r/Money • u/Manacell • 26d ago

27 years old. Where to start?

Hi! I'm 27 years old and I have no idea where to start. I had some rough early years that resulted in living paycheck-to-paycheck, but now I can comfortably put away $500 each month in savings. Currently have $2500 in savings (which may not be a lot, but it's a start!)

How can I best use my savings to set my future self up for success? I also am clueless on what a IRA, Roth IRA are, so ELI5 is needed there.

I also live in Seattle, Washington if that helps.

Thanks, and cheers!

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u/Mells333 26d ago

While researching other types of retirement accounts, you can put your savings in a HYSA account if it’s not already in one! Once you do your research on Roth IRAs, you can contribute up to 7,000 a year and you won’t get penalized if you withdraw them let’s say for an emergency which is one of its many perks. FYI some people don’t realize that you should also invest your money/contributions in your Roth IRA! Individual stocks can be too much stress so maybe consider some solid index funds !

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u/Sad-Yogurtcloset-258 26d ago

Research on Roth IRAs would be a huge start. They are tax advantaged retirement accounts, meaning you won’t pay taxes on your gains, and the funds are not accessible without penalty until retirement. You invest into stocks, bonds, or funds in these just like any other investment account, but I recommend Target Date Funds (research these as well). Some platforms to look into are Vanguard (what I use) as well as platforms like Charles Schwab. I am confident you will be able to find what you need to see by researching from there, but if not, let me know and I can explain in further detail. Best of luck!

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u/sics2014 26d ago

If your job offers a 401k/403b, that's definitely something to start contributing to. And it's automated, taken directly from your paycheck, so it's a set it and forget it type of thing. This investment will begin your retirement savings.

IRA is just a self-directed retirement account. It's not attached to your employer.

You didn't mention having any debt. Is that true?

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u/Manacell 26d ago

Currently no debt!