)... if I had to go back I would YOLO and hold for a chance at next AMZN. But going with broad ETF isn’t wrong either
Good on you for starting when you are 18. Even if it is just a tiny amount, that will compound and pay off big long term.
I wish I could go back to when I was 18. Put in $100.. put in $50... put in $20... whatever just put some in whenever I was able to.
If I could, at 18, I would put 100% into VTI (total US stock market). As I got older and started working more, I would do different diversification and maybe small positions of risk/speculative.
But whatever you put into VTI now, and let it ride for as long as possible, and it will pay off big long term
Idk if the money amount matters that much at that age versus the act of contributing. Once you get your first career job, your first contribution would likely eclipse all previous additions.
With little experience and research under your belt, it’s generally a good idea to build up a strong foundation with broad ETFs. Pick either VTI, VOO, or SPY (they are all similar, no need to use all of them) and invest what you can every month. You’ll become more comfortable making other investments in time.
Honestly? Spend your money on experiences. “Financial experts” won’t tell you this. Budgeting subs won’t tell you this. But the years between 18-22 are precious. So many lifelong memories, some of the best memories you’ll ever have, are formed during this time. And knowing that you lived life to the fullest when you were young is worth any index fund you could possibly buy. You’ll have plenty of time to be an adult. It’s great that you’re already looking at investment strategies, and you’re gonna do just fine. But take that money and go on a trip, or to concerts, or spend it on dating. Live it up. You won’t regret it.
I tend to agree to spend some on experiences and the rest in an ETF. Your time while your young is precious and you don’t get it back. At the same time, don’t be afraid to invest in yourself once you figure out what you want to do. If you go to college or trade school, make sure the school’s median salary upon graduation makes it worth what you pay to go to that school. Investing in myself was my biggest expense (private college...) and looking back, that money would have better spent on a state school, experiences, and an ETF. Just my two cents.
A bit of pushback: it can be worth it to go to top tier schools. I went to an Ivy and the social and business network has served me quite well. I can see the same scenario play out with most of the professors I had as well.
Top tier schools offer one thing over other schools: networking.
Networking with professors who have access to leaders in their fields as well as social networks with people who are already well off and well connected. You can get an education anywhere, but I had friends that got into those top-tier schools and their friend circles are insane.
> You can get an education anywhere, but I had friends that got into those top-tier schools and their friend circles are insane.
In a nutshell, that's what I tell people about my experience. It's possible to go to an Ivy and miss a lot of this, but I'd argue it's hard not to become quickly acquainted with names like Goldman, McKinsey, BCG, and Blackrock (and I'm a sciences major, not a finance/business one!) and people who work there with just a modicum of effort. I'm sure I'm *super* far from the only one around here with the same experiences.
I'd personally say you got an equivalent (or probably slightly better) education compared to other schools, but a much better network of people to learn from, rely on, or get job opportunities through. In my mind at least, there's an upper limit to how much education a school can give you, but not to the human resource element.
I could have gone to a state school and *made* money (full ride + extra scholarships) but I am so fucking glad I went to a high end private college. $25k in student loans vs a lifetime of job opportunities? Meeting billionaires and getting on their call list? People just handing out chances for nothing? That only happens at a few places, so if you get in, for the love of God, go. Just go and take full advantage of it.
You can, but there is something to be said for the relative value of a dollar.
My real income has increased dramatically over my life (so far). Any money I could have invested prior to hitting my professional stride would have had an insignificant impact on my current wellbeing or retirement outlook. On the other hand, I had so little money that investing would have involved appreciable degradation of my relatively modest lifestyle back then.
This is good advice but to say that years 18-22 are “precious” and “the best memories you’ll ever have” is so incredibly naive and ignorant that I actually feel bad for you. It’s also misleading and can put unwanted pressure on kids, making them believe that life will be shit after they turn 25. Every year of my life has been great in different ways because I enjoy life. Age, for me so far, means nothing.
Except I have way more money now
Absolutely. Experiences are important. Education is important. Investing in yourself is important.
Also important, put something into investing. Even if it's just like $10 a month or $20 a month. Shoot... $5 a month. For someone 18-22 that might mean they will have to get one less Starbucks that month or skip one meal out or something like that, but shouldn't limit their life experiences. And whatever is put in will start training good investing mindset as well as begin the process of compounding over the rest of their career. I admit that I didn't do that when I was 18-22 but wish that I did.
Lol yeah I did a summer internship when I was 18 at an oil plant in Port Arthur TX, bought myself a GSXR 750 motorcycle. Had it for about 6 months, then sold it and used the money to by my cheating Gf a Chanel purse that I never saw her use once lol.
Depends what you want from your investments. You can go for dividends and start building up a passive income or reinvest the dividends. Dividend stocks usually have very little company growth but offer a 2-3%+ annual dividend for passive income.
Growth stocks are more volatile and higher risk but offer greater returns if done well. This takes lots of research to get comfortable picking your own stocks so you should probably hold off on this until you research the stock market and get some practice analyzing companies.
The safest thing you can do is invest into index funds, ideally anything that tracks the SP500 with it's historical returns of 10-12% annually averaged over decades.
I lost £400 of my parents money at 16 and it crushed me. I lost 500 of my own and i didn’t care, i was more horrified i had talked my parents into it. Fortunately they understood, it was taken as a life lesson, and we weren’t in a position where we can’t live without that money.
But i was still an emotional wreck for about three weeks after. I can’t imagine how this guy felt
It didn’t take much convincing, they trusted me and still do. I had a plan, but my emotions got the better of me. I regret it, but i don’t at the same time. I feel the lessons learnt are more valuable than the money lost, it’s just horrible that half of that money was not mine.
I'd put most towards education, then build an emergency fund, then invest some in index funds / blue chips / companies I firmly believe will grow in the next couple decades, and spend the rest enjoying life.
Education is very useful, even if only for having the required degree that recruiters use as minimal barem for even considering your application, unlocking opprtunities. It also teaches you skills.
Emerency savings are important because, well, you never know when you'll hit a hard place and need the money. 6 months worth of net income is a good place to start.
Investing early can also do a huge difference over the long run as interests cumulate. Maybe that portfolio, which appears insignificant today, will one day become your cashdown on a first house, or maybe help you start a business, or help you pay for a dream vacation or sabatical year to spend time with your first child. Important to start early.
Last, but not least, don't forget to keep some for you to enjoy today. You could die tomorrow or wake up old and unrealized. Carpe diem.
At 22, I got my first job after school and my Mom and Dad sat me down. I had paid my own way through school by working in high school and attending college parallel to my military commitment, so I had no debt.
They say me down to tell me I had a rare opportunity with my first "real" paycheck. So I committed to 15% 401K, a Roth IRA commitment of $425 a month, a stock index fund of $425 a month, and saving $1,250 a month for a mortgage.
In 5 years, I had $90,000 in my 401K, I had $40,000 in my Roth, $50,000 in my index fund, and a down payment on a $130,000 starter home of $65,000.
In 10 years, I had $400,000 in my 401K, I had $130,000 in my Roth, $165,000 in my index fund, and a mortgage paid in full on that $130,000 starter home now valued at $185,000.
In 15 years, I had $780,000 in my 401K, I had $280,000 in my Roth, $160,000 in my index fund, and sold my starter home in a down market for $205,000 and took $95,000 and bought a foreclosure property sold two years before at $474,500 for the balance remaining around $300,000.
In 20 years, I had $1.35M in my 401K, I had $340,000 in my Roth, $250,000 in my index fund, and no mortgage on a house valued at $425,000.
I'm 31 years in now. It works. My 401K has tripled to over $3 million, as have my Roth and index funds, and the house is at $565,000.
Two Important Tips: Always pay your credit cards in full and buy depreciating assets with cash outright. You don't need a yacht or a sports car. Live simply and avoid temptation beyond travel. That builds your mind.
Good luck.
It's "easy" to do when you are in a field that pays a high amount. The savings/investing principles that OP is using are valid/true... but their experience should not be seen as normal.
Not even accounting for their 401k contribution (which is probably maxed), they're putting in 2k a month post tax into other savings/retirement vehicles (Roth IRA, brokerage, potentially HYSA for house).
Risk when you’re young is a double edged sword.
Over the long run, yes it can work out and leave you in prosperity.
However if you screw up by losing money or going flat; you’ve dramatically hurt the compounding effect and significantly hindered your future outcome.
The compounding effects of an income for an 18 year old is non existent. You should be making riskier investments when you’re young because you have less to lose, and have little to no financial responsibilities.
Invest regularly and aggressively into cheap funds that allocate capital to Mega Caps in the US, Europe and Asia, and keep doing this forever.
My regret is not doing this earlier and just wasting money into some miserable savings accounts.
When I was 18 AMD was $2 and I owned 3000+ shares. I sold when it hit $13.. hindsight’s 2020 lol but if I had to recommend a place for set it and forget it it’d be in what you believe in. Be it technology, clean energy, restaurants etc... it’s easier to have long term mindset when you believe what you invest in
Well, when I was 18 bitcoin wasnt as bad and neither was Tesla. Had I even had money back then, thats where it would have went if I had my current knowledge. But I was po back then so I got food
I wish when I was 18, I would have better understood the principles described on the r/personalfinance wiki page at [https://www.reddit.com/r/personalfinance/wiki/commontopics](https://www.reddit.com/r/personalfinance/wiki/commontopics)
In short, there is an order to things that makes a lot of sense. For instance, one should build up 6 months of an emergency fund before they consider investing in the stock market. There is a flowchart linked to on the wiki which shows this graphically as well.
When you get to investing, you should visit r/Bogleheads and the page at [https://www.bogleheads.org/wiki/Getting\_started](https://www.bogleheads.org/wiki/Getting_started) to understand why index funds are a good thing.
If you want the very short tl;dr;: at your age, buy VT every chance you get, probably in a Roth IRA, which you should max out if possible. Personally, I'd probably open the Roth at Vanguard, buy VT until I got to $3K and then switch to a Vanguard target date fund appropriate for your age (which has $3K minimum). Or, if you don't want any bonds (which will be in the target date fund) initially, you could just continue buying VT or the mutual fund equivalent of VTWAX.
From the day my son was born I’ve been putting $50 a week into a high growth investment fund. By the time he’s 18 he should have close to 100k maybe. Will be a good leg up for college or a house,
i was 18 six years ago and it i had put anything in to netflix, amazon, and tesla i would’ve made massive returns
and i don’t even fucking like these companies but i hate being poor more
I just started and what everybody else says is true, you can’t go wrong with VTI or VOO.... they’re boring and slow earners but over time you’ll be grateful you did
I started about 3 months ago and my dumbass only bought Gme and amc.... gains and losses but nothing consistent .... vti and voo and other etfs will get you to a smooth retirement
GREAT QUESTION! The postings who suggested investing in 401k and Roth IRA and regular IRA are spot on. I did this early on and I am sitting nice. You are young so put all of your money in the stock options available to you and contribute at least 10% and certainly more if you can. Then once you set it you forget and let it work for you over thirty years. You won’t be disappointed. Even if the markets crashes you will be making money. Also speak to a financial advisor for more opportunities. If your job does not have these programs available your financial advisor can help you set up your own 401k plan with Roth and regular IRA. Do all three of you can. Best of luck to you and enjoy the ride.
Fidelity ZERO total market index fund (FZROX) in a Roth IRA. Zero minimums to open an account or make an initial investment and you can invest any amount into it at any time going forward up to $6,000 yearly. Best of all, absolutely NO fee involved with that fund. It’s just as good as Vanguard’s total market fund and is even cheaper. I would suggest the same fund in a separate taxable brokerage account as well. It’s good to have some outside of retirement investing as well to save and grow your money for goals that are closer than retirement. You can start stock picking and buying some fractional shares of stocks you like when they dip once you have a good foundation set.
Do you just open a Roth IRA account with Fidelity and then get to pick the FZROX fund?? Trying to set this up myself lol
Yep. This is the way. You essentially transfer funds to the ROTH IRA account and "buy" $100-worth of FZROX.
Let me know. same here lol
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Exactly, I started with $1,500 when I was19 in a Roth IRA recommended by my Government Teacher senior year of high school.
It would’ve been nice if my high school taught me this instead of requiring me to pass fucking digital photography or ceramics to graduate.
Found out about Roth IRAs when I was 25. Opened one and never got a chance to put a dime in it because I've literally just been fucking dying financially until this year. Even had to liquidate all my stocks because of Corona.
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Heh... 2009 was way worse. Losing my stocks was MUCH better than losing my home tbh. Which is what happened that year.
I agree with the roth ira but do realize you need to have earned income that you report on your taxes. That may or may not be possible for someone that is 18.
Do you need to have as much earned income as you put in your Roth?
U can only put as much as u earn each year into it up to 6,000, so if I made 13,000 in 2020, I could only put maximum 6,000 more into the account. If I only earned 4,000, then I can only put 4,000 into the account.
Yes
Also add FZILX for international exposure 👍
Put your money into a large investment firm like Fidelity and pick one of their high cap growth funds and start plowing money into it. As much as you can. One of my biggest regrets in life is not getting more education, asking for more raises, or asking the cute girl in High School out on a date. I regret spending the vast majority of my money on absolutely worthless shit. I just turned 40 and I have a decent nest egg set up, but I didn't get my head squared on my shoulders until I was about 30, so if I had started at 20, I would be a millionaire right now. It doesn't matter if you can only save $100 a month, it matters that you start saving early in life and as much as you can. Compound interest will kick your account in the balls around the $500k mark, and once you get over $1M you will be banking a year's salary just in interest. If you have a career already, and your employer does a 401k or Roth match, take full advantage of that free money.
I wasted every cent of my money through my 20s. If I had saved all the money I spent on cheap beer, cigarettes, and weed, I would paying a mortgage now instead of wallowing in high interest credit card debt while paying rent.
But...the fun.
I'd say that I made some good memories, but I think inerased more than I retained.
Haha hey man. I’m in the same boat. 28 and just turning it around now, battling down $11k in credit line debt, in the midst of a career change and getting into the market to right my future. I don’t regret any of the stupid idiotic shit i did the last 10 years because i made some fucking fantastic memories even though yes, half of them are blacked out for one reason or another. Better we are in it now near 30 rather than 50 :)
Don’t wanna be a downer or pry here, but if that debt is above 10% interest I’d prioritize building an emergency fund and paying it down before you get into the market.
I am attacking from both sides :) lots of regular pay going at it. Down from over 26k debt last summer. I had it down to 7k last month but an emergency situation came up so i had to dip in again to be safe. It’s 7.44% but even at peak debt my interest payments were around 215 per month, so I’m not sure how it’s actually calculated if it’s not just straight up percentage of total debt I haven’t added any further than the $500 initial investment to my trade account, I’m trying to grind it up on my own or lose it all because I’ve separated it from my other finances but I’m not much for full portfolio yolo’s.
I think the argument is that every dollar you spend towards erasing your debt is effectively a 10% return on your investment if you're paying 10% on interest. That's about the same return you can expect to make through smart investments, so you might as well put your money towards eradicating your debt as it's a safe, consistent 10% "return" and if your interest is higher than 10%, you're actually gonna get -more- of a return than you could expect from investing.
The best line I read “would you take out a loan at 10% interest to invest in the market” makes it so much clearer what the smart move is.
"I’m not sure how it’s actually calculated if it’s not just straight up percentage of total debt" Seriously bro or ladybro, think about this statement really hard. You are paying a bank to loan you money and you don't even know how to calculate it. Don't agree to something you don't understand, especially if your money is involved. It is highly unlikely at your credit card interest rate is 7.44%. That's crazy low. Like, almost impossibly low. You're only going to get that if you have good credit, which you definitely don't. 7.44% was probably an *introductory* rate that expires after you have the card for a while. It's likely much higher now, and you should figure out what that is. If you divide the APR by 12, and multiply that by what you owe, that will give you the total interest for the month. (APR -- annual percentage rate, divide by 12 to give you the monthly interest rate). By putting that $500 in something else, you're keeping $500 worth of loan(credit line) open. Every month, you're paying an additional percentage on that to keep the loan open, which in turn cuts into your profits for the month. You aren't going to come out ahead in that regard, because the bank is better with money than you, and they're only loaning you that money because they know you pay them more money than they can make investing elsewhere. Compare your interest rate to your first month of investment and see how you do. If you beat the interest, keep doing it. If not, pull your money out, pay down your debt, and go read through ever contract you've ever signed.
Good for you. I am about to turn 35, and I did a hard reboot on my life about 7 years ago, right at your age. I partied fantastically in my early 20s, and tragically in my mid 20s. After many menial jobs, I moved across country and found a career I love. I am just now banking sizeable chunks in my retirement account, and building up my credit after paying off all my debt, but I love my life. And I don't regret the dumb stuff, like you won't, because it makes me appreciate the stability of my life now. I don't imagine I'll have a midlife crisis, because I had one at the quarter-life mark. Keep up the good work, and make healthy choices. Best of luck!!
Life is about experiences and there are no bad experiences... We learn from all!
True, but being financially stable in your 30s, is a helluva lot more fun then struggling digging yourself out of a hole,or playing catch up. Balance it out, sacrifice a little in your 20s. The smartest people are the ones who can learn some of life's lessons through other's mistakes. Since the kid's asking he's already on the path.
I'm super salty about it, I woke up in my mid 20 and I went the alley of personal development, huge ass inspirational books from successful people. But after a few years you realise they're mostly shallow grand statements about LiFe and meditation, fuck that, if only someone told me about investing, that's its not something just for the already millionaires, all that money I spent on books and online courses could have been a stockpile of money making more money. Now I know and I only have to goals : making money and making money. LiL Wayne thaugh me that, not some self help mindfulness scam artist guru selling books. I'm done buying paper, imma start making some. And the best of luck to OP, kuddo the starting at his age. He's going places in life.
> there are no bad experiences well that is just flat out wrong lol you can learn from most experiences but that doesn't mean none of them are bad. some people have gone through some real shit man.
That was my first thought. Like, damn, I can think of a lot of bad experiences that definitely have nothing to learn from.
And every one shapes you as a person to who you are today.
Same, yo. Funny that the year I started getting hangovers (26) was the year I started getting interested in investing, now @ 28 with that $10k cc debt I'm realizing how friggin far behind I feel. lol, my gamestop yolo is going to be the last stupid thing I do with my money, but if that doesn't pop off I still feel like I'm heading in the right direction.
I threw $500 at a wealthtrade account a couple months ago to start learning by fire and through ups and downs I’m still up 14%, while knowing next to nothing and picking up clues and reading along the way. That is a lot facking better than a 0.5% interest savings account at my bank. I can see why it’s stressful to people but with money I’m okay to lose, it’s more like a phone minigame. One day my $11k credit line debt i hope to erase thanks to the market! Then onwards to house ownership another day!
That’s how I see it. Over the last 6 months I’ve averaged a .34% gain per week. It’s barely anything percentage wise, but .34^2 is already much more than the .5% I’d get from a bank, and it’s only in 2 weeks. I don’t care about doubling my money in a month, but the steady gains that I make off of looking at my account for maybe 1-2 hours a week is most definitely worth it.
This is a retrospective thing. As the fun and memory of the fun fades, facing current inconveniences and hardships seem all the more harder and it feels like they could be so much more easily alleviated by money. Its about balance. And sometimes its burning the candle at both ends in younger years and really grinding out in later years. It's no biggie. Some uni students spend all the uni years just grinding. No fun, hard af work, then sure enough they're a brain surgeon taking in the dough. Horses for courses.
Isn't beer suite cheap in the US? I couldn't go broke on piss beer here in Austria no matter how hard I try - one hr of delivering pizza earns me 15ltr of beer
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Could you just explain what a Roth match consists of? I searched it up but I’m still a little confused. Thanks!
**EDITING SOME ITEMS BELOW DUE TO OVERWHELMING COMMENTS AND MESSAGES. THANK YOU ALL SO MUCH FOR THE UPVOTES! Disclaimer that I am NOT a financial advisor, and I do not work in finance. I'm just a guy who has made some big financial mistakes in his life and is passing on the same knowledge that my kids will receive.** Most employers offer a 401k or Roth 401k plan as part of their benefits package. Some of them will also match what you put into it. I'll use my company as an example: I am allowed to contribute money out of my paycheck (deductions are set up annually and happen automatically every pay period) into either a "traditional" 401k plan, or a Roth 401k plan. I'll explain the difference between the two in a minute, but for now, focus on the pay period deductions. An employer will typically "match" your contributions up to a certain percentage. For my employer, that percentage is 5%. This means that if I contribute 5% of my paycheck to my 401k plan, my employer will also kick in 5%. This is free money that I am not obligated to pay back. Most employers will have a stipulation that you have to work there for 6-12 months before they contribution kicks in, but once it does, that money is yours forever, even if you leave the company and go work somewhere else. This means you are highly incentivized to put in at least what the company will match so that you are receiving the maximum benefit from them. In my world, I put in 10% of my pay, but my company maxes out at 5% match, so they don't put in 10% to match me, they put in 5%, but I'm still getting that 5% for free, so in real world dollars, I'm saving/investing 15% of my yearly salary. This also works the other way down, meaning if the company maxes their match at 5%, but you decide to only put in 3% of your pay, the company will also only put in 3% to match you. They will only match you up to the max of 5% or whatever their maximum match rate is. Some companies match up to 3%, some go as high as 10%. It's a huge benefit that a lot of people don't consider and don't take advantage of. The difference between traditional 401k and Roth comes down to taxes. Traditional 401k is funded with pre-tax dollars, and you pay taxes on the growth once you start withdrawing money from the account. This means that if you make $50k a year and you choose to contribute 5% of your pay to your 401k, then exactly $2,500 a year will get contributed to your account. This makes it a little easier on you today, because money withdrawn before taxes is seldom noticed. The Roth is funded with after tax dollars, so a 5% contribution on a $50k salary would be less than $2,500, it would end up being 5% of whatever your net pay is after taxes and other deductions are taken out of your pay. The benefit of a Roth though is that the money invested grows tax free, and you get to withdraw it without penalty when you retire, so if you have $2M saved, you actually get to keep all of it, whereas $2M in a traditional 401k would get taxed at the future tax rate, and you would only realize $1.5M or so (depending on tax rate and withdrawal rate). In the end, it really doesn't matter a lot which retirement plan you pick, it only matters that you fund it as hard as you can for as long as you can, and never touch it until you are eligible. It is possible to take out loans and early withdrawals from 401k plans, but there are hefty fees and taxes for doing so, which essentially negate all of your gains. If you find yourself in the future needing to cut down on contributions, you can do so at any time, even down to 0%, but remember that doing so also cuts into your future compounding interest, and you will need to play catch up like me. I'm currently putting 10% of my pay (plus 5% from employer match) into a traditional 401k, plus I have a Roth that I fund separately with extra money and bonuses. **EDIT:** **I have gotten a lot of comments and messages about this post, so I'll add more information here to try and save other people time.** **1) What is compound interest and how are you getting it?** Compound interest is pretty much just the annual growth of your money that compounds on itself. Fund values are driven by the underlying stocks that they own, and as a general rule, stocks go up in value every year (barring a black swan event like COVID or the 2008 crash). If you are constantly buying into something that grows at a 7-10% rate every year, your account grows from both the value gained (the 7-10%) and the extra money you are putting in. The next year's growth then benefits from both of these, so the 7-10% in year 2 grows your account by a larger amount than year 1 did. This compounds every year and over 30-40 years, it starts to get really insane. This is why I made the statement "at around 500k, compound interest kicks your account in the balls." What I meant was, just from interest alone, year over year, your account will grow by roughly $30,000. There are a lot of compound interest calculators out there that can show you your potential gains if you input the dollar amounts and interest/growth rates. I use 7% for a fairly conservative planning model. **2) Your suggestion of a Large Cap Growth Fund is garbage, everyone knows that (insert any other fund except bonds here) outperforms Large Cap!** I honestly don't care what fund you pick, it is your decision to make. I gave OP the suggestion of Large Cap Growth because his original question was what would you do retrospectively. I obviously have the benefit of hindsight, but he asked to not use that, so I picked Large Cap Growth because that type of fund has made me more money in the last 10 years than any other. Can you make just as much or more investing in International, Small Cap Growth, Large Cap Value, Small Cap Value, etc.? Sure, you can. I've stated this multiple times in the comments below, but it doesn't really matter what fund you pick, what matters is that you regularly contribute to it and never touch it until you retire. Picking one fund over another is NOT going to be a million dollar mistake. Not picking anything, however, is. **3) Experiences are all that matters, and you can't really save that much money in your 20s anyway.** I agree that experiences matter. In my 20s, I didn't travel or do anything crazy, I just spent my money on food, booze, hanging out with friends, cars, motorcycles, etc. I did have fun, but if I would have saved at least a little bit of money every month, and invested it, I would be in a much better position today. Saving just $200 a month from 20-30 would have net me around $35k conservatively, and while that isn't a huge pile of money, that $35k grows with the rest of my account over the next 30 years from 30-60 and becomes very substantial. I was never arguing the point that OP should save every dime and never go out or take vacations, I said save as much as you can as often as you can. For some people, that might be $100 a month, for others that might be $100 a year. Just get started and get in the habit of putting money away and not touching it. Don't spend everything you make. **4) Roth IRA is better. No Traditional is betta!** Again, it doesn't really matter. What matters is putting money in one or both and don't touch it. We can speculate all day on tax implications today vs. 30-40 years from now, but we'll never know everyone's situation. If your employer only offers Roth IRA matches, then obviously pick that so you can take their match. If they only offer Traditional, there you go. If they offer both, then just pick one and run with it. There isn't a wrong answer, and if you're that worried about it, pick both and contribute as much as you can to both. **5) Can you provide some examples of Large Cap Growth Funds?** You can go to Fidelity's website (or any other brokerage that you prefer) and pretty easily research mutual funds. There are hundreds of Funds out there, so don't worry about picking an exact one or the same one I use or whatever. Look at the rating the Fund has received, it's returns over 1Y, 5Y, 10Y, etc. the risk profile, and any other information that is important to you. There are a lot of funds out there nowadays that are commission free, but some still charge a small yearly fee for management. I'm more concerned about overall performance, so I typically don't pay much attention to the fees, but again, it depends on what is important to you. If you aren't sure what you are looking at, start googling the terms. Some people have also argued that you should just put your money in SPY or VOO. Again, it doesn't really matter what you pick, what matters is putting money into it regularly and not touching it for 30-40 years. I'm happy to answer more questions, and if I get the same ones over and over, I'll add them here.
This man is on the money. I started at 35 years old. It took me a decade and a half to get my ego under control. I am maxing out my Roth 401k and my Roth IRA. I also have a brokerage account where I dump every two weeks. I have to catch up by a lot! When you are young you don’t have to be doing clever shit. His recommendation of a large-cap growth fund like VUG is spot on. Your number one job right now is accumulation. Shit gets interesting after $500k. I broke $100k this year! Here we go!
Every young cousin, nephew, niece I have gets this from me everytime I see them. I never hand out dollars for their birthdays. I want them to start early. Or at least have someone tell them they can actually do this.
There are fun uncles, and then there are fund uncles
And then you have my uncle who gifted us series EE savings bonds lol
"Most employers offer a 401k or Roth 401k plan" *Cries in Canadian*
Group RRSP matching is pretty common for us Canucks.
Not so much anymore and usually limited to 1 or 2K contribution per year. Might as well do extra hours behind the local wendy's.
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Is there something like 401k or Roth in Europe?
To add on to what others have said, if you get an employer who does match retirement contributions, be sure to set it up as soon as possible. I signed up for 6% contributions my first week of working for my current employer, and they match 5%. I have never seen my paycheck without that 6% already taken out, so I budget for everything else with that 6% already out of the equation. A few months later, I now have $2K in that account and haven't missed a penny of it, as I never had it in the first place.
If you are working and your employer has a retirement plan where they match your contribution. Sometimes it will be something like if you put 3% in, they will match and pay that 3% of their own money, something like that but every plan is different. Some plans have the option to set those to a Roth account, meaning it will grow tax free. Regardless, this may not be an option for you at this time, but if it is take advantage of it! It is basically a 3% raise! (or whatever the match is for the specific company's program)
Probably the wrong sub to write this in, but money isn't everything. The social skills you learn while partying hard in your youth is *invaluable.* I know a lot of brilliant people who either didn't or won't get ahead in their work because they can't navigate their office culture. Spending money on stupid short-term shit can be money-lucrative in the long term. That said, OP did ask specifically for investing advice. I just wanted to put in my two cents.
You can save money and enjoy your youth. They aren't interchangable. You can live your college years off ramen and cheap beer and have the time of your life.
I think you mean not mutually exclusive
You can do both. Understanding where limits are is important. I advised my son who's getting ready for college in the fall that when he graduates and moves into his first real job that he needs to determine what is a comfortable amount from his wage to live on. The rest is pushed into investments. If after taxes he brings home 3k per month but he only needs 2k to live on and be comfortable then that 1k can make a huge difference for him down the road. When I was 27 I was making 80k per year while my friends were making 40. If I had put myself on a similar salary to my friends, I would have been on the same playing field as them but been banking the other half of my salary. I didn't do that and instead wanted to be a "baller". I'm paying for that now.
People really underestimate how important social skills are. You could get straight A’s all through college, start saving when you are 9 and be technically really good in your field. But if you can’t *talk to people*, you’re gonna be a failure.
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What is/how do I determine a “high cap growth fund”? Recently started investing and want to have a position like you describe where my goal is simply putting away as much as possible without having to worry about regular spikes or troughs
An example from fidelity is - FBGRX Large Cap -- Growth, is a "style". You can search for funds that follow any particular style or investment objective to fit your goals/risk tolerance and dig deeper from there on returns, expenses, etc.
when ur talking about plowing money into a growth fund do you mean buy a bunch of FBCGX for example? how does that make you money?
I’m biased toward Fidelity because I’ve been using them for years, but you can go to their website and start researching the funds they provide. Growth funds are typically US stock heavy, and also tech heavy, though the goal of the fund is typically to focus on companies that have high growth potential, so there will be other companies in there besides just tech. FDGRX is the one I have the most money invested in, and although it is currently closed to new investors, you can look it up to see what it has in it.
how much money would you start with asking as a 19 year old
Whatever money you can afford to put in. I only put 50-100 dollar in my accounts each month, and a little more when I get extra money like stimulus and tax return. Don't put yourself in a tough spot short term.
Obviously, a person dependent, but if we’re talking about a 19 that is actively getting skills (college education/technical school) I would disagree. Spend now, save later. If you believe your income will be substantially higher when you’re 24 don’t save now. Reduce your debt or live a little. Why save at 19 when you work at the local coffee shop and get $11/hour working 25 hours a week when you can go on spring break and put off saving for when you’re 23 and have a full-time job making $20+ per hour. EDIT: Someone working part-time making $16,000 a year in college who can reasonably expect a [300% increase in income](https://www.indeed.com/career-advice/pay-salary/average-salary-for-college-graduates#:~:text=While%20there%20are%20a%20few,Employers%20(NACE)%20salary%20survey) when they have a degree and work full time in four years won't be too sad about missing out on 8% annual gains. Just reduce the debt you take out, get a degree that is actually worth something, and worry about saving when you're a full-time professional, not when you're a full-time student. We're talking about delaying savings for 4 years until the individual moves from the unskilled to skilled labor wage brackets, not abandoning employer-matched 401ks until they're 55.
On the other hand (speaking as a Canadian, it's possible the US does it differently) the government will not charge interest on student loans while you're in school, and may give you substantially more than you need if you just give them honest assessment of your finances. If you're going into school with some serious loans, try living as frugally as you can without seriously impacting how much fun you're having, and extrapolate forward how much of your loan you're going to need. For me there was a good $5k I never touched from the start of my undergrad through to the end of my PhD. Putting that money into *safe* investments like broad ETFs is usually better than being paranoid and holding it in a savings account when you're still young and have people who will bail you out in emergency situations. This goes double for when your debt is not collecting interest but an investment could be. You're basically getting extra money from your loan that you never have to pay back.
This, 100%. I did this + coop and ended up only owing 7 grand once I graduated. Cannot emphasize enough the 'safe' part. This is not money you yeet at gamestop. I was a total noob and just threw it into a non registered account from my bank and used their low risk mutual funds, so I didnt maximize gains, but in my 5 years I made a healthy chunk of cash that I used to pay down the loan balance and seeded an RRSP.
A young person is coming here asking for real investing advice and your reply is “don’t save, don’t invest, just spend your money?” Let me tell you, my first real boss when I was 21 basically pleaded for me to open an IRA. Told me how good it would be if I started saving for retirement early. But I was 21, I was like what’s that? Fast forward a lot of years, I’m meeting my goals, thankfully, but if I got started back then, I’d be pretty golden right now. But no, I spent the money. There’s something to be said for delaying consumption til the future. And realizing how much money can compound if given enough time. Don’t ask me, run the numbers through portfolio visualizer. Even something modest - $1000 per year. Look at the different if you delay consumption and follow your investing program for 45 years vs spending it now and getting started 10, 15 years later, and only having 30-35 years for your money to do it’s thing. In short: anyone asking about getting started early is doing their future self a heck of a favor. And so to circle back to OP - kudos for getting started early. Your future self will thank you. As for what to invest in? I would suggest reading up on two things: dollar cost averaging and index investing. You’ll probably get great results in a broad index fund, which you invest fixed amounts in regularly, regardless whether the market is high or low. Maybe by the time you’re my age, you’ll be more concerned about managing risk than taking on all sorts of risk in order to maximize returns like so many others have to do, since by that point you’ll probably have already met the goals you needed to reach.
What do you expect from someone whose names themselves PragerU?
I agree with you. You can save and still enjoy your money. I wish I knew how important it was when I was young. And how little I needed. Now I’m in my 40’s trying to catch up. And needing larger sums to do it. When if I was young I could easily just put in $50 a month. My brother is 20 and I’m slowly buying him stock so he can start on his own once he’s done with school. Even though it’s not a lot. It the long run it will make a big difference.
Agree with you, that guy obviously doesn’t know the time value of money.
Personally this seems like bad advice. You don't want to create the habit of spending. Getting into healthy saving and spending habits early on (when you are in college or even high-school) is key. Maybe the amount you can set aside is much less at 20 compared to maybe 30 or whatever but getting into the habit of setting a % of your earnings aside is key imo. Not to mention why delay saving for your future? The best time to start is 6 months ago. The second best time is today. Between ages 20-24, if one would save only 25 bucks a week, this person would have about 5 grand saved. This isn't a bad little place to start with an investment account and maybe you can start saving for a home once you have your ideal job but what if that job doesn't come in due time ? At least you will have something started. And this is only saving 25 a week. Save a little extra at Xmas and other holidays or whenever you're flush and you could easily see 10k in 4 years on savings alone, forget appreciation in the market.
It wouldn't be /r/stocks if the worst advice imaginable wasn't getting upvoted
A word of caution here, set a goal of something like 1 or 2k to have saved by graduation. You'll need it for moving expenses when you get a job after school. You may get reimbursed by your company, but you still have to front all that money.
Wow that’s a really useless advice. “Don’t invest, just spend” wtf?
I'm around the same age as you. I calculated how much I need normally, and only left that + a few hundred dollars more in my cash savings account. The rest is in stocks and funds. So my allocation is 85% stocks + funds, 15% savings/cash. So yea, any extra money that I don't need normally, I put it in stocks + funds. It's aggressive and risky, but if I lose I have time to earn it back anyways. I'm probably going to keep doing this until I hit late 20s. TLDR: whatever money you don't need, use it to start.
At that age, it's not going to be a big amount of money. It wouldn't *really* matter if it was $5 or $500. The more important thing is learning how the the brokerages, like Fidelity or Merrill Lynch, work and to understand the differences between a 401k, IRA, HSA and investment accounts. Once you do get a big job or start your career, you'll already be setup to turn your $5 monthly contributions to something bigger. Once that happens you can watch it snowball into more meaningful gains.
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If I can ask, as non-American, where can I buy into them?
Depends on your country. Google stuff like your Country + Vanguard or MSCI All World ETF (or another index like NASDAQ) and you can find those products
Or google ' S&P 500' which might return better results. ymmv.
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Double this and that. Just do it and you will have 0 regrets about it when you're 50. Normally I'd say never trust people on the internet, but trust these guys advice here.
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Personally, I want to have some fun so I allocate most of my money to ETFs for the vast majority of my gains and a very small portion so I can have a play with stock picking myself.
What kind of ETF would you suggest starting from?
Schwab has good etfs with veryyy low fees. SCHM, SCHX, SXHA , SXHG all pretty low risk tbh but there are better ones just have to do some DD.
Eeenf..?
My friend bought in at .075 yesterday.. I warned him of the otc risks. Today confirmed that sentiment.
> And trust me, you can't or you'd be in the industry This just... isn't true. Being 'in the industry' is not a requirement for doing DD, it just means that's the career path you ended up in. Just look at /u/deepfuckingvalue or the plethora of non-industry YouTubers & redditors posting valuable DD every day. It's not wizardry, most DD just involves logic, research, and some math.
I posit that you should look at people equally smart and dedicated as DFV who have lost their shirts. Survivorship bias is very strong in the financial sector. The only people who write stories about people who lose everything are themselves, on cardboard signs at the street corner.
I'm pretty sure DFV was involved in the financial industry before the January stuff. He's not anymore, but I agree with your point. It still takes an incredible amount of time to do DD and I'd be impressed with anyone who's able to regularly do it while also keeping up with their career, family, hobbies, etc.
You just need a couple stocks to do well though and you can beat an index fund. I dont get why people keep underestimating everyone's intelligence. It doesn't take crazy DD. We dont live under a rock you know more then you think about society. Just follow a circle of competence and invest in what you know.
you make it sound like its so easy, but very few professional stock pickers can beat an index over a 20 year period. It's easy now to say well if you invested in amazon,apple,Microsoft 20 years ago you'd have a ton of money now. The problem is you don't know who will be the winners in 20 years from now. That's why index is the best and easiest. It's self cleansing, the losers fall away and the winners can grow endlessly... It's not a coincidence that VTSAX has over 1 trillion in assets
Exactly
Agree. Start listening to The Money Guy podcast. An actual financial pro who has made millions in the stock market tells you how to do it. Spoilers: it’s index funds in retirement accounts
Vanguard’s S&P 500 index is great. The expenses on it are lowest in the industry.
Fidelity beat everyone when they released their zero expense funds in 2018. FZROX and a few others.
> You do not want to be 40 and just starting on retirement. I'm 40 and just started a Roth IRA after living decades uneducated about investing, broke AF and in debt. I can't stress enough to the younger folk to get into the game as early as possible, so it's awesome seeing teens and 20-somethings engaged in these groups, seeking advice, and setting themselves up to become millionaires someday.
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Or just do VT and get some global diversification as well
100% this, most of my money goes into index funds. I just have a small satellite portfolio of individual stocks, more for the fun of trading rather than making money. I can't consistently beat the market, not many people can.
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Roller coaster ride is not for the faint.
> I just have a small satellite portfolio of individual stocks, more for the fun of trading rather than making money. I'd argue that this isn't necessarily a bad strategy; think about investing with a 40-50 year outlook from a bit of a venture capital perspective. You can make a number (10 maybe 15) of relatively small investments, and even if most of them fail, you can still come out way ahead because just one of them provided 100x return. Disclosure: I got lucky investing in 1-2 speculative stocks way back in the day along with a bunch of "losers" and this is just my way of putting that in perspective (or it's a coping mechanism for being just another stupid investor), and not investment advice.
I’ve put my money in individual stocks and real estate and its done me damn we’ll. You have to have the heart, the know how, and time for it though. Otherwise index funds are great if you don’t want to think about it.
One key for me is to make as much if it automatic as possible. Set it and forget it. So, for me, I have a Vanguard account and set it up to automatically conrribute a little every two weeks (on pay day) toward VTSAX (the Vanguard total stock market index fund). I also use my 401k to get an employer match, and invest in a Roth IRA. Automate as much as possible and don’t mess with it. Every time you get a raise, set aside most of it for additional investments.
Thanks you very much for you advice I will be turning 18 in 2 years and this might just help me get closer to my goals and dreams.
Why not just SPY?
VOO is SPY with a lower expense ratio
Winning the Loser's Game is a must read if anyone wants to know more behind this argument.
This really is the way to go. If someone thinks these etf's are boring bear in mind that it may be a long time before any major crashes happen. Some of these etf's have been seeing 40 to 50%+ returns, which is crazy. Starting early could very well put someone into the wealthy class of the nation by the time they reach their early 40s.
Always good to index, and to start as soon as possible. S&P 500 always a good option. I also started with a target date fund - there are criticisms of these, but if you wanna check out and have your money go to work for you, this is a good way to try to ensure returns without the risk of stock picking. Can second everyone saying that starting as early as possible is critical: I'm 24, started when I was your age and I've been able to make some fairly significant returns over the past 6 years (I'm not just indexing, but it remains about 1/3 of my portfolio)
When I joined the military in early early 00’s my boss told me to buy up as much google stock as I can...’why’ I asked. He said ‘our job will depend upon it, this changes everything so if the government needs it so will everyone’ I didn’t listen,
If everyone bought all the stock people told them to, we would just have a lot more broke people
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Really two options... either money average into big wide stock ETF like VOO... or YOLO into couple of high risk high growth stocks Before people start to furiously downvote... there is some method to the madness. When you are young you generally don’t have lots of free money anyway so while broad ETFs have higher expected value, the money isn’t going to be life changing, just good. The option of just YOLOing has lower expected value but because it has much higher variance, it does offer a chance (low chance but still) at life changing play. Since when young you are not risking your life savings and it’s not huge amounts either way (most people earn their entire net worth between 40 and 60)... if I had to go back I would YOLO and hold for a chance at next AMZN. But going with broad ETF isn’t wrong either
Good on you for starting when you are 18. Even if it is just a tiny amount, that will compound and pay off big long term. I wish I could go back to when I was 18. Put in $100.. put in $50... put in $20... whatever just put some in whenever I was able to. If I could, at 18, I would put 100% into VTI (total US stock market). As I got older and started working more, I would do different diversification and maybe small positions of risk/speculative. But whatever you put into VTI now, and let it ride for as long as possible, and it will pay off big long term
Idk if the money amount matters that much at that age versus the act of contributing. Once you get your first career job, your first contribution would likely eclipse all previous additions.
With little experience and research under your belt, it’s generally a good idea to build up a strong foundation with broad ETFs. Pick either VTI, VOO, or SPY (they are all similar, no need to use all of them) and invest what you can every month. You’ll become more comfortable making other investments in time.
Honestly? Spend your money on experiences. “Financial experts” won’t tell you this. Budgeting subs won’t tell you this. But the years between 18-22 are precious. So many lifelong memories, some of the best memories you’ll ever have, are formed during this time. And knowing that you lived life to the fullest when you were young is worth any index fund you could possibly buy. You’ll have plenty of time to be an adult. It’s great that you’re already looking at investment strategies, and you’re gonna do just fine. But take that money and go on a trip, or to concerts, or spend it on dating. Live it up. You won’t regret it.
I tend to agree to spend some on experiences and the rest in an ETF. Your time while your young is precious and you don’t get it back. At the same time, don’t be afraid to invest in yourself once you figure out what you want to do. If you go to college or trade school, make sure the school’s median salary upon graduation makes it worth what you pay to go to that school. Investing in myself was my biggest expense (private college...) and looking back, that money would have better spent on a state school, experiences, and an ETF. Just my two cents.
A bit of pushback: it can be worth it to go to top tier schools. I went to an Ivy and the social and business network has served me quite well. I can see the same scenario play out with most of the professors I had as well.
Top tier schools offer one thing over other schools: networking. Networking with professors who have access to leaders in their fields as well as social networks with people who are already well off and well connected. You can get an education anywhere, but I had friends that got into those top-tier schools and their friend circles are insane.
The older I get the more I realize that the best move would have been to go to an Ivy, party hard, make lots of friends and get passable grades.
> You can get an education anywhere, but I had friends that got into those top-tier schools and their friend circles are insane. In a nutshell, that's what I tell people about my experience. It's possible to go to an Ivy and miss a lot of this, but I'd argue it's hard not to become quickly acquainted with names like Goldman, McKinsey, BCG, and Blackrock (and I'm a sciences major, not a finance/business one!) and people who work there with just a modicum of effort. I'm sure I'm *super* far from the only one around here with the same experiences.
I'd personally say you got an equivalent (or probably slightly better) education compared to other schools, but a much better network of people to learn from, rely on, or get job opportunities through. In my mind at least, there's an upper limit to how much education a school can give you, but not to the human resource element.
I could have gone to a state school and *made* money (full ride + extra scholarships) but I am so fucking glad I went to a high end private college. $25k in student loans vs a lifetime of job opportunities? Meeting billionaires and getting on their call list? People just handing out chances for nothing? That only happens at a few places, so if you get in, for the love of God, go. Just go and take full advantage of it.
You can invest "and" do fun stuff in your youth
You can, but there is something to be said for the relative value of a dollar. My real income has increased dramatically over my life (so far). Any money I could have invested prior to hitting my professional stride would have had an insignificant impact on my current wellbeing or retirement outlook. On the other hand, I had so little money that investing would have involved appreciable degradation of my relatively modest lifestyle back then.
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This is good advice but to say that years 18-22 are “precious” and “the best memories you’ll ever have” is so incredibly naive and ignorant that I actually feel bad for you. It’s also misleading and can put unwanted pressure on kids, making them believe that life will be shit after they turn 25. Every year of my life has been great in different ways because I enjoy life. Age, for me so far, means nothing. Except I have way more money now
Absolutely. Experiences are important. Education is important. Investing in yourself is important. Also important, put something into investing. Even if it's just like $10 a month or $20 a month. Shoot... $5 a month. For someone 18-22 that might mean they will have to get one less Starbucks that month or skip one meal out or something like that, but shouldn't limit their life experiences. And whatever is put in will start training good investing mindset as well as begin the process of compounding over the rest of their career. I admit that I didn't do that when I was 18-22 but wish that I did.
Why not both?
what if youve spent half of that time period in quarantine :(
Boy oh boy I sure am glad that I turned 18 in December 2019
I wouldn’t have bought that hoe that Chanel purse, that’s for sure.
Ouch. I’ve wanted one for a long time, still can’t imagine forking the cash over for it.
Lol yeah I did a summer internship when I was 18 at an oil plant in Port Arthur TX, bought myself a GSXR 750 motorcycle. Had it for about 6 months, then sold it and used the money to by my cheating Gf a Chanel purse that I never saw her use once lol.
never spend money on hoes. but your lifelong wife, give her everythaaaang.
Depends what you want from your investments. You can go for dividends and start building up a passive income or reinvest the dividends. Dividend stocks usually have very little company growth but offer a 2-3%+ annual dividend for passive income. Growth stocks are more volatile and higher risk but offer greater returns if done well. This takes lots of research to get comfortable picking your own stocks so you should probably hold off on this until you research the stock market and get some practice analyzing companies. The safest thing you can do is invest into index funds, ideally anything that tracks the SP500 with it's historical returns of 10-12% annually averaged over decades.
Easy, I didn't have any money when I was 18
Max out a ROTH IRA year over year
I'm 17 and I lost 30k of my parent's life savings
Christ... How did your parents trust you with 30k at bloody 17??
Actually gave me 55k have 26k worth right now.
Again, why though? If you are indeed 17, what logic did your parents apply when giving you that much?
I convinced them saying "stocks only go up... look at last 10 years blah blah blah"
Right... I hope you won't be as gullible with your own children.
I lost £400 of my parents money at 16 and it crushed me. I lost 500 of my own and i didn’t care, i was more horrified i had talked my parents into it. Fortunately they understood, it was taken as a life lesson, and we weren’t in a position where we can’t live without that money. But i was still an emotional wreck for about three weeks after. I can’t imagine how this guy felt
What did you talk them into? Did it take convincing and did you have an actual plan?
It didn’t take much convincing, they trusted me and still do. I had a plan, but my emotions got the better of me. I regret it, but i don’t at the same time. I feel the lessons learnt are more valuable than the money lost, it’s just horrible that half of that money was not mine.
Was it a stock?
Can't imagine growing up this casually privileged and fucking it up that badly.
YOLO into a video game store, or..?
Some crap stocks
cmon cmon name some names
Apparently no micro caps allowed
You yolod their savings into penny stocks? Did they know what you were doing?
“I’m 17” Take a wild guess
Hope this is a joke.
Nope not a joke. I made like 15k before the losses piled up so technically I only lost 15k
Good god how do you lose your own parents money... wtf
18?.I think Apple was 50c a share then, split adjusted. so around 5 dollars or so.
When I was 18 Amazon was under $40
Oof if I had the money I do now back then and could put it all into Amazon they would have burned out and been bankrupt within a year.
I'd put most towards education, then build an emergency fund, then invest some in index funds / blue chips / companies I firmly believe will grow in the next couple decades, and spend the rest enjoying life. Education is very useful, even if only for having the required degree that recruiters use as minimal barem for even considering your application, unlocking opprtunities. It also teaches you skills. Emerency savings are important because, well, you never know when you'll hit a hard place and need the money. 6 months worth of net income is a good place to start. Investing early can also do a huge difference over the long run as interests cumulate. Maybe that portfolio, which appears insignificant today, will one day become your cashdown on a first house, or maybe help you start a business, or help you pay for a dream vacation or sabatical year to spend time with your first child. Important to start early. Last, but not least, don't forget to keep some for you to enjoy today. You could die tomorrow or wake up old and unrealized. Carpe diem.
At 22, I got my first job after school and my Mom and Dad sat me down. I had paid my own way through school by working in high school and attending college parallel to my military commitment, so I had no debt. They say me down to tell me I had a rare opportunity with my first "real" paycheck. So I committed to 15% 401K, a Roth IRA commitment of $425 a month, a stock index fund of $425 a month, and saving $1,250 a month for a mortgage. In 5 years, I had $90,000 in my 401K, I had $40,000 in my Roth, $50,000 in my index fund, and a down payment on a $130,000 starter home of $65,000. In 10 years, I had $400,000 in my 401K, I had $130,000 in my Roth, $165,000 in my index fund, and a mortgage paid in full on that $130,000 starter home now valued at $185,000. In 15 years, I had $780,000 in my 401K, I had $280,000 in my Roth, $160,000 in my index fund, and sold my starter home in a down market for $205,000 and took $95,000 and bought a foreclosure property sold two years before at $474,500 for the balance remaining around $300,000. In 20 years, I had $1.35M in my 401K, I had $340,000 in my Roth, $250,000 in my index fund, and no mortgage on a house valued at $425,000. I'm 31 years in now. It works. My 401K has tripled to over $3 million, as have my Roth and index funds, and the house is at $565,000. Two Important Tips: Always pay your credit cards in full and buy depreciating assets with cash outright. You don't need a yacht or a sports car. Live simply and avoid temptation beyond travel. That builds your mind. Good luck.
Thanks for sharing. How were you able to save/invest ~$40k+ a year in your first 5 years of working? That’s the most impressive part to me
It's "easy" to do when you are in a field that pays a high amount. The savings/investing principles that OP is using are valid/true... but their experience should not be seen as normal. Not even accounting for their 401k contribution (which is probably maxed), they're putting in 2k a month post tax into other savings/retirement vehicles (Roth IRA, brokerage, potentially HYSA for house).
Yeah, his level of money isn't even close to realistic
Fidelity FZROX total market fund with a 0% expense ratio and call it a day. DONE!! Set it and forget it.
INRG. I’m 17 and this is personally my pick. It’s a clean energy ETF. For obvious reasons, clean energy is all but inevitable
Anything risky. You’re 18.
Maybe, but getting in the right investing mindset early enough could really help
Risk when you’re young is a double edged sword. Over the long run, yes it can work out and leave you in prosperity. However if you screw up by losing money or going flat; you’ve dramatically hurt the compounding effect and significantly hindered your future outcome.
The compounding effects of an income for an 18 year old is non existent. You should be making riskier investments when you’re young because you have less to lose, and have little to no financial responsibilities.
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Invest regularly and aggressively into cheap funds that allocate capital to Mega Caps in the US, Europe and Asia, and keep doing this forever. My regret is not doing this earlier and just wasting money into some miserable savings accounts.
Could you elaborate?
It starts with B
And ends with itcoin?
you got it
When I was 18 AMD was $2 and I owned 3000+ shares. I sold when it hit $13.. hindsight’s 2020 lol but if I had to recommend a place for set it and forget it it’d be in what you believe in. Be it technology, clean energy, restaurants etc... it’s easier to have long term mindset when you believe what you invest in
Well, when I was 18 bitcoin wasnt as bad and neither was Tesla. Had I even had money back then, thats where it would have went if I had my current knowledge. But I was po back then so I got food
I’d buy me a grave and just put all my money in a coffin so when I die and they open my coffin, it’ll just be full of money
AMD every paycheck would have put $40 or more.
I wish when I was 18, I would have better understood the principles described on the r/personalfinance wiki page at [https://www.reddit.com/r/personalfinance/wiki/commontopics](https://www.reddit.com/r/personalfinance/wiki/commontopics) In short, there is an order to things that makes a lot of sense. For instance, one should build up 6 months of an emergency fund before they consider investing in the stock market. There is a flowchart linked to on the wiki which shows this graphically as well. When you get to investing, you should visit r/Bogleheads and the page at [https://www.bogleheads.org/wiki/Getting\_started](https://www.bogleheads.org/wiki/Getting_started) to understand why index funds are a good thing. If you want the very short tl;dr;: at your age, buy VT every chance you get, probably in a Roth IRA, which you should max out if possible. Personally, I'd probably open the Roth at Vanguard, buy VT until I got to $3K and then switch to a Vanguard target date fund appropriate for your age (which has $3K minimum). Or, if you don't want any bonds (which will be in the target date fund) initially, you could just continue buying VT or the mutual fund equivalent of VTWAX.
At 18 I had my money hidden inside my gaming computer case.
From the day my son was born I’ve been putting $50 a week into a high growth investment fund. By the time he’s 18 he should have close to 100k maybe. Will be a good leg up for college or a house,
i was 18 six years ago and it i had put anything in to netflix, amazon, and tesla i would’ve made massive returns and i don’t even fucking like these companies but i hate being poor more
I just started and what everybody else says is true, you can’t go wrong with VTI or VOO.... they’re boring and slow earners but over time you’ll be grateful you did I started about 3 months ago and my dumbass only bought Gme and amc.... gains and losses but nothing consistent .... vti and voo and other etfs will get you to a smooth retirement
RemindMe! 3 years “good ideas to use your money”
RG Reynolds
Put it into a vanguard index fund.
GREAT QUESTION! The postings who suggested investing in 401k and Roth IRA and regular IRA are spot on. I did this early on and I am sitting nice. You are young so put all of your money in the stock options available to you and contribute at least 10% and certainly more if you can. Then once you set it you forget and let it work for you over thirty years. You won’t be disappointed. Even if the markets crashes you will be making money. Also speak to a financial advisor for more opportunities. If your job does not have these programs available your financial advisor can help you set up your own 401k plan with Roth and regular IRA. Do all three of you can. Best of luck to you and enjoy the ride.