WEB EXCLUSIVE: Three essential steps to start saving
MIAMI VALLEY, Ohio (WKEF/WRGT) - Investing for the future can seem like a daunting task. A recent Harris Poll says 80 percent of millennials have not invested in the stock market.
But some have taken advantage and made a lot of money. Grant Sabatier retired by 30, saving and investing $1.2 million in just 5 years.
He recently shared his three essential steps to start saving on his blog MillennialMoney.com.
- Invest as much money as you can in tax-advantaged account - Taxes are one of the biggest drains on your investment returns so you want to minimize your taxes as much as possible. For most new investors the number one goal is to invest as much money as you can into tax advantaged accounts where your money can grow tax-free over a long period of time. There are two types of tax-advantaged accounts you need to know about – 401Ks and IRAs (individual retirement accounts). For Millennials the most money you can put into them each year is $18,000 in a 401K and $5,500 into an IRA (so you can save $23,000 a year in tax advantaged accounts). Do this first before investing in anything else
- Select how to invest your 401K and IRA 0 Both the 401k and IRA are used to hold investments and are typically used to save for retirement – they are not investments themselves. This means you need to pick investment vehicles to go into them. There are literally an infinite number of choices, but most of the simple ones are the best options.
- Start Saving! -The number one rule is you want to start saving as much money as you can as early as you can, but everything counts. At Millennial Money we recommend that you start saving directly into an investment account which can be opened with very little money. If you try to start saving your investment money in a savings account you are likely to spend it over the next year, but if you move your money directly to an investment account you are going to be less likely to touch that money (that is the key – letting the money grow and compound over time).
You can read more on this website, or check out an app that will help you keep track of investments like Acorns, Stash, Robinhood or Personal Capital.