Assuming I have a time horizon >10 years.

Edit: thanks for all the replies!!

  • Orbituary@lemmy.world
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    7 months ago

    Yes. I started with 50/month using Autopilot to get in on the Pelosi investment portfolio. I am up 18% for the year.

  • KombatWombat@lemmy.world
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    7 months ago

    Yes, and actually with low amounts of money to work with you can make your contributions very efficient. To best spend save for retirement, choose the first option from this list that applies to you (and if you are able to save more later, go down the list after exhausting each option):

    • 401k up to maximum company match
    • pay off high-interest (>4%) debt
    • IRA up to the contribution limit
    • investment-type HSA up to the limit
    • max out 401k contribution
    • personal investment account without tax advantage

    For most people, it’s recommended to use a traditional 401k and a Roth IRA, but it varies by situation. As for what to invest in, I would recommend a popular low cost ETF or index fund, like Vanguard or SPY. You can also look into ESGs if you want to do good with your money, but your expected earnings may be lower. I’m in ETHO and TICRX.

    You might check out fire@lemmy.ml or personalfinance@lemmy.ml if you have questions about getting started.

  • 474D@lemmy.world
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    7 months ago

    I just put extra money in a 5% high yield savings account. It’s not exciting, but there’s no risk and it will pay off over time

    • subtext@lemmy.world
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      7 months ago

      There’s also hardly any reward (comparatively speaking). Yields are crazy high right now on savings accounts, but they’re going to continue to drop, vs investing in the stock market (over the long term) is much more likely to maintain a much higher rate of return. Even at 5%, you’re really only getting about 2% growth since inflation is stuck at 3% right now. That compares to a long term average in the stock market of 7-9% after inflation.

      Not to say that OP should do that, necessarily. Especially if they haven’t built their emergency fund which is far more important than investing, until you have a safe amount.

      • 474D@lemmy.world
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        7 months ago

        You’re probably right, as I’m not an expert, so thanks for your input. I am still worried of how the stock market will change with the upcoming trainwreck

        • subtext@lemmy.world
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          7 months ago

          You gotta remember the time horizon, even with historically bad presidents in office, if you smooth the line of the stock market returns over 10, 20, or 30 years, it ends up looking like a really, really good as an investment opportunity. Especially if you’re into dollar cost averaging.

          Basically, if Trump tanks the stock market by going way overboard with things like tariffs, that would (at least looking at historical trends, I’m no financial expert or anything) make for a killer time to buy into the stock market because you’re getting stocks at a “discount.” Then when a different president / legislature comes into office, and if they turn around the economy, your investment would rise faster than otherwise expected.

          Again, you gotta do what’s right for you, this isn’t me saying you should absolutely invest or anything, especially if your basic needs aren’t met or your emergency savings aren’t at a good enough level to last 6–12 months unemployed. This is just how it has been for the last ~100 years.

  • BlameThePeacock@lemmy.ca
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    7 months ago

    It’s honestly probably better putting that amount of money into trying to get a better job over that time period via education, or taking time off to apply for new positions, or something similar.

    $6000 total investment over 10 years even with decent interest on top would be made up in less than 2 years with a $5k raise.

  • ryathal@sh.itjust.works
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    7 months ago

    Yes, saving is like a muscle you need to do it to get better with it. It’s far easier to turn 50/months into 200/month as your income grows, than starting at 200/month.

  • Swordgeek@lemmy.ca
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    7 months ago

    Absolutely 100% yes yes yes.

    Compounding is your friend. You can play with the values all you want, but this calculator showed me that if you deposited $50/month at 5%/year compounded annually, you’d end up making >$1800 in profit over ten years. Realistically, you should be able to get a better rate and shorter compounding periods once you’ve passed the threshold amount for a mutual fund or GIC.

    And that’s assuming you never increase your deposits.

    Realistically, whenever you get a raise you should assign some of it to increasing your monthly payments. Your goal should be to increase your payments faster than inflation. Get a $2/hr raise? That’ll probably add $250/month to your paycheque after taxes. You should be able to squirrel away $25/month from that at least.

    Here’s a great piece of advice from The Wealthy Barber (Canadian financial dude): Pay yourself first. See if you can get your investment amount taken directly off your pay, and then you’ll never see it, thus be tempted to spend it.

    His other advice is to set a goal of 10% of your income to invest for retirement. Seems like a lot, but it’s doable for most people who are talking about investing anything, like you.

    Remember: The biggest factor in how much you make from investments over time is how early you invest. Invest now. Invest regularly.

  • JackLSauce@lemmy.world
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    7 months ago

    That’s 600/yr and a long enough horizon that most diverse portfolios are likely to be net positive (I’m seeing about 5,000 gained with 8% growth in a basic savings calculator)

    I’d spend those 10 years trying to free up cash flow but time’s a powerful weapon regardless

  • subtext@lemmy.world
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    7 months ago

    As much as I hate to send you to Reddit, the r/personalfinance flowchart is hard to beat for most people. I’d recommend you start there to make sure you’re not overlooking something like your emergency fund.

    Reddit’s r/personalfinance flowchart for personal income

    • bamboo@lemmy.blahaj.zone
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      7 months ago

      Is there a reason to focus on 401k (beyond the employer match) before HSA? Isn’t HSA more tax savings advantageous, even if just limited to health care expenses?

      • subtext@lemmy.world
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        7 months ago

        I’m not certain why they have HSA after 401k and IRA, but some possible things I can think of:

        • HSAs can be harder to take advantage of of the triple tax benefit if you’re retiring early (that is, still younger and healthier)
        • HSAs probably have worse investment options than an IRA
        • Allowing the user to optimize their Roth vs Traditional mix

        Again, I don’t really know because you’re right about the HSA triple tax advantage making it seem better than IRA or 401k, but I’m sure there was a reason given if you care to trawl the subreddit.

      • slazer2au@lemmy.world
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        7 months ago

        For the most part you can follow it. Pay down debts, save what you can, make a budget but it gets wonky when you hit 401K, IRA and healthcare

        Problem is each country in the EU is different. What works for Germany may not work for the Netherlands or Denmark.

        As an Aussie I substituted it’s and 401K with our pension equivalent called Superannuation. The healthcare is different in AU. Here in Europe it isn’t too different to AU, replace 401K and IRA are private pension or one offered through an employer.

      • IncogCyberspaceUser@lemmy.world
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        7 months ago

        I looked around a bit, and while I couldn’t find a drawn flowchart for the EU, r/EUpersonalfinance has a page on their wiki inspired by(links to it too) the US flowchart and accompanying text. I hate to plug reddit as well, but here is the link.

        spoiler

        https://www.reddit.com/r/eupersonalfinance/wiki/basics/?utm_medium=android_app&utm_source=share#wiki_general_graphical_version

        (I’m not near a desktop, so can’t really copy and paste the info here with functional hyperlinks.)

    • Mr_Blott@feddit.uk
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      7 months ago

      hard to beat for most people.

      *Utterly irrelevant for most people

      Sorted that for you. What the hell is 401k, Roth, medical debt?

      • vzq@lemmy.world
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        7 months ago

        Financial advice will always be intrinsically linked to fiscal advice, and that will vary with jurisdiction. Where I live we have no 401k or medical debt, but we have other debt and investment instruments with preferential tax treatment.

        The main line of the flow chart is sound.

      • Altima NEO@lemmy.zip
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        7 months ago

        Link is broken for me when I try opening it in a new tab. Something is up with imgur.

  • foggy@lemmy.world
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    7 months ago

    Do you have emergency money?

    First start emergency fund, then take care of debt. Then build a savings for emergency fund, then invest.

    • MonkRome@lemmy.world
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      7 months ago

      For anyone with stable income, only debt who’s interest rate is at or above the potential interest you would earn investments should be paid down first. Any debt at a rate lower than you stand to earn, should be paid over time. Any debt lower than the rate of inflation should be paid as slow as the terms allow without penalty.

      So my order of priority is: high interest debt>emergency fund>tax deferred investing>ira and investing>low interest debt>even more cash holding>debt below inflation.

      • foggy@lemmy.world
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        7 months ago

        Not everyone has stable income. And for them, attacking debt isn’t always possible, especially after they go to get their car inspected and have a $1000 bill to settle in order to get to work for their unstable income. That’s starting your emergency fund goes first.

        You need your initial emergency fund to reasonably cover “a bump in the road”. You then get stable, attack debt, and build emergency fund to be 3-6months expenditures, in case of a serious emergency.

        Only then do we begin gambling in the investment markets.

        • MonkRome@lemmy.world
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          7 months ago

          High interest debt is an emergency. Anything in the emergency category gets paid first. High interest debt is a trap, you can’t hope to meet any other goal in life if you don’t take care of that first.

      • foggy@lemmy.world
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        7 months ago

        Terrible advice.

        Emergency money literally must be liquid or it is not, by definition, emergency money.

          • SpermHowitzer@sh.itjust.works
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            7 months ago

            The issue with keeping your emergency fund in an index fund is that the odds of your own personal crisis coinciding with a more widespread crisis is high. I got furloughed in April 2020. Had my emergency fund been in index funds, I would have had to realize all those market losses in order to use my emergency fund, which would have meant my emergency fund would have been a fraction of what it actually was since it was in a savings account.

  • Clent@lemmy.dbzer0.com
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    7 months ago

    Yes. Investing is always worth it unless you have credit card debit.

    Set it up to automatically invest into the lowest fee index fund your broker offers.

      • jagged_circle@feddit.nl
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        7 months ago

        Can you recommend a single ethical index fund? I’ve been searching for the past decade

        Every time I find one, I look at their holdings and see companies like Google, Meta, Tesla, and for profit banks.

      • Clent@lemmy.dbzer0.com
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        7 months ago

        The post didn’t ask for ethical requirements to be included in the advice.

        Appending additional personal requirements turns the conversation towards one’s personal soapbox.

        • utopiah@lemmy.world
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          7 months ago

          The post didn’t ask for ethical requirements to be included in the advice.

          Right… everything does have ethical requirements though. As soon as a member of a society does make something that impacts themselves and others it has ethical requirements. Some examples :

          • voting (obviously)
          • buying a Xmas (avoiding slave labor)
          • selecting toilet paper (limiting pollution)
          • buying a coffee (fair trade)
          • paying an electricity bill (source of the energy)
          • posting on Lemmy (avoiding centralization)

          Everything, literally everything we do, has ethical requirements. We don’t have to say it because it’s implied.

          Now… if you are genuinely curious about the topic I can only recommend https://en.wikipedia.org/wiki/Ethics_in_mathematics showing that even in the most abstract field, there are ALSO ethical requirements. Nobody can avoid that.