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Does 20-year-old already have an emergency fund set up with 6-12 months worth of living expenses in the account? If not, that would be my first priority.
Next, I'd look at a Roth IRA. Since the money has presumably already been taxed, there's no sense in paying taxes again in the future. If the 20-year-old needs guidance, now would be a good time to establish a relationship with a financial advisor.
I'd start by asking friends and family members if they currently use someone that they would recommend. Personal referrals are always nice, but if that's not an option I'd look in the phone book to see which companies have offices in my area. Then I'd set up interviews with a handful of people and let them know that you're meeting with several people before choosing an advisor. Ask each of them how they are paid for their services, which group of funds they can (or will) work with, a list of references and how he/she will help you achieve your personal goals. From there, I'd pick a winner.
1) Have 6 month of emergency expenses.
2) NO CREDIT CARD DEBT of any amount for any interest rate. You may have a low interest rate but just wait until you are late on our water bill or something like that.
Then
Max out roth ira.
Max out 401k, preferably a roth 401k.
put rest into gold/silver.
Make sure there is no credit card debt. Try to have a couple months expenses set aside, then throw 4k into a Roth, I think thats the max contribution.
If the above is taken care of, I would put a third to half into a market index fund, and 10% in each of an international fund and a fund for small caps for some diversity. With the remaining 2-4k, I would put in a 3 to 6 month CD while I learned as much as possible about stock investing. When comfortable use a discount broker to invest in some stock. (Dividend reinvestment plans are nice). I'm not as comfortble with advisors...are they makingyou more than you can make yourself with their fees?
If the above is taken care of, I would put a third to half into a market index fund, and 10% in each of an international fund and a fund for small caps for some diversity. With the remaining 2-4k, I would put in a 3 to 6 month CD while I learned as much as possible about stock investing. When comfortable use a discount broker to invest in some stock. (Dividend reinvestment plans are nice). I'm not as comfortble with advisors...are they makingyou more than you can make yourself with their fees?
Not a smart move. Inflation is very high right now. So when you factor in the cost/benefit of investing in the stock market it doesn't make sense. Better off using tax-efficient accounts as much as possible.
Max out your 401 if your employer has a good match, work on the roth as much as possible, possible self directed ira, gold, silver, oil just a matter of time before they crash don't waste your time and your broker will not be watching close enough to get you out in time anyway, life insurance if you choose to do so while your young or go with term later, scrap any idea of c/d's no gain there, don't invest thru a bank always use a broker or inv/ financial advisor, at 20 yrs of age you can afford to get fairly aggressive but keep some in conservative to diverse a bit, an index fund won't do much for you, lots of vehicles to use just keep tabs on the fees and once it gets built up good have a good cpa not an idiot from h&r block.
Not sure I understand your comments. Investing in stocks is a way to keep up or beat inflation. One can't time the market, but getting some high dividend stocks can keep pace with the economy. What are tax efficient options for a 20 yr old?
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