Ask Terry Questions INVESTMENT for a young mom

INVESTMENT for a young mom

By Terry Savage on September 09, 2017 | Investments

Hello Terry, I am a mother of a 3yr old going 4 on 11/02/17. I live on Paycheck-to-Paycheck but still wants to save and invest in the Stocks and Bonds for better future Financial Security for myself and daughter. I don't know Where and How to start. Sometimes, it is very intimidating and embarrassing to these Financial Advisers. They don't make it easier for so many people. Please help me! Thanks

Terry Says

Well, I'm glad you were willing to ask your question here!   Don't be intimidated by Financial Advisers.  The basic principle is to spend less than you earn.  If you are living paycheck-to-paycheck that's very hard to do.  But you are already doing some kind of mandatory saving --since they take FICA out of every paycheck, Social Security, which you won't get until you are nearly 70 years old!  You need to do another form of "automatic" savings to get started. Do you deposit your paycheck in a bank account every week -- or cash it?  If you deposit it in a bank account, ask the bank to automatically take $100 from each deposit and transfer it to a separate money market deposit account in the bank.  It's not an investment account, it's just building up a cash reserve.  Set a goal for yourself -- to reach $1,000 in the account by a certain date.  Then to reach $2500. Then when you have $2500, you can call Vanguard (1-800-Vanguard) and open an Individual Retirement Account with $1,000 of that money. and start to invest.  Choose their "equity/income fund" to open your account. The balance stays in your money market account as an emergency fund.   (When you get to that point, write back to me and I will help you through the process.)  Ask Vanguard to come into your checking account and take $100 a month to add to your IRA. Maybe by that time you will be earning more and can afford BOTH -- $100/month to Vanguard AND $100/month to your money market fund! The whole idea is that once it's automatic, you won't have to think about it.  And regular, automatic contributions are the way to build financial security.  I hope you can start now.  You notice that none of this requires a "financial adviser."   This is so basic, you can do it yourself.  Please write back when you are ready to open your Vanguard IRA investment account! And when you are earning more money -- and you will -- I will show you how to open a college account for your child.  But first things first.  Start saving, then start investing -- automatically, on your own!!



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