The dude at my bank was all about this earlier, but I told him I'd go home and think it over.
>~20,000 per year
>rate, not salary
>no 401k
Why did he suggest this so strongly? Should I cop?
If your workplace doesn't have a 401k, then you should have an IRA/roth-IRA
IRA are basically "tax-sheltered" accounts which you can purchase stocks, bonds, any sort of investments etc -- most end up with an ETF or an a broad index fund. If you can imagine a privatized (doubly taxed -- using post tax dollars) pension plan, that's your IRA plans. Same function as Social Security but higher returns, so that's what I mean by doubly taxed.
401K's are pre-tax dollars so they're not doubly taxed, and they're structured in the same vein. You end up paying taxes upon taking funds out, much like a regular IRA.
A regular IRA allows annual tax deductions (I mean fat ass returns). A roth IRA doesn't allow tax deductions, but a roth IRA allows you to avoid taxes upon taking funds out at the age of 65.
>>1376196
I see I see. Thank you for your insight anon, I will talk to bankman probably next month.
>>1376196
So it doesn't make much sense for a 20 year old college student to be putting money made from part time job into an IRA I'm guessing.
>>1376199
At that point you should probably just put it in a normal savings account
>>1376199
The advice I have is:
The more you save, and the earlier, the better you'll be in the future -- if you park your money in the right place.
$3000/year is a sweet spot. I think /biz/ has instructions on how to do it.
>>1376204
https://www.bogleheads.org/wiki/Three-fund_portfolio
>>1376196
this. as much as roth ira is spammed here, go traditional. there's no telling what the tax rates will be in the future, and if you ever have a crisis where you need to withdraw, you likely wont be taxed as much as you would immediately by investing in a roth ira.
plus, pre-tax naturally earns more than post-tax. id rather be taxed on higher profits. the confusing part here is how dividends work with roth iras. it's possible that a roth ira of 100% dividend yielding securities earns more than a traditional, but thats a different thread. basically, dividends arent taxed in a roth ira.
>>1376204
Replace save with sell and you actually make sense.
