Originally Posted by Vacountryboy-IXI
Thank you for the great replies!
I have considered throwing a few small amounts into different stocks and see where they go. Logic tells me using anything more than play money in any one stock would bring more stress for myself than anything.
Yes, I am currently drawing money into 401 through my employer. They do match to a certain amount, something I haven't looked into like I probably should.
That is great advice about foreclosure, it's something I have definitely looked into. Unfortunately, I'm currently living out of state and don't want to purchase anything in area. I don't plan to be living in Nc by the end of this following year, I'm ready to be back in Richmond!
I'm going to look into the Roth IRA. Anything specific I need to take into interest before starting?
Thanks again guys! I'm really looking forward starting a road to better finances!
Definitely invest in the 401k to the maximum amount they match. This is free money. It will also lower your taxable income, so that is a raise (until you retire). Whatever funds they offer, deversify among at least 3 of different types with different strategies (growth, value, large, mid, small cap, domestic, foreign).
Also, for funds, index funds (Like S&P 500) are the most cost-effective. Actively managed funds often have a lot of overhead costs that deplete your returns. Look for low expense ratios (always under 1.00, if not much lower).
For cash reserve "savings" (a joke for the last few years), you can look into a tax-exempt money market fund, which will provide better return than just about any regular bank savings account. ING (online) also has a decent savings program, but all interest rates are shit now, so that is a tough call.
You really shouldn't invest anything in stocks that you can't afford to lose outright. You have a family... Build up at least
a six-month reserve for all life expenses first (as someone else said) and stuff that in an FDIC-insured account, max out your 401k for matching funds, start a Roth and invest the max in there that you can (I think $5000 a year is the limit now), then consider other things like stocks. The retirement accounts depend on compounding interest. The earlier you start, the more it makes for you in the long-term. It is impossible to ever make up this time advantage later in life.
And keep saving for a house down payment for when you are ready. Rates have never been this low. Our folks used to face rates like 15%. You can make a one-time distribution from the Roth IRA for a first-time home purchase, if that is what works for you when the time comes. Never take loans or distributions from your 401k. It isn't worth it.