UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76101  
Subject: Re: How Should a 25 Year Old Self Empoyed Invest Date: 8/6/2011 10:01 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 4
I am in my mid 20's and self employeed. I would like to start investing primarily for later in life.

As someone who is self-employed, your first priority should be tax obligations, and your second priority should be a contingency fund for those times when the checks don't come in as planned. I would say that the contingency fund should be a minimum of 6 months expenses.

Assuming you have these covered, then investing primarily for later in life is appropriate.

It seems like a Roth IRA may be a good option b/c I'm young but is there a better option (I hear there are 401ks for the self employeed)...or is a traditional better?

As far as what type of account, it depends, in part, how much you are planning on putting away. At your age, a Traditional or Roth IRA allows you contribute up to $5,000 a year. A 'solo' or 'single' 401(k) allows you to put away singnificantly more money than an IRA - up to $16,500 (assuming you have at least that much in compensation) for the employee contrributions, and up to a total of $49,000 for the combined employer & employee contribution. The employer contribution for 401(k) is also constrained by your net employment income. There are other potential plans for the self-employed, such as SEP and SIMPLE. You should be consulting your tax adviser to see which plan(s) fit your sitation best.

I basically just want a balanced investing strategy that I don't have to worry about till later.

For 'set it and forget it' type investing, you may want to look at index funds or index ETFs, age targeted funds, or balanced funds. I would suggest places like Vanguard and Fidelity that charge relatively low fees.

AJ
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Apple

Wal-Mart Nixes Apple Pay
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement