Hey Money Minder,
I need some advice on how to save and invest my extra cash. I managed to pay off most of my student loans and even invested some money while living with my folks. Right now, I have around $20.5K split between two ETFs and another $6.5k in a savings account. I make sure to max out my 401k to get my company’s match, but I’m not fully vested yet. I kind of just randomly throw money into different accounts when I have some to spare.
I’m thinking of opening an IRA, but I’m not sure where to start or which company to go with. I’m also a bit worried about having a lot of my savings in stocks – should I switch things up? Aside from my student loans (which I’m chipping away at), I don’t have any big debts. I pay rent, cover my living costs, and probably spend too much on fun stuff (trying to cut back).
Any tips on what I should focus on in the short and long term with my finances? Thanks a bunch!
Budget Beginner
Response from THE MONEY MINDER:
Hello There,
Congratulations on paying off most of your student loans and starting to invest your disposable income wisely. It sounds like you have a good foundation already with your investments in ETFs and a savings account. Opening an IRA and maxing it out could indeed be a smart move, as it provides tax advantages for retirement savings. Consider researching different companies that offer IRAs and choose one that aligns with your financial goals and investment preferences.
Regarding your concern about having a majority of savings tied up in stocks, it’s important to have a diversified portfolio to minimize risk. You may want to consider reallocating some of your investments into other asset classes, such as bonds or real estate, to achieve a better balance between risk and return. It’s also a good idea to develop a systematic approach to adding to your accounts regularly to maximize the benefits of compound interest over time.
In the short term, focus on creating a budget to track your expenses and identify areas where you can cut back on non-essentials. By reducing unnecessary spending and redirecting those funds towards savings and investments, you can accelerate your financial growth. In the long term, continue to educate yourself on personal finance and investment strategies to make informed decisions that align with your financial goals.
Remember, financial planning is a journey, and it’s important to stay disciplined and committed to your financial goals. All the best from THE MONEY MINDER as you continue to build your wealth and secure your financial future.
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