I've been collecting information about the best investment practices, however I'm have very little financial knowledge and was hoping someone here could point me in the right direction. I feel like I don't even know the correct questions to ask. I guess my question is where do people normally start? At the very least is there a simple way for me to start earning interest?


I live in the United States and have planned some money planned ahead in case of an emergency. I'm 22, Single and living out of an apartment. My work doesn't offer any savings programs like a 401(K). My goals would be that eventually I could live entirely on investments/interest.


(First of all, congratulations on saving $25K!)

If this is all aimed at retirement (no new car, house, children, etc), then -- presuming you earn more than this -- put $11,000 into "Retirement 2065" fund in a Roth IRA account at a discount brokerage like (alphabetically) Fidelity or Vanguard.

Since it's before 15th April, assign half to year 2018 and half to 2019. If you wait until the 16th, you can only invest $5,500.

Then open a regular, taxable brokerage account at the same firm and put the balance of the $25,000 in it. Buy the same "Retirement 2065" fund with this taxable money.

Next year, and every year after, move $5,500 into the Roth account until the whole $25K is in there.

Hopefully by then you'll be earning more on your own, or at a job which offers a 401(k) which you can contribute to.

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    A note on those target funds -- they can have some heavy fees, even from the "discount" brokers like Vanguard, Schwab, etc. Recently, these firms have started offering "Target Index Funds", which have far lower fees than their managed target funds. So be careful when selecting a target fund because the names can be misleading. The "Index" part is important. – Rocky Mar 13 '19 at 22:51
  • Oh, an excellent advice on the 2018/2019 deadline! OP has about a month to make a 2018 IRA contribution, good timing! Roth vs Traditional is a whole topic, though. Since OP is young and might be in a low tax bracket already, Roth might be better ... for now... – Rocky Mar 13 '19 at 22:52
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    The 2019 IRA limit is $6,000. – nanoman Mar 13 '19 at 23:10

This question is asked frequently and there are some common responses. You're wise to start thinking about savings while you are young. Since you already have an emergency fund:

  1. Set aside a portion of your pay towards savings. 10% is a common number.
  2. Tax-advantage accounts are a good thing. A traditional IRA from any of the discount brokers out there (Schwab, Fidelity, Vanguard, etc) is easy to open. If you can max your annual contribution ($5500 in 2019), you should!
  3. Invest in low fee Index funds, like an S&P 500 Index or VSTAX. It is very hard to beat the market in the long run, so just matching the market is a fine goal. You can open a taxable account at the same firm if you are maxing out your IRA.
  4. Don't forget to save for things like buying a home, raising kids, college, etc. But that's advice for another question.
  5. Don't sweat market downturns. You are in this for the long haul, so a market correction is inevitable and is an opportunity to invest more at a discount.

This is just general advice. Basically, compound growth is a very powerful tool. The younger you start, the better!


I would recommend investing in a six-month or less duration bond fund.

Then every three to four months move 10% into some investment that has been found to be interesting.

Obviously, when the entire investment has been placed in interesting positions, the investor would probably allow themselves a re-positioning every three to four months.

  • Short-term bond funds for a 22-year-old with a lifetime of savings ahead of him/her seems far too conservative. OP can sock it away regularly in equity index funds (not bonds), which perform quite well in the long run, and just cruise to retirement. – Rocky Mar 13 '19 at 22:45
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    @Rocky yeah, that's almost as conservative as my father's who's been holding money for my kids in a 0.01% MM account for 10 years... – RonJohn Mar 13 '19 at 22:49
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    The short term bond fund as explained is just a temporary holding while deciding on more significant investments. I don't need to repeat the post I can just say that it is a "slow roll" method of investment. – S Spring Mar 13 '19 at 22:49
  • He might as well park it in an online savings account. That way, we won't lose anything if interest rates rise again. – RonJohn Mar 13 '19 at 22:52
  • Certainly, a bank account that pays about the same as a three-month Treasury Bill is a good choice for a temporary holding. But to move into a stock market investment would require a bank transfer to the home bank account and then another bank transfer to a brokerage account. Look at the ticker symbols mint, near, and shv that are on the stock market. – S Spring Mar 13 '19 at 22:58

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