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.]