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24. Female. State worker. Has about 15k in a pension (quarterly reports to be mailed soon, so it is just a guess). Just opened a Vanguard Target Fund for 2050 and maxed it out for this year.
Are target funds okay for people who aren't investment savvy? Also what about CDs? I have a general savings accounts at US Bank and it earns a pittance. What would you tell a newbie about CDs? Are they a good/better investment than a savings account?
24. Female. State worker. Has about 15k in a pension (quarterly reports to be mailed soon, so it is just a guess). Just opened a Vanguard Target Fund for 2050 and maxed it out for this year.
Are target funds okay for people who aren't investment savvy? Also what about CDs? I have a general savings accounts at US Bank and it earns a pittance. What would you tell a newbie about CDs? Are they a good/better investment than a savings account?
Thanks.
These days a CD earning less than 1% is not investing. Ditto for bank savings accounts. You won't even come close to keeping up with inflation. Stick with a target date fund. Looks like they start out at about 90% stocks and 10% bonds. That's essentially what you would otherwise be doing on your own with a total bond market index fund and a total stock market index fund, although you'd save about .10% per year in expense ratio fees, which isn't much.
Your on your way to creating financial freedom- you're young so your ahead of most. Vanguard Target date funds are fine although I usually suggest something more aggressive for a younger investor, at least pick the target date longer so it is a more aggressive portfolio.
US Bank, BOA & many of the larger banks pay nothing (.05 etc) & usually have many hoops to go thru to avoid service charges. You may want to investigate some local credit unions or an on-line bank such as EverBank or Ally etc. Of course I do not know what your needs are maybe you need a national bank & a local credit union will not work but just look around. I would not buy any CD's at this point with rates as low as they are, I'm sure an on-line bank will have a liquid account that will beat US Banks CD's. GL
24. Female. State worker. Has about 15k in a pension (quarterly reports to be mailed soon, so it is just a guess). Just opened a Vanguard Target Fund for 2050 and maxed it out for this year.
Are target funds okay for people who aren't investment savvy? Also what about CDs? I have a general savings accounts at US Bank and it earns a pittance. What would you tell a newbie about CDs? Are they a good/better investment than a savings account?
Thanks.
1. Yes, Target Date funds are the perfect investment for people who aren't investment savvy--and that's most of us. Even those of us who consider ourselves investment savvy may not get better returns than target date funds. Ask me how I know.
2. You might consider opening an online savings account for some of your savings. You'll get a better interest rate than some of the big banks. I hear some are even paying 1% interest. CDs can be ok if you don't think you'll need the money, but check the interest rate first. Sometimes the online savings accounts offer the same interest rates without the strings attached to CDs.
Your on your way to creating financial freedom- you're young so your ahead of most. Vanguard Target date funds are fine although I usually suggest something more aggressive for a younger investor, at least pick the target date longer so it is a more aggressive portfolio.
Vanguard Target Retirement 2050 is about 89% stocks and 11% bonds and cash. I think that's plenty aggressive.
Vanguard Target Retirement 2050 is about 89% stocks and 11% bonds and cash. I think that's plenty aggressive.
Actually for a most 24 year olds (do not know entire individual situation) would actually be ok with 100% stock portfolio. Obviously need a cash (emergency) reserve account as well.
24. Female. State worker. Has about 15k in a pension (quarterly reports to be mailed soon, so it is just a guess). Just opened a Vanguard Target Fund for 2050 and maxed it out for this year.
Are target funds okay for people who aren't investment savvy? Also what about CDs? I have a general savings accounts at US Bank and it earns a pittance. What would you tell a newbie about CDs? Are they a good/better investment than a savings account?
Thanks.
First save some money for emergency funds. Those Emergency funds can be in CD's or money market accounts.
Then with any extra money, I would invest in stocks.
401K or 403K in your case is fine with Vanguard target funds for 2050. Make sure you put 10% or 15% if possible.
Vanguard Target Retirement 2050 is about 89% stocks and 11% bonds and cash. I think that's plenty aggressive.
Not necessarily for a 24 year old who is putting the money away for 2050 and not drawing from it. With a target date fund the asset allocation changes as the target date nears and appetite for risk declines.
If she wants less stock risk then she could allocate a little more towards a bond index fund.
Actually for a most 24 year olds (do not know entire individual situation) would actually be ok with 100% stock portfolio. Obviously need a cash (emergency) reserve account as well.
While age might play a factor in planning or making recommendations the actual investor and their risk/comfort level is the main driver. Suggesting and equity percentage based simply on age is a sure fire way to accumulate complaints in this business
I am a little bit risk adverse, but I know that at my age, I am going to need to invest in stocks in order to save enough for retirement. Plus I have a state pension, so I feel okay with taking some risks for now.
After doing some research on CDs, I don't think they are really worth the investment at this point. I do have a savings with about 15k. I don't know if it is a good idea to let so much money sit there and make such little savings. I have been thinking about Bonds, and I like that they are more secure and can earn more interest than a CD/regular savings account.
Any bonds worth investing in?
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