Business Week recommended the following strategies for one's twenties and I included my brief comments in blue:
- Tighten up spending; ratchet up savings. Target to save 12 to 20% of one's income.
- Put savings on autopilot. I would add to pay oneself first.
- Live beneath your means. This is a must.
- Start an "escape" fund to be used before retirement accounts become available at 59 1/2. This can also serve as one's emergency fund initally.
- Revel in the Roth because withdrawals are tax free. I would max out the matching amount of a 401K first.
- Watch the investment fees and keep them low. I would add invest in a good domestic and foreign diversified equity fund.
Overall, I would summarize the twenties as "Build a good foundation of habits." The recommendations were a good starting point for someone in their twenties. I also would include having the right insurance - i.e. health, disability, auto, and renters/homeowners.
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This is not financial or retirement advice. Please consult a professional advisor.
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