• wrath-sedan@kbin.social
        link
        fedilink
        arrow-up
        5
        ·
        edit-2
        1 year ago

        Compound interest. Buy into a total market index fund that will get you more or less 7% on average a year. Let’s say you have a $100 extra per month (doesn’t actually matter whatever you can afford).

        Sally from age 20-30 puts her $100 in every month. At the end she has about $16000. She stops adding anything, but keeps that money invested. By 65 she has $170k.

        Jeff doesn’t start investing until he’s 30, but he’s consistent and does the same thing, $100 a month from 30-65. He ends up with about $165k.

        What that means is Sally made more money than Jeff even though she did the same thing for 10 years that he did for 35. She just started earlier.

      • jon@kbin.social
        link
        fedilink
        arrow-up
        2
        ·
        1 year ago

        I think better advice would be “invest/save” in general. You could just throw money into a mutual fund, index fund, savings account, whatever. If you get a job with an employer matched 401k, max that out. I don’t think you need to worry about trying to play the stock market by buying individual stocks. You’ll end up spending way too much time doing it for minimal gains over an index fund, and a lot of the time you’re just basically gambling on what companies you think are going to do well.

        • JelloBrains@kbin.social
          link
          fedilink
          arrow-up
          1
          ·
          1 year ago

          I want to piggyback on this, if you are in your 20s now, or any age really, if you are willing to do online-only banking and have a good size monthly payday deposit some online banks like Discover and Ally will offer 4% APR savings accounts, that is unheard of at places like Bank of America that were only offering us 0.1% APR on savings accounts.

          If and only if you are good with money and won’t go crazy, buy everything with a decent APR rate credit card and pay it off at the end of the month. We buy gas and only gas with a credit builder card after screwing up in our 20s, it’s helped tremendously and credit scores can affect everything you do from insurance rates to job offers.