IAM Financial, LLC
In the 7th grade I knew that I wanted to work with money, like my dad. In 1997 I received a bachelors in finance from Michigan State University. In 2001 I became a Certified Financial Planner because CFPs are the standard for giving financial advice.
The longer I worked in the industry, the more I heard about a group that had an even higher standard - NAPFA. NAPFA, or the National Association of Personal Financial Advisors, has the most stringent membership requirements of any association in my profession. They offer truly comprehensive, fee-only Fiduciary advice with no commissions, surrender fees, or hidden fees. That's why out of the more than 800,000 individuals in the country who claim to be financial advisors/planners, less than 2500 qualify for NAPFA. Because of my love for organizing, and desire to be a part of an even more prestigious group, in 2004 I became a NAPFA Registered Financial Advisor.
To further enhance my specialty of working with retirees, in 2011 I added a tax service and became an Enrolled Agent with the Internal Revenue Service. Only Enrolled Agents, attorneys and CPAs may represent taxpayers before the IRS. This added service makes it easy for my seniors to have their planning, investment and taxes done in one location.
I currently serve as the membership director for the Midwest Board of NAPFA and on the Strategic Communications Committee for the Small Business Association of Michigan.
In my free time, I enjoy playing golf, teaching Yoshokai Aikido to kids and adults, and working on a personal finance blog, called Thinking Beyond Numbers, that’s changing the way the world thinks about money.
BS, Finance, Michigan State University
There are really two ways to save. The first is just start putting "x" amount in a separate account every month or paycheck and let it grow. The hope is that your other expenses adjust, and you don't incur any debt.
The second way to save is to look at all your income, subtract your taxes for your net income. Then you review your expenditures using a program like mint.com or quicken, total them up and subtract that from your net income.
If you have money left over, you save this moving forward. If you have no money left over, you are over-spending and need to look at your expenses and figure out where to make cuts. Reduce your insurance premiums by changing carriers and qualifying for "new business" discounts. Maybe cut back on latte's as David Bach explains in his book "The Automatic Millionaire", or get rid of cable and go with a sling, etc.
The best way to reduce expenses quickly is to look at the big two - home and auto. The key is to have no debt. Most people have more than enough when they do not have debt payments. So the next time you want something, save for it. If you pay off debt, don't get anymore, save! Good luck.
Getting started so late in the game means your best strategy might be to lower your expected retirement expenses first. I'd make sure ALL your debts are paid off first.
If you have no debt (except maybe a mortgage), you should have plenty of cash flow to save for retirement. First, take advantage of any matching your employer might offer. After that, whether you should put it in a Roth where withdrawals are tax-free, or a pre-tax account like a 401k or traditional IRA depends largely on your tax bracket now versus retirement. If you pay more tax now than you will in retirement, you're better off putting it in a 401k or traditional IRA. If you'll pay more tax in retirement, you're better of putting it in a Roth.
Starting at 49 you should probably be saving a minimum of 25% of your income, maybe closer to 40%. if possible. But am much as possible.
You'd also benefit from becoming a student of investments. Check out books like Automatic Millionaire and The Boglehead's Guide to Investing and see what other DIYers are doing. Alternatively, you could hire a professional to help you. Good luck.
Your answer depends largely on the product you are asking about. Many of these equity index annuities have high internal fees and limited returns specific to the product you are buying making it virtually impossible to answer your questions.
The key words in this non-answer include "high internal fees" and "limited returns". If you do a little research you'll find that they are one of those "it sounds to good to be true" ideas that seldom pan out in my experience. "All the return and none of the risk" is often how they are sold. BTW, they are almost always sold and very seldom invested in. By that I mean, nobody wakes up and says, "hey, I have some money, I think I'll find the best equity indexed annuity I can find." But some people go to large institutions and are "suggested" that they buy these products. The high fees go towards covering large commissions. If you're really interested, ask someone to do an independent analysis for a small fee. Someone that cannot sell you one at the same time so you know the advice you're getting is objective. Good luck.
Congratulations on starting so young. If I were investing $5,000 at age 24, and it was for retirement, I'd probably invest in index funds. There are a million to choose from, but something like the Vanguard Total Stock Market ticker VTI (prospectus) is a good place to start. There are 50 or so S&P 500 funds that would work as well. I like Total Stock Market funds because they give you access to large, medium, and small cap at the same time. Some even have international. As you add more funds, you can diversify into international developed and emerging markets.
If, however, you need the funds sooner than retirement, for buying a house, or something, I would not invest in all equities. Any funds needed in 1 to 3 years should be invested in money markets, CDs, or cash. Funds needed in 3 to 7 years can be invested in short and intermediate term bonds index funds. Beyond 7 to 10 years and your equities usually work. It all depends on your investing time horizon, investment plan, and risk tolerance.
To put together an investment plan, or financial plan, I'd suggest going to the National Association of Personal Financial Advisors, or the Garrett Planning Network. They offer good, fee-only, objective advice. Good luck.
Paying off the loan is usually the way to go. You'll no longer be paying interest and you'll not have the worry of a loan hanging over your head. If there's any left over, I'd save it towards the emergency fund.