Starting at 44: Where to begin

[cwenbass]

Naive, irresponsible? I would say both for sure when it comes to saving and investing, but now in my mid-40's I probably have to start investing some other than my 401K. There is so much information here and honestly, most of the terms I have been reading on this stocks/investments board are like a different language. Where to begin? I am pretty late in the game and don't have a lot of expendable income, but where would be a good start to learn about stocks, mutual funds, index funds, and anything and everything in between?

[IMhooked]

Congratulations man! Welcome to the world of saving and investing. No worries on your age man, the 2nd best time to start savings besides yesterday is today! Your future self will thank you.

To get a better feel for your overall financial picture do you have any consumer debt outside of your mortgage (i.e. debts with interest above 4-5%-Vehicle loan, boat loan, student loan, credit card, etc.)? Do you have cash in reserves for an unforeseen emergency (ie Job loss, mechanical breakdown, major appliance failure, etc.)?

If you have no debt other than your mortgage and an emergency fund of a few months of expenses then you're ready to start savings and investing! If you need to to 'get your financial house in order' first and knock out some debt and save some cash (which will give you a foundation of financial strength to build upon) then I would start there.

What's your 401k like at work? Do they have a company match (aka free money)? What type of funds are you invested in inside the 401k?

Do you currently know your marginal federal and state tax brackets? (not important if you're unsure but can often help determine what tools (roth or traditional) will help you succeed best.

What is the nature of your employment (what do you do for income) and What is your annual gross income?

Do you track your spending currently? Do you know how much money you need to live on each month (ie Housing, electricity, insurance, food, transportation, phone, and discretionary spending)?

Don't feel overwhelmed by the terminologies man and do yourself a favor and don't compare yourself to anyone else. The only comparison needed is where YOU are NOW and where YOU want to go in the future. The 401ks, IRAs, HSAs, Stocks, Bonds, Cash, etc. are all tools to help you get there and do the job. Let's find your starting line and I'm sure many here will be glad to chime in and help you jumpstart your savings career!

Good job again on defining this as important!

[cwenbass]

I have a pretty hefty student loan but no credit cards or car/boat payements. I am a teacher with a 403B so no matching. I don't necessarily track spending, but have a good idea month in and month out generally what my costs/expenditures are like.

[IMhooked]

Is teaching your only source of household income right now? Married with kids? Do you plan to? If married does wife work? Own a house or rent? Roommates?

Depending on your state do you know what the investing tool is inside your 403B. As a former teacher I know they don't always have the best set up. Hopefully you aren't in a fixed or variable annuity product inside the 403B. If you're unsure what you're invested in INSIDE your 403B it would be worth it to sit down with your HR person in your district to make sure you're optimizing that account. I would HIGHLY CAUTION you to let the district withdraw money from your check every 2 weeks and put it in your 403B WITHOUT understanding what they're putting you into. If Pompton Lakes, NJ is your current location and you're teaching in Jersey, you're most likely in the state's Teachers’ Pension and Annuity Fund (TPAF). With this the more years of service you accrue, the larger the percentage of salary you collect at when you retire. FULL benefits aren't available until 65. IF this is the case....

"To help fund the defined benefit plan, you are required to contribute 6.5% of your regular annual salary, while your employer contributes an additional percentage that fluctuates."<<--this is concerning and in the plan contract documents IT SHOULD detail what the minimum percent that's allowed by the district.

If you know your current salary find out what 6.5% of that is and I would recommend ONLY investing that amount. I would get with HR and ensure that this minimum is met and not gone beyond each and every year. IT'S YOUR MONEY NOT THEIRS TO MANAGE!

After investing your 6.5% in order to have a comfortable retirement you'll most likely want to contribute an additional 4-9% minimum to retirement savings. A good baseline is to save overall save 10-15% minimum to overall retirement. HOWEVER getting started a little later in the game you may need to save a higher percentage.

FURTHER:
Once you reach retirement age, you will receive your monthly pension. The pension payments are based on your final average salary and your length of service:

Years of Service
multiplied by
55
multiplied by
Final Average Salary
For example, if you retire after 30 years of service with a final average salary of $62,000, you will receive $2,818 per month what do you spend now per month?

Run your specific scenario and ask yourself....will this be enough?


What is the interest rate on your student loan?

As a teacher you'll be able to appreciate the fact that investing and saving is down to math.

I'm not necessarily saying to you NEED to be on a budget but for a couple months, but I'd get a notebook or open a note on your phone and simply write down what you spend for 2-3 months. By doing this you might find yourself a "raise" in savings an understand what a comfortable lifestyle currently costs for you.

Do you max your 403B out to 19,500 every year? What percentage of your income annually goes into the 403B and how much is that? If it were me, I'd do the 6.5% minimum requirement but then switch over to an IRA (Individual Retirement Account) to invest in Stocks and Bonds inside this while deferring some tax (traditional) or a ROTH IRA if it makes better sense to do this from your current tax scenario.

[NitroZ7]

The easiest way to get started would be to dollar cost average into an index fund like the SPY which tracks the S7P 500. You can buy whatever amount of shares you want each month and just start building it over time. You can get broad diversification this way with smaller amounts of money. Best of all you don't have to do anything with it and can just keep adding to it as you see fit. The expenses on SPY are very low and nowadays the broker commissions are very cheap making smaller purchases more economical.

[boneil]

I would say spend some time online looking at the different online brokerages. See what resources they have to help you learn. Most of the big brokerages have really good learning resources. Open an account and put a little money to work. Like Nitro said, buy some SPY and QQQ just to get started, add a little every month. And when you get comfortable enough you might decide to buy individual stocks. The most important thing is to start.

[idbefishing]

Investopedia is good place to browse around for info. There are also finviz, IBD, seeking alpha for more browsing. As stated, brokerages have screener example: https://investor.vanguard.com/home

[purple_champ193]

Start by reading Investing for Dummies. I don't recommend this book to be mean but it really is a very good book. It can be purchased for less that $20, is written in common language and does a great job explaining the basics. Then google Boglehead three fund portfolio. As others have pointed out, before investing it might be better to take a holistic view of your finances before implementing anyone's advice.

[NitroZ7]

Start by reading Investing for Dummies. I don't recommend this book to be mean but it really is a very good book. It can be purchased for less that $20, is written in common language and does a great job explaining the basics.

Totally agree. When I first started investing in my late 20's I read Stocks for Dummies and Bonds for Dummies. Both were great in explaining how both work. I would definitely recommend these and even suggest that people hold onto them as they have nice definitions for terms like P/E etc. so you can look them up later.

[BoilermakerZ519]

As you do research on the fundamentals of investing, stock valuation, etc. remember to do an honest self assessment of your risk profile. Finding investment vehicles that meet your investment return goal must be compatible with your willingness to withstand its associated risk/volatility.

With this in mind, don’t try to “swing for the fences” because you feel like you have to catch up. I would instead look for ways to put more to work...that is eliminate excess expenditures/find more savings to invest.

[Finlander]

A job pays the bills but investing makes the money. Do lots of homework before your begin.

[Charles Prestridge]

You can invest $19,500 each year in your 401K. Increases to $26,000 at age 50.

Depending on your income, you may also be able to contribute to traditional IRA or Roth IRA.

If you are eligible for an HSA, that may be a good pre-tax way to save. I max out my HSA and invest most in various mutual funds.

I like to pick 6-8 funds from different sectors.