I'm 23 years old, and I want to retire early. (payment, account, increase)

[eofelis]

You might like to hang out with the folks at the "Early Retirement Extreme" blog. You can find it with a web search.

[mysticaltyger]

Originally Posted by Submariner

I suggest that you consider working for an employer that offers a 20-year pension.

I wouldn't. Pensions are going away. I work in the public sector and our pensions are being scaled back and now 13% of my gross salary goes toward that pension, and the percentage I have to put in goes up every year. Who knows if I will actually get the pension I am supposed to get? And I am 42. I definitely wouldn't recommend this to a 23 year old.

Now, if you're going to look for such an employer and think of the pension as an added bonus, then that's fine....but if you want to retire early, you still need to save as if your pension doesn't exist. That's pretty much what I've always tried to do.

[proverbs23and7]

Everyone is different. Having a child and a Wife can be the biggest blessing in anyone's life. Not trying to give you advice on a personal level, but to be wealthy and or well off with no one to share it with is not so fun for most.....If you decide to have children, make sure he excels academically or decides Military. That would eliminate a lot of college expense. I know a lot of Parents that go into huge debt and put themselves to put their kids through college so they can earn a degree in Psychology.

[CaptainNJ]

Originally Posted by brightdoglover

Add: Ditto on the kids thing unless you are really really called to parenthood. It's an option, not a requirement.

its an option that can have a bigger payoff than any financial investment you would ever make. I see a lot of people saying "i have kids so i cant save" or saying "its going to be hard if you have kids." in many case thats just an excuse, many of those people can save and raise children if they are disciplined.

[LordSquidworth]

Originally Posted by Peerless

My father is big on CD's. To be honest, I am very naive about finances. I think he got me into them early just to get started with investing my money into something, rather than nothing.

They're from a bygone era, when interest rates used to actually be worth using them for. Until interest rates are up above 3% minimum, I'd avoid them.

Originally Posted by Peerless

Please correct me if I'm wrong (and I very well could be), but why take out a car loan when I had the funds to purchase the vehicle upfront?

It depends on the interest rate. Today, car loans seem to be 1.99%.

It also depends on what you do with your money. If you decide to invest your money, and get decent at it, your returns should be greater than that 1.99%.

I'm assuming you know of compounding interest. What most investments are. Using a car loan when you have the money, but can make more money in the market than the car loan rate, is like a reverse of your typical compounding interest. In the end, you have more cash.

If your investments return 12% in a year, and your car loan is 2%, you end up +10%. In reality it is probably 8-9% but that's more math. Point is, you're better off.

Originally Posted by Peerless

YES!! I definitely have to learn more and take action with this. I hear 401k's are very risky since they aren't a defined pension plan.

They're not really any more risky than a brokerage account, as they're just brokerage accounts with special tax stuff.

I always advocate using 401ks to the point where your exhaust your employers contribution, then stop. For the next part, it takes some work on your part. 401ks delay taxes till you withdraw the money at a certain age. The theory is that you'll save money because you'll fall into a lower tax bracket.

With taxes at historical lows, I'm expecting my taxes to be higher later in life (I'm same age, 23), naturally. Then there is the bracket thing. In order to fall into a lower tax bracket, you'd probably have to cut what you live off of, sometimes rather drastically. I myself, don't plan on doing that.

Originally Posted by Peerless

I'd like to invest my own money. I don't know much about mutual funds to be honest.

Mutual funds are for the lazy. IMO, picking your own are the way to go. If you can further elaborate, I'd be more than happy to fill in blanks.

Great thing about learning right now, is I believe right now is a great time to learn. I've been teaching myself (I don't read books, I do) since 2008. I've gotta spanked a few times, but it's easy to recover with the market these days. Start with 5-10k till you feel comfortable. I just dove in.

Originally Posted by proverbs23and7

Taking out a loan and creating debt is not a good idea IMO. I know rates are low, but creating debt when not needed can alter your financial behavior. You will find yourself justifying debt for everything after you start.

It's all about personal responsibility. You either have it, or you don't. If you do, make debt work for you.

Originally Posted by proverbs23and7

Im no expert buy I learned a lot about investing by talking to folks wiser than I. I also use Investing - Home | Investopedia. Good stuff there whether you are a beginner or an expert.

Investopedia is a good site for looking up the meaning of words and for examples, ie options trading.

Originally Posted by PureHapa

Buy used cars only and pay for them in cash and drive them until the annual maintenance outlay doesn't make sense anymore.

This is hit and miss. At times, it's a better choice to buy a new car.

Originally Posted by cpg35223

I have a different opinion on this one. I don't believe in walking onto a car lot at the beginning of the model year or anything, but right now buying new makes a lot more sense than it did a few years ago. The Cash For Clunkers program took a lot of used cars off the market and drove up the prices that remained. A year ago, we shopped and the used car prices were insane, within spitting distance of new car prices.

We ended up buying new, but during the closeout, and got an insane deal with 0% financing. Add the seven year warranty to the thing, and we were actually coming out way ahead.

The point of all this? While generally, you are right, it's always a good idea to see how the current market might temporarily put the tried-and-true advice in abeyance.

^^ I also went looking for used, and ended up with a new one. While my friends are breaking down all the time, mine keeps on going.

Originally Posted by PureHapa

Now is a fantastic time to buy real estate - interest rates are ridiculously low. Buy homes in the nicest neighborhood you can afford. Always buy something special - special architecture, special view, close to the beach or etc. That something intangible makes your house more attractive for renting or selling in the future.

At 23, this is something to go over very detailed. I bought a place last year, at the age of 22. It's a huge weight to carry at a young age. Both mentally, physically, and financially. I did rent mine out, so I really only pay "rent" as the extra bed rooms cover 85% of the house bills, including a 15 year mortgage. But I put a bunch of money in it to charge top dollar.

But real estate, good real estate, is one of the superior investments available.

Originally Posted by PureHapa

Personally, I no longer hold long-term stocks or funds. I play the market like the gambling mecca it is - buy when stocks tank due to economic news, then sell when they go up a certain amount. Make sure to learn about your tax liabilities for selling stocks short term, and subtract tax liabilities from your gains to see the real gains you made.

I can only advocate for new people to do the long-term method. The markets are nerve racking these days for anyone active, trading makes it much more so. I also find that to be successful, you have to devote time. If you're in school, working full time, or living an active life, go long and relax.

Over the long run, the long method is far superior for the majority of investors. (Technically all investors, trading is gambling.)

Originally Posted by HereOnMars

No. You are not wrong. Never finance a car if you have the cash to pay for it. That's just silly. You cannot write off the interest on auto loans. And you can sometimes get a better deal on a car when you tell them it's a cash sale. Unless you can get a 0% loan as mentioned by another poster, cash is best.

Myth. See above. Paying large amounts of cash when interest rates are low isn't making your money work.

[Submariner]

Originally Posted by mysticaltyger

I wouldn't. Pensions are going away. I work in the public sector and our pensions are being scaled back and now 13% of my gross salary goes toward that pension, and the percentage I have to put in goes up every year. Who knows if I will actually get the pension I am supposed to get? And I am 42. I definitely wouldn't recommend this to a 23 year old.

Now, if you're going to look for such an employer and think of the pension as an added bonus, then that's fine....but if you want to retire early, you still need to save as if your pension doesn't exist. That's pretty much what I've always tried to do.

My employer offers a 20-year pension.

An RN going into it starts off at a very reasonable salary.

[brightdoglover]

My RN job is vested in a pension at three years and really takes off compounding) a few years after that. If you quit, you roll it over to an IRA and just keep going. It's not a public job, and it is as solid as a pension can get. For retiring early, that depends on what you mean by early, but it's a benefit that I appreciate more every minute.

[Themanwithnoname]

Few thoughts and some advice:

Avoid debt: (makes it hard to GAIN money through interest, and for the 1.9% people... I have experienced life's ups and downs.
Lack of debt and cash gives you options.)

Drive cheap cars: (counting repairs, mine cost me about $1,000/year... Means the $ can go elsewhere.

THE BIG THING: that keeps most people from retiring early is health care bennies.
I got lucky/unlucky.

Unlucky: I got hurt
Lucky: it happened on active duty, and I have tricare.

You need your own solution to this.

Something to consider:
I'm working on breaking into the oil industry.

Once I am successful I will consider myself 'partially retired' (off 6 months out the year seems so to me!)
I'm 30, I plan on being 'partially retired' from 35 to 55, and then being done with it.

6 figures, for working 6 months... I can live with that, and have less concern with potentially having to be a Walmart door greeter in my 60's because I haven't worked in 20 years and misjudged my finances.

[mysticaltyger]

Originally Posted by CaptainNJ

its an option that can have a bigger payoff than any financial investment you would ever make. I see a lot of people saying "i have kids so i cant save" or saying "its going to be hard if you have kids." in many case thats just an excuse, many of those people can save and raise children if they are disciplined.

Just to clarify....I'm not knocking kids per se...but you have to realize your chances of retiring early go down pretty significantly if you have them. That is just reality. We all make trade offs in life...and if you have kids, one of those trade offs is that you are probably not going to retire at 55 or younger (unless you earn a fabulous income or have a successful business). Of course, I do agree that most people with kids probably can save and use their kids as an excuse. But being able to save and being able to retire early aren't necessarily the same thing.

[mysticaltyger]

Originally Posted by proverbs23and7

Everyone is different. Having a child and a Wife can be the biggest blessing in anyone's life. Not trying to give you advice on a personal level, but to be wealthy and or well off with no one to share it with is not so fun for most

Kids are a blessing for some folks and not for others. It's also possible to have money and to be able to share it with people who aren't your children. It's also possible to be married without kids.

Originally Posted by proverbs23and7

.....If you decide to have children, make sure he excels academically or decides Military. That would eliminate a lot of college expense.

These two things are easier said than done.