How I Maxed Out my Roth IRA On a $28K Salary

How I Maxed Out my Roth IRA On a $28K Salary

Hello! Today I have a post written from a blog friend of mine. I was able to meet her at FinCon and talk to her quite a bit. She has a great blog and I definitely recommend that you check it out. This post goes along well with my recent post Why You Should Invest and Save For Retirement – Plus a Personal Finance Confession Fail. Also, if you are new here, check out my latest online income report – $14,136 in October Income.

There’s a myth out there that you need to be rich to get started investing for retirement.

You may think that first you have to pay off all of your student loans. Then you need to squirrel away $25,000 in savings. Maybe buy a house. Start earning an income of $100,000 each year. Only THEN would you consider yourself “qualified” enough to become a Capital-I Investor.

The problem is: waiting too long can threaten your ability to retire at all.

Because here’s the deal—the math is in your favor to start as early as possible. Even if that means starting with a measly $100 or so. (Seriously!)

If you need a refresher, here’s why, in math terms. [Read more…]

Why You Should Invest and Save For Retirement – Plus a Personal Finance Confession Fail

Why You Should Invest and Save For Retirement Plus a Personal Finance Confession FailThere is one topic here on Making Sense of Cents that I hardly ever talk about. That topic is investing.

Investing is something I have never really gotten too deep into in my personal life. I know, personal finance blogger fail right here.

It’s an area in my life that I have been too embarrassed to really talk about. We’ve always had some money in a retirement fund, but nothing to be proud of. My main excuses in the past were always that I was paying off my student loans, saving for something, or preoccupied with things going on in my life.

We do have other money saved as well, but I’ve made a huge mistake of letting it sit in accounts that earn hardly anything in interest.

However, I plan on changing that now.

To make a long story short, I took a leap and bought a few hundred shares of Vanguard Total Stock Market Index Fund Admiral Shares and put it into my SEP IRA. Yes, I’ve finally joined the Vanguard bandwagon thanks to Holly at ClubThrifty and J. Money at BudgetsAreSexy (among several other bloggers!). It is cheap to invest in VTSAX, and their diversified holdings definitely had my interest. [Read more…]

Investing for Beginners

Some of you have asked me to make a post about investing for beginners. I’ve decided to make this sort of like a series because of course it’s way too hard to sum everything about investing into one blog post.

P.S. I am not an investing genius. I almost have my Finance MBA and I work in the financial field, but I am not an investment/financial advisor, so if you don’t agree with any of this, then speak up :) All advice is wanted.

I don’t do a whole lot of investing, mainly because we are so focused on paying off debt. However, once my student loans are done (hopefully next summer), then I do plan on heavily investing. Right now we invest around 10% of our after-tax pay every month, but this isn’t very much.

 

What is investing?

Investing is putting your money somewhere in expectation of some sort of return (hopefully a monetary return!). You want your money to grow for you

Warren Buffet is a great investor. I’ve had lots of classes on his investment strategies. He only invests in things he knows. If he doesn’t understand the company or the business entirely then he doesn’t invest in it. So for example, if you don’t know a ton about the oil business, then you probably won’t want to be investing heavily in it until you understand.

Now, of course I’m not saying that we can all be the next Warren Buffet, but I do believe that only (or mainly) investing in what you know can be extremely helpful and beneficial. This is something that I’m working on right now.
 
Compounding
I’ve also heard of people saying that they don’t invest because they say it’s gambling. It would be extremely hard to prepare for your future and your retirement without investing.

As long as you put enough effort into it and aren’t just investing in anything you see, then you should see some sort of positive return.

I’ve talked about our retirement plan (well, a rough draft), and without compounding and returns, it would most likely be impossible to reach this amount unless we won the lottery.

Different styles for different people
There are many different methods for investing as well. You can invest in individual stocks and try to determine the risk you want to engage in.

Or you could invest in funds so that you are more diversified. It all depends on your individual risk tolerance and how risky you really want to be.

It also depends on when you plan on retiring. If you plan on retiring soon, then you most likely want to minimize your risk in your investments so that nothing bad happens. However, if you’re young, then you can ride the fluctuations in the market without it hurting as much.

Eventually in this series, I’d like to talk about everything that comes along with investing: more in depth about compounding, stocks, funds, bonds, options, and so on.  Hopefully I don’t bore you too much, but I think it would be helpful!

P.S. If anyone wants to guest post on their investment strategies, please e-mail me or leave a comment below! I’d love to hear from others and I’m sure others would want to read it. And even if you have no experience, I would still love for you to guest post on your thoughts and why you haven’t started investing yet.

What are your investment strategies, thoughts, etc?
Share any tips!
Also, what do you not understand about investing? I’ll try and include it in my series!