Retirement/investing/saving?

I am 25 with Roth IRA of only $750ish currently. I only add like $50/month to it. It's through my bank, USAA, called cornerstone strategy fund(moderate risk). I don't know much about investing, but should I actually be putting more money into it(since poor market)? I also have a mutual fund for emergency savings purposes with like $3K(low risk). I add $100/month to it. I also add $150/month into ING savings account with 2.5% rate return(only $500 in it now). How does my savings and retirement plan need improvement? The only debt I have is $15K on my Civic. The rest are regular bills like rent, cell phone, etc.

Public Comments

1. I recommend putting more money into your savings account. When you have 6 months to a year or more of living expenses in the bank, so that you can live for 6 months without trouble and without a job or even unemployment you can put more money into retirement investments. I would try to invest most of your money in after-tax investments which do not have a penalty for withdrawal at any age. This is what you call planning for emergencies. Like right now many people will be out of a job for a year, maybe more. I am currently on a 1 month layoff and I have no worries. I don't really like the stock market myself as I think it's all a scam...Before 9-11 many U.S. companies were being discovered as fraudulent. And they are still finding more fraud to this day...wonder when the next terror attack will be since that was the pattern before the last so-called attack. Anyway I digress. Nothing beats money in the bank. you can lose money on stocks and funds but the bank you can't unless your over the FDIC insured $100,000 mark. If you own a house you need more emergency funds than if you don't..expensive repairs/surprises.
2. You are off to a pretty good start... Consider using the $250/month from EF and Ing to pay off Civic sooner if you have a rate higher than 3-4%. Why pay 8% on a car loan while only earning 3% in a bank account? As an alternative if the Civic has a low interest rate: consider contributing the $250 to the Roth. If you don't contribute now, you will never be able to go back to do so. Also, you can take out Roth contributions without penalty if an emergency arises. Be as conservative as you want INSIDE the Roth for now; the key is to have it in there so that later on, when you have more money, you can invest aggressively without being taxed.
3. We are in unique economic times with a collapsing financial system. Even most seasoned investors were probably stunned in 2008. But it sounds like you are doing well in putting money into investments. However, are you saving as much as you want available for retirement and for emergency savings? Have you considered different kinds of CDs, their rates and conditions (some allow early withdrawal without penalty)? Inflation seems to be expected in 2009 which might not be good for many investments -- a physical precious metal investment might be an exception this year, like an investment in precious metals that are bought at a good price off of ebay and stored. However, such an investment is volatile (often gains or loses money fast) and has costs like postage and could get stolen. People often overpay for precious metal coins when they don't know how much they are worth. I'm pretty sure that you may add $4,000 this year to a Roth IRA. Can you afford that much -- or do you need it now? It might not be worth going into debt and making interest payments on the debt. If you need savings for the future and you have no need to purchase much else to help you along currently since you already have a new car, maybe putting money in savings is a good idea even if will lose some purchasing value. If you want to play it safe cashwise, you could try putting some money into a USAA money market fund. It might not keep up with inflation but it might retain some value for the future when you need it. Even losing investments can be worth it, just to have money in the future when much more in need of money. I invested in Brita filters and corresponding pitchers and I double filter well water to save on spring water. I invested in long distance telephone cards from Costco that don't cost much per minute and last me a long time. I invested in supermarket food and stopped using restaurants. I drive less in spite of low gasoline cost. ADDENDUM: coach is sort of right but to answer his question about why: it's because you can withdraw from the savings account, while paying off the car loan cannot be undone. So emergency funds are sometimes more important than paying off debt. However, if you can afford to pay off the debt, it's different.
4. You are doing great to be thinking about saving and investing at your age! It sounds like you are making a good start. You likely should have more emergency savings (though it sounds like you are working on that). Your savings account can count toward those emergency savings if you aren't using it right now for something else. A mutual fund might not be the best choice for your emergency savings -- as we've seen these last few months, the job market and the stock market might follow each other, so just at the time you are most likely to lose your job, the stock market is down. You might want to look into CDs or money market. The CD rates should be a little better, and while that does sort of tie up your money for a specific amount of time, if you transfer it over in chunks, you can get it out over a short period of time penalty free (so, say you take out a $1000 1 year CD today, and then another in 6 months, and then another 6 months after that -- then that money will be penalty-free available on the same timescale). Since an emergency big enough to deplete your entire fund should (should!) happen over a period of time, this might be a decent strategy. How much you should be socking away depends on your income. At your age, you should probably be saving 10-15% of your income toward retirement. (This depends some on your income too.) You should have 3-6 months of income in emergency cash at least. You're at the perfect age to do some really aggressive saving. First of all, if you get in the habit now, it will be easier to keep later when you may have some additional pressing bills (a mortgage, a family?). But most importantly, let's say you want to retire in 40 years. Every dollar you invest today toward your retirement should grow to something like $15 by the time you are 65. Compare that to the dollars you invest in 20 years, when you are 45 -- those dollars will each grow to just shy of $4 by the time you are ready to retire. So today's retirement savings are absolutely golden for you because you have so much time to earn on them. (This doesn't even account for the presumption that the market is low right now -- that could boost your savings even more.) You can get more detailed information at http://www.vilkri.com/intro/retirement_planning_calculator.php -- this site will take your specific income, debt, age, and preferences into account and give you other suggestions on how to manage your money in multiple areas (including retirement). You can use it over time to track your progress, too. Good luck!