Skip to main content
No. of Recommendations: 0

I am 30 years old and have been investing in my 401K since I was 24. I recommend you do the following:

- Put the maximum contribution into the 401K for the first 5 years. After the first 5 years (or longer if you chose) decrease your investment. Obviously, don't put in any amount less than what your company will match. (I have been putting the maximum into my plan which is 16% + 4% company match).
- Immediately open a Roth IRA. Since this investment yields tax-free returns, it is preferable to a 401K. Put $2000 in every year. Be aggressive with this investment.
- Lobby your HR department to get better investment options. Ask for at least and index fund and an aggressve growth fund.
- Look at each of the funds. Rule out any that are not 100% equities + cash. Look up their long term performance - 10+ years (most charting sites can give your a chart which compares against S&P500).

The trick with any investment is not so much the amount you put in, but how early you invest the money. (This is very easy to show with a spreadsheet). A small amount of money invested early on will easily outperform 2x/3x the amount which is invested 10 years later. Your income will increase over time which will enable you to put more dollars into the plan. But the initial dollars are the ones which will reap the highest return.

I know that when I was 25, I tended to look in the present (when it came to money) instead of the future.
You may have to forgo some luxuries initially to do this, but it will be well worth it. Even if you do this plan for only 5 years.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.