How to invest your money
At this point in time, I am in 20k debt and don’t have any money to invest. So, I am studying all the ways to invest, so that in the next 6 months when I will have money I would be prepared to invest it well.
- Get debt free-obvious thing; as you are paying high interest on your debt, so prevent that by paying it off first.
- Roth IRA- Its retirement savings account where you put your post-tax money, and after the age of 60 you can withdraw it and no tax would be charged on it. There is a limit of $6000 per year on it. Let's see how much your money would grow:
We can open up the IRA through Vanguard, Fidelity, Charles Schwab, etc. A good one is Vanguard Target Retirement Income Fund, but it needs starting amount of $1000 to open up the account.
3. 401k: This is pre-tax money, and employers also match some % of your salary towards it. The pre-tax money is good as it's the extra money that is being invested. This is also a retirement account. You will be charged tax when you take it out. So IRA is better than 401K, as you might be at a higher tax bracket in your later age, so the tax cut in 401k might be higher then.
4. Index Funds: These are a pool of stocks, which reduce the risk as we would invest in multiple companies instead of a single stock. Buying into ETF is an option- Vanguard S&P 500(VOO) is a…
