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Ashmanarion
01-25-2012, 11:28 AM
I have looked over websites and read some books but still have a hard time grasping how to enter the world of investing. I'm 30, been married three years and have a 10 month old. We both have 401ks but very little savings and are looking at getting a home of our own in the future. We are trying to cut our costs and save more and I know I need to start an IRA as soon as possible.

I have not found anybody or anywhere that has said, "Here is where you start investing and this is who to go to." I'm hoping some of you that are much more experienced in these matters could lend a hand. We're looking at building an emergency fund first, then retirement, along with college savings for our DD, saving up for a house, and I would like to invest a small amount(below 2000 or lower) in the market to help with the house issue.

Could anyone lend some helpful advice please?:confused:

crisi
01-25-2012, 12:18 PM
You have it. Start saving. All the stuff you are talking about, except the IRA are short term. A savings account at the bank will do. I'd not worry about the IRA until the other stuff is underway since you have 401ks. When you have $10k or so floating free, then you can think about investment vehicles.

The market is a lousy place for $2k needed for a house. Don't over think this.

bettymae1121
01-25-2012, 12:37 PM
I wouldn't (and won't) invest outside of a 401k until I had all my short term savings goals funded. Down payment for house, 6-12 month emergency fund, and maybe some savings for a new(er) car if my current one is getting long in the tooth. Also I'd make sure I was debt free other than a mortgage and a modest car payment.

Once you're at that level, then look at investing in stocks.

teCh0010
01-25-2012, 01:35 PM
Have you read Dave Ramsey? He has a step by step system that may work for you.

If I was in your spot I would :
1. Fund 401k up to employer match levels (get the free money)
2. Put at least 1k in an emergency fund and don't touch it.
3. Pay down any Credit card debt.
3a. Fund 6 months living expenses to your emergency fund
4. Fund a savings account for you house
5. Buy a house
5a. Get 30 year term life for a reasonable amount
6. Pay down any car loans
7. Create a car savings plan so you won't have car loans again
8. Max out a Roth IRA each
9. Max out 401k after fully funding a roth IRA each
10. Fund college savings
11. Start to invest in a taxable account outside of your 401k

For your emergency savings take a look at a rewards checking account. There are requirements such as the number of debit card transactions but you can get a rate as high as 3% FDIC insured on up to $25k at many smaller banks and credit unions.

Here is a site to search rewards checking accounts :
http://www.depositaccounts.com/checking/reward-checking-accounts.html#P|26|10000|false,false,true,true,fal se,true,true|NC|EstimatedEarnings desc

cornflake
01-25-2012, 01:42 PM
With the others that the market should not be your concern right now.

You want the 401 maxed. You want a Roth IRA maxed.

You want a nice emergency fund.

Then start a 529 or other such for your daughter.

You want no consumer debt.

THEN start throwing things at saving for a house - and then you can consider what vehicles. Remember, market investing carries risk. There are some places that do general market funds for you, that you can balance with t-bonds to your liking, there are p-to-p lending places that give excellent returns for not bad risk, there are straight trading accounts, brokerage accts., mutual funds, etc.

Ashmanarion
01-25-2012, 07:02 PM
Thanks for all the advice. I really think I was getting way too ahead of myself thinking that if I invested in an IRA now or bonds it would help get us towards a house down the road a ways. That doesn't make sense to me now so I truly thank you. DW has been hit pretty hard this week about the news that we just can't afford a house we want and our resources are stretched thin. I have to admit, I went a little crazy buying her stuff for Christmas. I've looked at Dave Ramseys site and really like the idea of getting our debts paid off, except for car loans, as quickly as possible. I just have to find the money to do that, pay off Disney trip coming in April, and start an emergency fund.

I'll gladly take any other advice!

cornflake
01-25-2012, 07:26 PM
Thanks for all the advice. I really think I was getting way too ahead of myself thinking that if I invested in an IRA now or bonds it would help get us towards a house down the road a ways. That doesn't make sense to me now so I truly thank you. DW has been hit pretty hard this week about the news that we just can't afford a house we want and our resources are stretched thin. I have to admit, I went a little crazy buying her stuff for Christmas. I've looked at Dave Ramseys site and really like the idea of getting our debts paid off, except for car loans, as quickly as possible. I just have to find the money to do that, pay off Disney trip coming in April, and start an emergency fund.

I'll gladly take any other advice!

An IRA won't help you with a house, I'm not sure how you mean that.

Bonds are a safe investment but with a generally low return. They're part of an investment portfolio - you keep rebalancing your portfolio depending on your goals and therefore your risk tolerance.

If someone is young, like 20, and investing for retirement, they'd have a very high risk tolerance, because they have time to make up any losses, so they'd have very light investments in bonds.

If someone is 40, and investing for retirement, they'd have a lower risk tolerance, because they have less time to make up losses, so they'd have a higher percentage in bonds, because even though they have low returns, they're safe. See?

Though, as everyone said and you now see (yay!) investing isn't your immediate need. It's saving for an emergency fund, maxing out the 401k, maxing out a Roth IRA, getting rid of consumer debt (look at the interest your credit cards are charging you. If they're at a typical 20ish%, every month you don't pay that down, it's costing you the 20% interest on the money you owe, PLUS whatever you're not earning on that interest, if you were able to keep it and save it on your own), starting a 529 for your daughter, and then a house and investment.

arthur06
01-25-2012, 09:32 PM
An IRA won't help you with a house, I'm not sure how you mean that.

Bonds are a safe investment but with a generally low return. They're part of an investment portfolio - you keep rebalancing your portfolio depending on your goals and therefore your risk tolerance.

If someone is young, like 20, and investing for retirement, they'd have a very high risk tolerance, because they have time to make up any losses, so they'd have very light investments in bonds.

If someone is 40, and investing for retirement, they'd have a lower risk tolerance, because they have less time to make up losses, so they'd have a higher percentage in bonds, because even though they have low returns, they're safe. See?

Though, as everyone said and you now see (yay!) investing isn't your immediate need. It's saving for an emergency fund, maxing out the 401k, maxing out a Roth IRA, getting rid of consumer debt (look at the interest your credit cards are charging you. If they're at a typical 20ish%, every month you don't pay that down, it's costing you the 20% interest on the money you owe, PLUS whatever you're not earning on that interest, if you were able to keep it and save it on your own), starting a 529 for your daughter, and then a house and investment.


I agree with the younger is more aggressive approach.

I will also add, that make sure you max out to at least the company match if you have one.

I have always thought that even if the market loses money, I make money. My thought is, if I put $100 and my employer matches at 50%, then they give me $50. So my initial $100 is $150. If the market loses 25%, which of my $150 is $37.50, my $150 is still $112.50.

I have always thought the best way to get ahead us to utilize your employer match.