Dave Talks To A Millennial Who Is Doing It Right

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Posted: Mar 19, 2018 11:47 AM
Dave Talks To A Millennial Who Is Doing It Right

Dear Dave,

I’m 27 years old, and I have no debt. In addition, I have a five-month emergency fund of $14,000. Recently, I started a new job making $60,000. I’ve been offered a 401(k) with no match, but I was wondering if instead I should open a high-yield CD. 

Kris

Dear Kris,

You’re doing very well at a young age. Congratulations! I’m glad you’re thinking about your financial future, too. But I’ve got a better idea.

How about opening a Roth IRA with good growth stock mutual funds inside? That would be my choice. Fund it up to $5,500 a year, and make sure the mutual funds have strong track records of at least 10 years. This investment — growing tax-free — will be superior to a non-matching 401(k) or certificate of deposit. If you want to invest even more, you could then put additional cash into the 401(k) offered by your company.

With your income and maturity, plus the proper investment strategy, you’re likely to retire a very wealthy lady. Keep up the great work, Kris!  

—Dave