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Originally Posted by redefined
Great post Greg.
I've got a few things I want paid off - school loans - BAHHH  but I should be able to knock that out by May. After that it's all about saving for the new house and investments!!!!
Time to pick a few of the ones listed here and watch them for the next few months. Interesting that you dropped McDonalds.
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Paying any debt that has a "high" (that's relative) interest rate is priority. Once it's paid off --- the catch is to not charge more than you can pay off each month... If you pay off a 10% loan -- it's the equivalent of making 10% (not quite but you get the idea). Paying interest is the opposite of compounding interest for yourself... it's compounding for someone else.
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Originally Posted by protour73
so let's talk Roth IRA's . . . . Good idea?
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For those that qualify -- I'd always fund an ROTH IRA first --- while it's not tax advantaged NOW --- pulling that money out tax free when you retire is just HUGE. We don't know what tax rates will look like when we retire -- but the longer you have until you retire -- the more you can bet they'll be higher than what they are now. Allowing your money to compound for years - and withdrawing it completely tax free is huge!
Think this way --- if you retire and need $2000 a month from your ROTH IRA... you can just pull out $2000 each month... but if you need $2000 a month to pay your bills and you're withdrawing from a 401K and you're in the 25% tax bracket -- you now need to pull out enough to cover your $2000 need AND enough to cover taxes ($500 more?)... so you're draining your account $500 a month more than if you had it in a ROTH. That's $6,000 a year! Just for taxes.
Put the money in NOW -- let it grow... and withdraw tax free! It's the greatest gift Congress ever gave you!
Quote:
Originally Posted by redefined
How much would you say is a minimum to start with? I'm a few months out before I can commit a decent chunk every month but I could swing a grand or so until then. Pick 1 stock and put a grand in it now?
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Whatever you can afford -- there is no magic... I'd say if you have a grand --- either do ONE stock -- or do TWO.... and when you have $500 more add a third -- do this until you have TEN stocks... then start to add your $500 to one of the ten names... until you have a grand in each... and so on. The most you need is 20 names even if you have one million dollars (that's 5% per investment). If it was me -- I'd always add the additional funds to the name that had the poorest performance -- thus buying me more shares - and bringing my average cost down the quickest...
There's an explanation to averaging down somewhere in the thread.