I have fairly limited knowledge on finances. Curious to know if what I'm doing is sufficient or if I should change how I'm managing my finances.
-Yearly income is $45k, almost no expenses, No 401K through employer 🙁
-5k in IRA, 2k in brokerage
-2 lines of credit, one with ~$400 yearly fee, planning to downgrade
-36k in high yield savings
23 year old. What should I be doing?
byu/Kruzty_boy inpersonalfinance
Posted by Kruzty_boy
5 Comments
you should be heavily weighted toward growth investments. your current allocation seems too conservative …
Well, you’re doing much better than most 23 year olds. If I were you:
1. Deploy your capital. HYSAs barely keep up with inflation. You should invest your money in the S&P 500 or similar IMO. Also consider a small investment in Bitcoin.
2. Start a Roth IRA, and max it out every year ($7k or $8k currently?). This money will grow tax-free.
3. Get rid of your high fee LOC of course
4. Don’t open debt to buy a car
5. Open a credit card if you don’t have any; this will help you build your credit profile if you eventually want to buy a house.
Why the 36k in high yield savings? This probably only makes sense if saving for an immediate need like down payment on a house or car. I say that because you’re probably only getting 4% on it right now. Keep maxing the IRA and contributing to the brokerage.
Working hard. You have 40+ years of inflation to keep up with before it’s over.
Your instincts are correct you are heading in the right direction. Advice, that’s been on here so far. It’s good advice. I would follow that.
The money you have an emergency fund might be a little Much it could be trimmed. All the best to you.