In this month’s edit we want to give a warm welcome to our Ila Mag Readers while we introduce you to our very own shark tank. We’re bringing you a survival guide to navigating the changing tides of the market, and how to keep your money from turning into bait for needless expenditures. You don't have to fare the rough seas of finance alone, we’ll be your life raft. First, let's talk success, monetarily speaking success is found in quantity, but the secret is in the quality of your knowledge. Success in terms of longevity is found in being smart with your assets and knowing where to allocate your funds.
Opening a brokerage account
A brokerage account will help you grow your sea legs-
It’s an exchange in which you can buy securities that are taxed.
What are securities?
A financial asset traded in the market. Ex: Stocks, bonds, index funds
You can set up a brokerage account through Vanguard, Fidelity, Charles Schwab, and more.
Benefits:
You can take your money in and out as you please without any penalties.
Low-cost index-funds to purchase: VOO, VTI
VOO tracks the top 500 companies in the U.S. (S&P 500)
Roth IRA (Individual Retirement Account)
Using this type of account you can contribute your “after tax dollars”, and over time your contribution will build with interest. The max contribution for a Roth IRA is 7,000 annually. You can take out your money at the age of 59 ½ without any penalties– which I know is a long way for a lot of us.
*Interest is the rate of money you earn upon investment. Builds overtime.
Benefits:
Tax free when you retire
This is the advantage over a Traditional IRA, which taxes your dollars upon withdrawal. A Roth IRA is a great account to open to save your money over time that you can access when you retire.
Once you open a Roth IRA, you’ll need to invest it into stocks or index funds.
Time > Timing
The amount of time you have had money sitting in the stock market or interest based accounts is more important than when you decide to invest. Time turns your money from minnows to sharks. The longer and sooner the better, and there's no time like the present to let your money begin its compounding journey.
$300/mo at age 20 = 3 million at age 65
vs.
$300/mo at age 30 = 1 million at age 65
Vocabulary for Minnows:
Interest: Money earned from your investment. Usually in a brokerage account.
Securities: Financial assets traded in the market.
Assets: Your money in the market, stocks, index funds, etc.
P.s. thanks nick
Go on Ila Mag Readers… we’ve parted the seas now is your time to take the bait!
@ilamagzn
By: Rosemary Aziz