Mid 20's advice

[KevinNJ25]

Hey fellow Savers,

I wanted to post within to get some feedback. I'm 26 years old, making about 67,000 at a large insurance company putting aside 25% of my paycheck into a 401k savings account with a 7.5% match. Been with my current employer nearly 2 years and amassed $32,342.94 in savings. I pat myself on the back because I know my age group is more concerned with many other things other than savings, especially in this econ. I've obtained my Masters right before entering the workforce with 100% tuition remission and also no student loans from my uundergraduate studies. Reputable school, St. John's University in Queens, NY. Living with my girlfriend we split rent and bills down the middle. I take home ~2950 a month after Uncle Sam and savings contributions. About 1500 goes to rent/bills per month, and the other 1500 to credit card payments and spending. I've saved up ~20,000 in a regular savings at a local TD. I am debt free and carry a $1,000 balance on a credit card, so not REALLY debt free.

I really want to make a move. I am living comfortable and maybe feel a little scared of taking a risk because of obvious reasons. I'm more of a conservative person so opening a Roth or Trad. IRA and maxing that out every year would probably be more my thing just not sure if that the smartest. I rent and own my vehicle so I don't have much equity. My brother said he would help me if I was ever intrested in buying a rental with him and spliting down payments and keeping both of us on a deed.

Really looking for some guiadance for those grown up, adult decisions in life. I went to college with a lot of finance and tax majors, just don't know how much expiernece they have in the real world so far.


Thanks,
Kevin

[Goldy]

Why do you carry a CC balance with 20k in the bank? There seems to be a myth going around that you need to carry a balance on a CC to increase your credit score but that is not true. If thats why you carry a balance I would urge you to pay it off in full.

[jIM_Ohio]

I would focus on liquidity at your age, meaning I would amass savings in brokerage accounts, savings accounts or other OUTSIDE of a 401k, Roth or other IRA.

If you use the advantaged accounts, you will look good on paper, reality is in next 10 years you will make some BIG life decisions, marriage, house, car and possibly career. Having liquidity will help solve those problems in a good way.

[atomicrc11]

I agree with Jim. Having just come out of my 20's I realize that I put too much into retirement accounts. I have a significant sum saved which is great, but I realize I now have nothing for a home down payment. Certainly contribute up to the maximum match on a 401k and put some cash into a Roth IRA as well, but don't neglect to save for non-retirement goals as well. The way I look at it is I'm saving a good amount for retirement, but not all of us will get there. Enjoy some money now and some before retirement.

I'm not saying don't save, just don't put every penny you save into tax advantaged accounts.

[psuicyde king]

I would focus on liquidity at your age, meaning I would amass savings in brokerage accounts, savings accounts or other OUTSIDE of a 401k, Roth or other IRA.

If you use the advantaged accounts, you will look good on paper, reality is in next 10 years you will make some BIG life decisions, marriage, house, car and possibly career. Having liquidity will help solve those problems in a good way.

I 90% agree with Jim. Stack your Roth IRA though. The advantages that come with it are worth it, and the max limit is easily tolerable for you based on your current savings patterns.

[snafu]

I'm confused. You are smart to participate in your employer's retirement plan and capturing the 7.5% free matching sum but what product did you actually invest/buy and what were/are your choices? What are the fees and associated costs hidden and declared?

artwest asks some relevant questions. What skill sets do you and brother bring to the table that are important to the role of landlord? Do you have sufficient cash to buy a rental unit outright? Would you jointly need to borrow/mortgage? What responsibility would each of you undertake? If there was intermittent months of vacancy, how would the payments be allocated? If there was a catastrophic incident [flood, tornado,hurricane, earthquake, sewer backup] what would you do? If your tenant checked out ok but you later learn they faked credentials and operated a 'grow house' how would you remediate the rental? [this is happening to landlords in my community and causing havoc for landlords]

Since you are young and a relatively inexperienced investors, I suggest you start with a low cost, index mutual fund like those offered by Vanguard while you are on a major learning curve. You can set up automatic, monthly payments to buy fewer units when the market is up and more units when the market trends downward. It will also help you clarify your RISK tolerance.

...just some thoughts

[KevinNJ25]

Really thankful for all of the honest and knowledgable responses given to me here on my thread. Since starting the thread I've:

-Decided to not persue any long term investment properties with a family member. To answer the post above, I had no considered some of those questions at all. Young and naivee I figured tennants are a dime a dozen and they're all as good as me and my girlfriend but I know that isn't the case.
-Scaled back my 401 contribution to 17.5% and opened a Roth IRA with my TD and maxed it out the day after I opened it. $5,500 from my savings.
-Paid off all CC debt with my savings. I had heard that carrying a balance was good, or adventagous. Having a recent credit repot done with my current landlord I feel a 713 score is pretty good and won't really mess with it if I paid it off.
-Still looking into additional brokerage accounts for small investing to maybe understand the market more.

Thanks again for all advice.