CNN Money features "Fortune's 10 Rules for Building Wealth." I'll review them here, and see how I measure up.
1. Start early.
Check. I currently contribute about 12% of my net income to a high-yield savings account. When I become eligible for my company 401(k), I'll begin contributing to that too (see below).
2. Use your 401(k).
Not yet. I don't become eligible for my company's plan until January, but you can bet I'll be asking for the signup information before we close for Christmas and New Year's. I'll be contributing enough to get the full match ($1,500/year).
3. Keep it [your asset allocation] simple.
Well, right now it's a little too simple, but that's the plan. I'll probably lean heavily on target retirement funds, at least for the time being. Anything else is too intimidating.
4. Don't try to beat the market.
Pursuant to #3, um, no fear.
5. Don't chase trends.
See #4.
6. Make saving automatic.
Actually, I have to confess that my transfers from checking to savings aren't automated, yet, though of course I make them religiously. One reason I haven't wanted to automate is because my current savings allotments aren't permanent. Once I open my Roth and my 401(k), hopefully in January, I'll get a better idea of what's going on. My biggest financial New Year's resolution, after setting up the aforementioned accounts, will be automation.
7. Go heavy on stocks.
See #3.
8. Hold down fees.
I'll be opening my Roth at Vanguard, so no worries there.
9. Ditch credit card debt.
I pay off my bill online after each charge. Credit card debt isn't going to happen.
10. Defer taxes
Not so much applicable to me, insofar as I lack any investment accounts.
In sum, a pretty good set of goals for someone beginning to manage their own financial life, and a nicely-formulated simple set of guidelines to which I can aspire. Also, a neat diagnosis that tells me that the things I'm doing I'm doing pretty well, but there are things I need to be doing that I'm not, yet. I'm working on it!
Monday, December 11, 2006
Fortune's 10 Rules For Building Wealth
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1 comment:
Hi! I just started reading your blog, and I think we have a lot in common because of our stage of life (I graduated in '04). I just wanted to comment on what you said about your credit card bill, because it sounded from the post like you pay online before the statement actually comes out. I started out doing that too, but what I heard is that this can hurt your credit (or really, not help build it). My understanding is that credit scores take into account how much of your available credit you're using, and you want to be above 0% but way below 100%. If all of your statements officially read $0 because you paid the charges before the billing cycle ended, you look like you're using 0% for most cards. For me, when I wanted to pay the bill, I would schedule the payment to go through 2 days after my billing period ended (28 days or so before it was due). That helps me feel like I'm paying as soon as I make a charge, but also puts off the actual payment until it's recognized by the company. But I don't know if I'm necessarily right about how this works. Sorry for the long comment! I'm looking forward to reading more : )
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