this post was submitted on 20 Dec 2024
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No Stupid Questions

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Assuming I have a time horizon >10 years.

Edit: thanks for all the replies!!

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[–] KombatWombat@lemmy.world 6 points 1 day ago

Yes, and actually with low amounts of money to work with you can make your contributions very efficient. To best spend save for retirement, choose the first option from this list that applies to you (and if you are able to save more later, go down the list after exhausting each option):

  • 401k up to maximum company match
  • pay off high-interest (>4%) debt
  • IRA up to the contribution limit
  • investment-type HSA up to the limit
  • max out 401k contribution
  • personal investment account without tax advantage

For most people, it's recommended to use a traditional 401k and a Roth IRA, but it varies by situation. As for what to invest in, I would recommend a popular low cost ETF or index fund, like Vanguard or SPY. You can also look into ESGs if you want to do good with your money, but your expected earnings may be lower. I'm in ETHO and TICRX.

You might check out fire@lemmy.ml or personalfinance@lemmy.ml if you have questions about getting started.

[–] Maggoty@lemmy.world 69 points 2 days ago

Yes. So much yes.

[–] kevincox@lemmy.ml 8 points 2 days ago

The others have made great points about how any amount adds up. Especially with compounding.

But the most important reason me just be making it a habit. If you are saving $50/month you have a place to put your savings and an investment strategy for that money. The next time you get a pay raise or get rid of some recurring spend it will be natural to start saving $60/month, then $100 and more and more. It is much easier to improve an existing habit than starting a new one. So as soon as you have the chance start that got habit.

[–] Clent@lemmy.dbzer0.com 45 points 3 days ago (1 children)

Yes. Investing is always worth it unless you have credit card debit.

Set it up to automatically invest into the lowest fee index fund your broker offers.

[–] Tehdastehdas@lemmy.world 22 points 2 days ago (3 children)

The lowest fee ETHICAL index fund. Careless investing is how we got evil corporations.

[–] jagged_circle@feddit.nl 6 points 2 days ago* (last edited 2 days ago)

Can you recommend a single ethical index fund? I've been searching for the past decade

Every time I find one, I look at their holdings and see companies like Google, Meta, Tesla, and for profit banks.

[–] 13esq@lemmy.world 15 points 2 days ago (1 children)

Unfortunately, there aren't many ethics in the world when it comes to money.

[–] Tehdastehdas@lemmy.world 5 points 2 days ago* (last edited 2 days ago) (3 children)

Several funds in my bank have ESG in the name.
https://en.wikipedia.org/wiki/Environmental,_social,_and_governance
Other terms in their fund names: fossil-free, climate, forest, sustainable agriculture.

Their claims about them:
in Finnish:
https://www.s-pankki.fi/fi/private-banking-ja-varainhoito/vastuullisuus-ja-vaikuttavuus/vastuullisuus-sijoittamisessa/
in Swedish:
https://www.s-pankki.fi/sv/private-banking-och-kapitalforvaltning/ansvarsfullhet-och-paverkan/ansvarsfulla-investeringar/
For machine translation, probably better use Swedish as the source because it shares the Indo-European language family with many of you readers' target languages, and has more speakers so maybe better translation engine training too.

[–] utopiah@lemmy.world 4 points 2 days ago

ESG in the name

Place to start but once you dig into it, it's not great either. A lot of the evaluations basically boil down to negative externalities, namely making sure that somehow whatever is problematic is NOT accounted for. That's how plenty of ESGs end up with ... other banks as stocks. They "abstracted themselves away" from problems whereas in reality they are funding the problems.

[–] 13esq@lemmy.world 9 points 2 days ago (1 children)

I wasn't trying to say that ethical funds don't exist, I'm well aware of them. I was saying that when money is on the line, loyalty and ethics often end up second place.

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[–] agent_nycto@lemmy.world 3 points 2 days ago

These are pretty cool and I didn't know about them! I'm pretty me to investing, do you just look up ESGs or something?

[–] Clent@lemmy.dbzer0.com 3 points 2 days ago (2 children)

The post didn't ask for ethical requirements to be included in the advice.

Appending additional personal requirements turns the conversation towards one's personal soapbox.

[–] utopiah@lemmy.world 2 points 2 days ago

The post didn’t ask for ethical requirements to be included in the advice.

Right... everything does have ethical requirements though. As soon as a member of a society does make something that impacts themselves and others it has ethical requirements. Some examples :

  • voting (obviously)
  • buying a Xmas (avoiding slave labor)
  • selecting toilet paper (limiting pollution)
  • buying a coffee (fair trade)
  • paying an electricity bill (source of the energy)
  • posting on Lemmy (avoiding centralization)

Everything, literally everything we do, has ethical requirements. We don't have to say it because it's implied.

Now... if you are genuinely curious about the topic I can only recommend https://en.wikipedia.org/wiki/Ethics_in_mathematics showing that even in the most abstract field, there are ALSO ethical requirements. Nobody can avoid that.

[–] Tehdastehdas@lemmy.world 1 points 2 days ago

Not funding companies that destroy the planet and kill people is basic decency, not personal taste.

[–] swordgeek@lemmy.ca 8 points 2 days ago

Absolutely 100% yes yes yes.

Compounding is your friend. You can play with the values all you want, but this calculator showed me that if you deposited $50/month at 5%/year compounded annually, you'd end up making >$1800 in profit over ten years. Realistically, you should be able to get a better rate and shorter compounding periods once you've passed the threshold amount for a mutual fund or GIC.

And that's assuming you never increase your deposits.

Realistically, whenever you get a raise you should assign some of it to increasing your monthly payments. Your goal should be to increase your payments faster than inflation. Get a $2/hr raise? That'll probably add $250/month to your paycheque after taxes. You should be able to squirrel away $25/month from that at least.

Here's a great piece of advice from The Wealthy Barber (Canadian financial dude): Pay yourself first. See if you can get your investment amount taken directly off your pay, and then you'll never see it, thus be tempted to spend it.

His other advice is to set a goal of 10% of your income to invest for retirement. Seems like a lot, but it's doable for most people who are talking about investing anything, like you.

Remember: The biggest factor in how much you make from investments over time is how early you invest. Invest now. Invest regularly.

[–] hobovision@lemm.ee 11 points 2 days ago* (last edited 2 days ago) (5 children)

100% anything you can do is great.

My girlfriend and I have each been putting $50/month into an investment account instead of paying for insurance for our dog, that way if she ever needs a big procedure I can pull money from there if I don't have the savings for it. We've been doing this for 3.5 years and have now built up a good amount! I'll divide the numbers roughly in 2 so you can see what you could be looking at:

Total $2750.
Deposits $2200.
Gains $550.

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[–] ComradeMiao@lemmy.dbzer0.com 32 points 3 days ago (1 children)

Yes, in 35 years with compound interest that would end up between 35-85k ;) sounds great to me

[–] 13esq@lemmy.world 28 points 2 days ago* (last edited 2 days ago) (5 children)

$50 per month for thirty five years saved with no interest at all is $21k, so I can absolutely understand the point of view that it's not worth it if you're currently struggling to scrape by to wait 35 years for what might be just an extra $14k

If that $50 has literally no other use to you, then great, if that $50 can provide fair value for you now, it's a much tougher decision.

[–] FireRetardant@lemmy.world 8 points 2 days ago (1 children)

I blew a lot of my money when i was younger, something I don't regret spending lots of money on is decent tools, they can last a lifetime if taken care of and can save you money in the long run if you learn to do your own work. Sometimes stuff now is a better investment but it can be super specific depending on your situation.

[–] 13esq@lemmy.world 4 points 2 days ago* (last edited 2 days ago)

I absolutely agree. I used to have no choice but to buy budget and have to deal with it when stuff inevitably failed and broke. But now I'm much more financially stable, I made a commitment to buy quality when I can, the old "buy once, cry once" mantra.

With clothes I'm in the best of both worlds. I'm a proper hawk for charity shops and if you're patient you can get both budget and quality. I bought a £100 shirt for £3 the other day and it looked like it had never even been worn, there's no reason it won't last me decades if I look after it. Good riddance to TK MAXX and fast fashion. Charity shops are especially good for suits and smart shirts as a lot of men only get them out for interviews and weddings, meaning they are usually in great condition and can be bought at a tiny fraction of the original price, you just have to be patient waiting for ones that are the correct size for you.

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It would be worth it with even $10. Do it.

[–] AA5B@lemmy.world 15 points 2 days ago

Specifically if for retirement, time is your best friend. Anything you can put aside will be multiplied down the years and be much more when you need it most

[–] JackLSauce@lemmy.world 34 points 3 days ago (2 children)

That's 600/yr and a long enough horizon that most diverse portfolios are likely to be net positive (I'm seeing about 5,000 gained with 8% growth in a basic savings calculator)

I'd spend those 10 years trying to free up cash flow but time's a powerful weapon regardless

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[–] subtext@lemmy.world 34 points 3 days ago* (last edited 3 days ago) (9 children)

As much as I hate to send you to Reddit, the r/personalfinance flowchart is hard to beat for most people. I’d recommend you start there to make sure you’re not overlooking something like your emergency fund.

Reddit’s r/personalfinance flowchart for personal income

[–] grandel@lemmy.ml 5 points 2 days ago (2 children)

This is awesome! Would love to see a version for EU too!

[–] slazer2au@lemmy.world 7 points 2 days ago

For the most part you can follow it. Pay down debts, save what you can, make a budget but it gets wonky when you hit 401K, IRA and healthcare

Problem is each country in the EU is different. What works for Germany may not work for the Netherlands or Denmark.

As an Aussie I substituted it's and 401K with our pension equivalent called Superannuation. The healthcare is different in AU. Here in Europe it isn't too different to AU, replace 401K and IRA are private pension or one offered through an employer.

[–] IncogCyberspaceUser@lemmy.world 4 points 2 days ago* (last edited 2 days ago)

I looked around a bit, and while I couldn't find a drawn flowchart for the EU, r/EUpersonalfinance has a page on their wiki inspired by(links to it too) the US flowchart and accompanying text. I hate to plug reddit as well, but here is the link.

spoilerhttps://www.reddit.com/r/eupersonalfinance/wiki/basics/?utm_medium=android_app&utm_source=share#wiki_general_graphical_version

(I'm not near a desktop, so can't really copy and paste the info here with functional hyperlinks.)

[–] pezhore@infosec.pub 6 points 3 days ago (1 children)

Link is broken for me over on infosec.pub.

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[–] xmunk@sh.itjust.works 30 points 3 days ago (2 children)

It's worth saving - investing (I assume you mean in the stock market/index/mutual fund) probably wouldn't yield very significant growth but it is worth saving what you can.

[–] Rhynoplaz@lemmy.world 20 points 3 days ago* (last edited 3 days ago) (1 children)

Investing accidently helped me save. If I have money in an account, and I need to use it, I will, but by buying stocks and bitcoin, I don't have that money, I have things that will increase in value that I can sell for money. And there have been a few desperate times that I had to do that, but my brain is far more unlikely to take a hypothetical future loss, than spend all my money today.

[–] EleventhHour@lemmy.world 17 points 3 days ago (2 children)

That’s what bitcoin really is: a commodity, not a currency.

[–] KingJalopy@lemm.ee 10 points 3 days ago* (last edited 3 days ago) (1 children)

Truth. Lots of money to be made in crypto but it's basically gambling outside of eth and BTC. I make decent returns playing with memecoins but you have to watch it for awhile and know when to sell/buy etc... for example, now it's a good time to throw money into Shiba Inu coin. It's down a lot, which is normal, but it'll go back to higher numbers soon, as it always does. Once you get a feel for what a normal low and high are you can just set auto buy/sell at those points and make decent profits.

Of course, when it comes to crypto, Bitcoin and eth are more like commodities and are generally safe. Shit coins are high risk but but $50 in a shit coin could be $150 overnight if you know what to look for.

Edit - don't fuck with big money in crypto unless you're willing to lose it, but $10 here and there can be fun and often profitable.

[–] RogueBanana@lemmy.zip 11 points 3 days ago (1 children)

I am gonna take that as financial advice and dump my life savings in shiba inu, thanks.

[–] KingJalopy@lemm.ee 7 points 3 days ago

Awesome. I'll take the the standard 10% unless/until, you lose your ass. Then I'll just pretend I don't know you.

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[–] untorquer@lemmy.world 2 points 1 day ago

Compounding debts need to go first if their interest is higher than your savings.

[–] ultranaut@lemmy.world 9 points 3 days ago

Yes. If you can afford it, dumping that money into an ETF like VT, VTI, or VOO every month for the next 10 years is very likely to result in you turning a profit. Start with a Roth IRA and don't bother with a standard brokerage account until you're able to max out the contribution limit. If you want to do anything more complicated than buy big low cost ETFs study up first and go slow.

[–] foggy@lemmy.world 9 points 3 days ago (8 children)

Do you have emergency money?

First start emergency fund, then take care of debt. Then build a savings for emergency fund, then invest.

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[–] BlameThePeacock@lemmy.ca 9 points 3 days ago

It's honestly probably better putting that amount of money into trying to get a better job over that time period via education, or taking time off to apply for new positions, or something similar.

$6000 total investment over 10 years even with decent interest on top would be made up in less than 2 years with a $5k raise.

[–] Orbituary@lemmy.world 9 points 3 days ago (1 children)

Yes. I started with 50/month using Autopilot to get in on the Pelosi investment portfolio. I am up 18% for the year.

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