What to do with your summer money

If you read my blog you’re probably responsible with money. Here are some action steps to get smarter with the money you’ve saved this summer:

1) Open an online savings account. I use Capital One 360.

I have two savings accounts, one through my local M&T bank and this one. My M&T account is used for short-term purchases (rent, food, gas, etc.), while my Capital One account is for long-term purchases (a new car, a down payment on a house).

My Capital One account returns 1% per year. This means that if I have $10,000 in the account, in one year I’ll make $100. That’s not much, but as my dad used to say, “It’s better than a kick in the teeth.”

My M&T account returns 0% per year.

Get as much of your money into the high-interest savings account as you comfortably can.

2) Open an investment account. I (used to*) use Vanguard.

This account will return 7% per year, more or less. You can do the math to understand why I funnel most of my money into my investment accounts.

When I was 19 I started out with a Roth IRA, invested in Vanguard’s Target Date Retirement Fund. I’ve since moved away from that fund, but it’s a great place to start.

Once you open up your investment account get used to investing at least 15% of every dollar you make. Invest much more if you can. I try invest 50% of my income.

Now, rest assured that you’re on the path to wealth as your peers drain their money downtown.

[* I no longer use Vanguard because Fredonia doesn’t sponsor it. If they did I would.]

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