Saving for Retirement

tj1320 said: "I'm 23 years old right now and I want to figure out the best way to go about retiring a millionaire. I'm not sure what to do though because there seems to be a lot of different ways to go about it. Someone told me that I could just open a savings account at my bank and put $7,000 - $10,000 a year into it and easily retire a millionaire. What about IRAs, annuities, etc.? Would that be better than a savings account? I just don't want to end up like my parents, who are in debt and barely staying above water."

ladybridgeport said: "Each paycheck you get, save 10% and put it into a savings account. By the time you retire you have some money for retirement. In the meantime you might want to invest that money into a cd for a year. cd's are safe, relatively. Make sure it's not a new bank."

marbles said: "[QUOTE=tj1320]. Someone told me that I could just open a savings account at my bank and put $7,000 - $10,000 a year into it and easily retire a millionaire. [/QUOTE] Sure, on your 80th birthday you will be a millionaire, but the birthday cake your wife bought will cost $45,000 due to inflation. :D Historically, stocks, real estate, and bonds have done much better than savings accounts and CDs. Put that money into stock mutual funds, individual stocks, purchase a house or a condo in a desirable location when you have the means. Having some emergency money in a bank savings account is a great thing, but at your age you should take more risk for a higher return. You always have to factor in [B]inflation[/B] , and a savings account may not even keep up with inflation over the long term."

Pimp said: "you actually lose money value putting ur money into a savings account, due to inflation!!!!"

JAP said: "Right now there are some municiple tax-free bond funds paying between 4-5%."

Harry said: "IRA accounts...buy best-of-breed stocks and basically ~HOLD~ them. . Pay attention to what your stocks are doing. be aware when they are genrationally no long in your best interest and trade out to higher ground. Example...A great HOLD for the next three years would be Toyota and HONDA. Need I even explain in the current enviornment?"

lil dickie said: "Savings accounts only I would say no. But an index fund or excellent performing mutual fund would probably take care of that for you."

wildmandan32 said: "there is lots of info on how to do this but regardless of what direction you go START TODAY the longer you wait the more money you are throwing away by an astronomical amount so start now and then start perfecting your system....compounding is a beautiful thing"

Heather said: "Ditto what has already been said. Savings are still savings. A CD or an IRA are both fine choices for long term savings.."

tj1320 said: "Thanks for the help guys. I have a sharebuilder account with Wells Fargo and here is what it told me (Portfolio Builder) to do over the long term for aggressive growth and higher risk: Total of $400 per month, will be more as I make more money. (EFA) EURO-ASIA INDX (MSCI-ISHARES) $60 (IWD) RUSSELL 1000 VALUE (ISHARES) $172 (IWF) RUSSELL 1000 GROWTH (ISHARES) $152 (TIP) LEH US TREAS INF FD (ISHARES) $16 I also have an account with optionsXpress that I trade mainly options with so most of whatever I gain from it will be put into the sharebuilder plan also. Does this sound like a good plan at age 23?"

marbles said: "[QUOTE=tj1320] here is what it told me (Portfolio Builder) to do over the long term for aggressive growth and higher risk:[/QUOTE] Those are all good ETFs. I own that IWF- Russell 1000 Growth :) The only downside is that both of those Russell 1000 ETFs are just large and giant cap indexes. You don't have any exposure to small or mid-cap stocks. If Portfolio Builder gives you access to an ETF with the Mid Cap 400, S&P Small Cap, or Russell 2000 indexes.....I would substitute one of them for one of the Russell 1000. If not, no big deal, that sounds like an excellent portfolio. :cool:"

tj1320 said: "That is encouraging, thanks. I can probably afford a little more than the $400 per month so maybe I'll add another $75-$100 for one of the ETFs you suggested. Will all of these including one of the ETFs you suggested be a good combo? I've been told that time is on my side at 23 so hopefully by 63 (hopefully I'll get there in good health) I'll be a wealthy man. Besides, I'm learning more and more with my options trading so if I can get good at that then I'll be able to add that much more per month."

tj1320 said: "EFA EURO-ASIA INDX (MSCI-ISHARES) $60 IJJ S&P MIDCAP 400 VALUE (ISHARES) $25 IJK S&P MIDCAP 400 GROWTH ISHARES $25 IWD RUSSELL 1000 VALUE (ISHARES) $172 IWF RUSSELL 1000 GROWTH (ISHARES) $152 IWP RUSSELL MIDCAP GROWTH ISHARES $50 TIP LEH US TREAS INF FD (ISHARES) $16 Okay, I added the S&P midcap value & growth and I also added the Russell midcap growth. Do you think I should replace one of the midcap ETFs with a small cap?"

marbles said: "[QUOTE=tj1320]EFA EURO-ASIA INDX (MSCI-ISHARES) $60 IJJ S&P MIDCAP 400 VALUE (ISHARES) $25 IJK S&P MIDCAP 400 GROWTH ISHARES $25 IWD RUSSELL 1000 VALUE (ISHARES) $172 IWF RUSSELL 1000 GROWTH (ISHARES) $152 IWP RUSSELL MIDCAP GROWTH ISHARES $50 TIP LEH US TREAS INF FD (ISHARES) $16 Okay, I added the S&P midcap value & growth and I also added the Russell midcap growth. Do you think I should replace one of the midcap ETFs with a small cap?[/QUOTE] You could just add one midcap index to keep it simple. IJH- MidCap 400 index is "the whole Midcap 400 index"- both the value and growth stocks. Or IJJ and IJK. IJR- S&P SmallCap 600. That one tracks quite a broad selection of small cap stocks. You can check all these out at [url]www.ishares.com[/url] I recommend just adding two indexes, one smallcap and one midcap. IJH and IJR would be my first choice. IJJ and IJR would be a great combination too."

dreamland said: "To keep your money, you have to make wise investment.:)"

jhealey said: "I like IRAs because of the tax reasons but you can only contribute $4500/year. I also like the US government treasury bonds that are compensated for inflation. I also like convertible bonds. Options are also a good way to earn/invest in a tax diverting way. Dont forget with mutual funds you pay fees + tax. Figure out Tax Equivalent Yields for tax free muni bonds vs what ever you want to invest in...tax free munis are great especially if you fall into a high tax bracket."

Maryland said: "I just opened up a Fidelity Roth-IRA account. You already have a head start, start saving money in your rothIRA and 401k. With solid investments you will reach your goals."

wildmandan32 said: "if you stick to this and sacrifice on the things you wont remember in the long run...taking your lunch to work instead of spending $6 a day eating junk, the years will go by faster than you can imagine and ten years from now will be a blink of an eye when you look back....before you know it your money will be making more money for you than you do working, and that is a great day ;) and should be everyone's goal...to me there is NO better peace of mind than financial security. How does that saying go..." he who plants a tree today, sits in the shade tomorrow" I know that is close and i have no idea who said it but it sure rings true here. Compounding is a AMAZZZZING thing, stick to it, there is ALWAYS an excuse don't fall from your plan and you will be a happy man before you know it....then the next problem arrises, keeping that wealth...I have become so cheap sometimes i think it is a double edged sword, but i'd rather have security than things any day."

tj1320 said: "Thanks. I worry about inflation also but I picked the most aggressive style according to portfolio builder. I also added a small and mid cap index to diversify it some more. Hopefully this will pay off for me in the long run. Now I just need to stay alive and in good health so that I can enjoy it when it happens."

JAP said: "[QUOTE=wildmandan32]if you stick to this and sacrifice on the things you wont remember in the long run...taking your lunch to work instead of spending $6 a day eating junk, the years will go by faster than you can imagine and ten years from now will be a blink of an eye when you look back....before you know it your money will be making more money for you than you do working, and that is a great day ;) and should be everyone's goal...to me there is NO better peace of mind than financial security. How does that saying go..." he who plants a tree today, sits in the shade tomorrow" I know that is close and i have no idea who said it but it sure rings true here. Compounding is a AMAZZZZING thing, stick to it, there is ALWAYS an excuse don't fall from your plan and you will be a happy man before you know it....then the next problem arrises, keeping that wealth...I have become so cheap sometimes i think it is a double edged sword, but i'd rather have security than things any day.[/QUOTE] Dan, you are indeed a wildman, but you give very sound, logical advice :) I earn a very decent salary for a single guy, I live at 30-40% of my means and I bag my lunch everyday. My co-workers always call me "cheap"... I simply laugh at them then say "thank you". :p Gotta love compounding! Never underestimate the "time-value" of money."

wildmandan32 said: "well thank you for the compliment. i am a young old guy lol, but saving religiously has afforded me a beautiful life, i can not begin to explain to new young investors the peace of mind that financial security gives you...and believe you me it was not easy to put away money sometimes....but you just have to do it, in the long run or not even in the long run.... in the not so long run what is going to matter that you bought a new car every other year or that you stashed away some extra money and drove your couple year old car a little longer....trust me on this one save the money.....the peace of mind, the security of not having to worry about money I would trade it for nothing. I dont know the #'s but you can look them up in many places that show the difference in final earnings if you started saving for retirement at age 18 versus 22 versus 30 etc it is amazing.....so all i say is do it now, you are sacrificing nothing.....that is all a illusion in ten yrs you'll go Oh my that goofy dude really was right lol we should start a thread on all the crazy things we do to save money now that would be funny.....now i dont call myself cheap, i am into spending money on memories and experiences....things are just not that important to me but i do have a expensive motorcycle habit lol ok so weird ways that i save money .... almost always make my own lunch, rarely eat out, I buy good quality (dont read that high fashion) clothes, and shoes so i get longer life out of them...and take care of them. Ok I just bought my first personal new car this last year and still cant believe i did it...grrr..buy your cars a couple years old to save depreciation, in my experience try to buy cars with all the options leather electric etc as they are easier to resale and command the highest price... take vacations in the off season (easy for me i dont like crowds), ok and my weirdest that i can come up with right now I quit drinking a few years ago bcause of some medication i am on but i miss it, dont miss the after effects lol but instead of buying longnecks i bought a keg cooler with co2 it was absolutely amazing how much money i saved....i guess that means i was drinking way too much beer then :D have a wonderful weekend everyone oh and as soon as financially possible and responsible buy your own home, in my opinion that is the first key to building personal wealth, all that money you waste on rent you instead essentially 'get back' when you sell your home..and in most cases then some....you always have to live somewhere you might as well make yourself some money instead of a landlord...just my 2 cents"