Basic Personal Investment Ideas, Tips, and Suggestions
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Basic Personal Investment Ideas, Tips, and Suggestions

The earlier you start investing, the bigger your retirement nest egg can become.

When I was in high school, I had the opportunity to attend an after-school session with a local bank. In it, I learned some investment advice that forever set me on a path of saving toward my eventual (and hopefully early) retirement. The advice was simple: the earlier you start, the more you can net.

Although my investment scheme is elaborate, and I have my money in about eight different places, the essence of it still follows the early investment scheme. Simply put, your retirement will be bigger the more you invest at an earlier age. Each day you delay investing diminishes that retirement.

At the age of 20, I set up an IRA (Individual Retirement Account), and I have reached the maximum contribution ever since I started earning income. Unfortunately, the paradox of investing heavy and early is that you often don't have much to invest at a young age. However, the 20's are the crucial years that make a big difference on the accumulation of your retirement.

My basic principles come down to this: I part with as few dollars as I can possibly spare, and I lock down as much of my money as possible. Knowing that I do not plan on accessing my retirement until retirement, I lock down the maximum IRA contribution every year for the maximum term (usually 7 years). I contribute a portion of my income to tax-free 401(k) options and another portion to taxable options (just to shake it up).

Accrued interest is a matter of inconveniencing yourself. The less accessible that your money is to you, the more accessible you make it to others (others who pay), and the more interest you earn. Money not locked down can go into a money market account to accrue interest comparable to a CD (certificate of deposit). At the same times, this money is still accessible with certain particulars (to avoid fees, you generally have to keep a rolling balance of $5000 in a money market account). You also cannot make more than six withdrawals from the account per month, but storing the money you may need in here is much better than in your checking or savings account. This is because normal accounts often accrue no interest at all, while money market rate can be as high as over one percent.

If you follow these basic tenets of investing and invest as hard and early as you can, then (assuming you work, live in a household with a working partner, net $100,000 or so per year together, and have two children) you should be able to make it to retirement with 3 to 6 million dollars. Good luck!


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Comments (3)

Good advice!

It is so hard to invest in your twenties and I wish I had invested more. Great article!

Thank you! Yes, it certainly is hard.