this post was submitted on 20 Dec 2024
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No Stupid Questions

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Assuming I have a time horizon >10 years.

Edit: thanks for all the replies!!

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[–] [email protected] 6 points 1 day ago

Yes, and actually with low amounts of money to work with you can make your contributions very efficient. To best spend save for retirement, choose the first option from this list that applies to you (and if you are able to save more later, go down the list after exhausting each option):

  • 401k up to maximum company match
  • pay off high-interest (>4%) debt
  • IRA up to the contribution limit
  • investment-type HSA up to the limit
  • max out 401k contribution
  • personal investment account without tax advantage

For most people, it's recommended to use a traditional 401k and a Roth IRA, but it varies by situation. As for what to invest in, I would recommend a popular low cost ETF or index fund, like Vanguard or SPY. You can also look into ESGs if you want to do good with your money, but your expected earnings may be lower. I'm in ETHO and TICRX.

You might check out [email protected] or [email protected] if you have questions about getting started.

[–] [email protected] 2 points 1 day ago

Compounding debts need to go first if their interest is higher than your savings.

[–] [email protected] -2 points 1 day ago

Nah, just piss it away.

[–] [email protected] 8 points 1 day ago

The others have made great points about how any amount adds up. Especially with compounding.

But the most important reason me just be making it a habit. If you are saving $50/month you have a place to put your savings and an investment strategy for that money. The next time you get a pay raise or get rid of some recurring spend it will be natural to start saving $60/month, then $100 and more and more. It is much easier to improve an existing habit than starting a new one. So as soon as you have the chance start that got habit.

[–] [email protected] 8 points 2 days ago

Absolutely 100% yes yes yes.

Compounding is your friend. You can play with the values all you want, but this calculator showed me that if you deposited $50/month at 5%/year compounded annually, you'd end up making >$1800 in profit over ten years. Realistically, you should be able to get a better rate and shorter compounding periods once you've passed the threshold amount for a mutual fund or GIC.

And that's assuming you never increase your deposits.

Realistically, whenever you get a raise you should assign some of it to increasing your monthly payments. Your goal should be to increase your payments faster than inflation. Get a $2/hr raise? That'll probably add $250/month to your paycheque after taxes. You should be able to squirrel away $25/month from that at least.

Here's a great piece of advice from The Wealthy Barber (Canadian financial dude): Pay yourself first. See if you can get your investment amount taken directly off your pay, and then you'll never see it, thus be tempted to spend it.

His other advice is to set a goal of 10% of your income to invest for retirement. Seems like a lot, but it's doable for most people who are talking about investing anything, like you.

Remember: The biggest factor in how much you make from investments over time is how early you invest. Invest now. Invest regularly.

[–] [email protected] -3 points 2 days ago (1 children)

If you bought bitcoin for $50 every month in the past 10 years, do you know how much you'd have today?

[–] [email protected] 14 points 2 days ago (1 children)

They said investing, not gambling

[–] [email protected] -1 points 1 day ago

Someone didn't do the math

[–] [email protected] 11 points 2 days ago (1 children)

100% anything you can do is great.

My girlfriend and I have each been putting $50/month into an investment account instead of paying for insurance for my dog, that way if she ever needs a big procedure I can pull money from there if I don't have the savings for it. We've been doing this for 3.5 years and have now built up a good amount! I'll divide the numbers roughly in 2 so you can see what you could be looking at:

Total $2750.
Deposits $2200.
Gains $550.

[–] [email protected] 2 points 2 days ago (2 children)

That $550 will cover two vet visits if you're lucky

Still better than pet insurance though, which is a scam (I mean all insurance is but especially pet insurance)

[–] [email protected] 1 points 2 days ago

Pet insurance is a good thing for people with a large number of animals - particularly rescue animal boarding.

For most people though, no.

[–] [email protected] 2 points 2 days ago* (last edited 2 days ago) (1 children)

I don't know about that. Both of my cats would be dead if not for pet insurance. One needed a $10k surgery this summer that I was able to afford because of my pet insurance. The other had $4k of surgeries the year before. Both instances my insurance covered 70%. Neither of my cats are much more than 5 years old, just bad luck with their health.

[–] [email protected] 2 points 2 days ago (1 children)

Right that's about all they cover, the freak stuff that costs thousands. But for routine visits, vaccinations, and even small conditions that aren't life threatening, they're useless.

[–] [email protected] 2 points 1 day ago

Correct, but thankfully that won't be a surprise since it is evident when you are enrolling. It's up to each pet owner to decide if that's worth it.

In our case, a few hundred dollars per year to make ER visits financially bearable is a good value.

[–] [email protected] 15 points 2 days ago

Specifically if for retirement, time is your best friend. Anything you can put aside will be multiplied down the years and be much more when you need it most

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