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Backstory: I am in my first job in my professional field. After all my bills are paid, I have ~$1k left over every month. These bills are all inclusive, mortgage, groceries, gas, etc. My job is with a small company, 10 employees max, with no retirement fund. I want you to assume I have no savings. I have a retirement plan that was rolled over when I left a previous job (1/2 pay, not in professional field). I do not know what type, I can find out if necesaary.

My questions are

  • When should I start investing in retirement and stocks in general? Remember, I have no savings.

  • Since I already own my home and can safely pay the mortgage and household bills, how much savings is generally suggested before one starts to invest in stocks or retirement?

Thank you.

  • I'd start with this post. – JoeTaxpayer Dec 31 '16 at 3:48
  • Great post @JoeTaxpayer. I was looking for all that info but couldnt find it! – Hypnic Jerk Dec 31 '16 at 4:00
  • Agree, Ben Miller's post there. I was just about to write that, but there it is. And I'll emphasize: you cannot believe how important it is to invest for retirement E-A-R-L-Y. It multiplies tax-deferred or tax-exempt, and that means it multiplies a lot more than other money. It is the most important thing behind emergency fund. If I had appreciated that at 20, I would've eaten ramen and thrown my sushi and cable TV money into my IRA. – Harper Dec 31 '16 at 5:19
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Investing requires capital, and the fastest way to get the capital is to develop good saving habits. Investing is an ongoing process to help you accumulate wealth, so to take advantage of compounding, the earlier you start, the better.

I can suggest a few pointers to get you started on the investing journey.

  1. Work out the amount which you can save comfortably every month, automate the savings process by standing order or any other free services that your bank provides and send the money into a separate account meant for investing/emergency purposes.
  2. Figure out if you have time to learn investing and what are your expectations in terms of investment returns, this will put you into a passive or active approach to investing
  3. For active approach, it will take time to develop your investing skills; many books and resources/courses will be covered, experience and knowledge will take time to develop your investing philosophy.
  4. For passive approach, invest into index ETFs on a regular basis. Although there is less work, you still need to know what your expectations are. There are some processes which I think could help you start on investing in index ETFs (S&P500 ETF). Read up about dollar cost averaging and value averaging to help you determine the amount of work you are willing to put in to commit to the passive investing process.
  5. Rinse, repeat and let compounding work for you.

Godspeed! :)

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