What is the best way for me to save for retirement at age 22?
I can only start with a few thousand. It needs to be little or no risk. My job offers no retirement plan.
Public Comments
- get a job that offers a retirement plan.
- THERE IS ALSWAYS RISK IN INVESTING. if you dont want any risk stick to savings accounts with high interest switch whatever bank account you have to one that pays interest like ing or schwab. the set aside 10% of your income each pay period and pretend like it was never there. then research some mutual funds on yahoo finance. and pick 2-3 that are diversified in sectors which are expected to perfom well, again, do your research. periodically invest a porion of your savings in those. also, if you are offered a 401k at your job, it is a good idea to contribute to that as well as a roth ira. both of these will decrease the amount of you income tax, and if your employer matches any of your contributions ( which mine DOESNT : ( -hey its like free money.
- The first answerer has certainly given a lead worth exploring, and let's not even talk about the second one. But if you were so savvy, you wouldn't be asking a question here, would you ? :) I'm sorry, this wasn't meant to sound patronizing ... How about starting at a very basic level ? Like a Savings account ? Like a Certificate of Deposit ? Do you know that these give you almost a guaranteed return of around 4.5 % ? I'm not saying that investing in stocks and mutual funds wouldn't yield you more, just be sure to research well in whatever you venture in. At 22 you definitely are in a position to take risks, but take calculated risks.
- If you don't have an IRA through your employer, the next best bet (especially since you're young) is a Roth IRA. It's not too late to add funds to a Roth IRA for 2007 (you can add up to $4000 through April towards your 2007 limit--and if you made less than $26000 you can get the "savers credit" on your 2007 taxes for it too) The limit for most people in 2008 is $5000. A Roth IRA is a retirement account where you add post-tax dollars and the money grows tax-free. You do not usually have to pay taxes on your earnings. You'll probably start out with an index fund (that's a mutual fund that's based on an index like the S&P 500--that means that historically it's performed well and there won't be a lot of fees associated with it since it's basically buying and holding.) The links in my source list are all great places to open an IRA. I recommend against going through your bank as they will usually charge you extra fees. Just like with regular banking, it's less expensive to do it yourself online. Good luck!
