But before you dive headfirst into the market, it’s important to prioritize paying off any high-interest debt that might be straining your finances and thenOnce that is handled you can get a jump on investing, even if you’re starting small. Developing a consistent approach to saving and investing will help you stick to your plan over time.
The accounts you use for short-term goals, like travel, will differ from those you open for long-term retirement goals. Once you’ve outlined a set of goals and established a plan, you’re ready to look into specific accounts.Twenty-somethings who begin investing through an employer-sponsored tax-advantaged retirement plan can benefit from decades ofA 401 allows you to invest money on a pre-tax basis that grows tax-deferred until it’s withdrawn in retirement.
There are two main IRA options: traditional and Roth. Contributions to a traditional IRA are similar to a 401 in that they go in on a pre-tax basis and are not taxed until withdrawal. Roth IRA contributions, on the other hand, go into the account after-tax, and qualified distributions may be withdrawn tax-free.Experts generally recommend a Roth IRA over a traditional IRA for 20-somethings because they’re more likely to be in a lower tax bracket than they will be at retirement age.