Beginner's Tactics for Investing - Young and Self-Employed

Yes, you get a Roth IRA. Thats a must.
Vanguard is probably your best option for an IRA.
You can open with with as little as $1,000 depending on which fund you chose, but most require a $3,000 initial investment.

Most will tell you to select a mutual fund comprised of 80-100% stocks.

IRA through Vanguard


Vanguard funds

I personally do not have any good feedback for the best vehicles to make use of if you are self employed. However I would suggest that you make sure you have your taxes and expenses in line before making a decision on your retirement investment vehicle.

Regarding retirement investing, if your income is expected to grow over the next few years, now might be the time to suggest opening a Roth IRA, and feeding money into it. If your income is at point perceived to only go down from here, you need to be looking at something such as a Traditional IRA. IRAs are a good way to take advantage of saving money on taxes, while also investing in yourself for your retirement years.

I suggest you make two lists. One list of expenses you wish to make over the next 5 years and beyond. Example:
1) Pay off student loans - $20k
2) Purchase a home - $200k
3) Pay for a wedding/honeymoon - $7500
4) Pay for child's tuition - $40k
5) Retire at the age of 60 - $500k

A second list of current expenses and a summary of how much you are spending per month. Example as follows:
1) Electricity/Water - $150
2) Cable/Internet - $150
3) Auto Insurance - $80
4) Grocery - $300

The first list will tell you what your goals are and allow you to come up with some ballpark figures for costs. The second list will tell you how much money you are spending relative to your income. You can then decide the best investment vehicles based on your goals. Short-term goals will require safe investments such as Savings Account or CDs. Long term investments such as retirement will direct you to put money into more risky investments such as stock mutual funds.

Do not blindly put money into something you are not sure about. At the same time, do not hesitate long enough to make your decision and suffer from opportunity costs.

Roth IRA-this is just an account with special tax privileges.
Vanguard index funds are what I would buy and put in it

I just don't think it's realistic to retire at age 60 on $500k in 30-35 years. It's probably more like $5m.

Max your Roth in Vangaurd index funds starting right now. As tempting as it is to pay off those loans early, you can never get back the years of missed Roth contributions.

This is my thought

I know its probably the "wrong" thinking but I value time in a fund more than quick payoff of a loan

I would chip at the loan and do retirement at same time if possible

Is that bad?

I agree that $500k is more than likely not enough money for retiring at the age of 60. On the other hand, I have a hard time believing that the majority of Americans will have $500k or more saved up at the age of 60.

This is exactly what I wanted to hear and needed. I've been out of school three years and have been throwing everything at student loans but then had the epiphany that even though they're at 6.8%, they're easily manageable and I'm missing out on years of interest by not investing.

quote:

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On the other hand, I have a hard time believing that the majority of Americans will have $500k or more saved up at the age of 60.

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For sure. That's why the majority of Americans ain't gonna retire at 60.