Baby Step Four: Invest 15% of Your IncomeSubmitted by Rock House Financial on June 20th, 2018
The fourth baby step from Dave Ramsey is to invest 15% of your household income into Roth IRAs and pre-tax retirement funds. This is the most important step (and the most exciting) but it also adds a great deal of complexity to the process. Gone are the days of simply creating a debt snowball in order to make progress on your financial plan.
During step four you need to consider the following questions:
- Am I taking advantage of my 401(k) options?
- Should I do an traditional IRA or a Roth IRA?
- Am I protecting myself from taxes?
- What are some realistic financial goals for my future?
- How do I start investing? What if I make a mistake?
This is only the beginning of many questions that will have a huge impact on your financial future.
Your Next Action Items:
1. Make a list of all your questions. Starting to invest is complicated and you won't have the answers to all of your questions but you can at least start a list of your questions so you can start finding answers.
2. Let's review your questions together. You'd be amazed at what we can accomplish together in a short phone call or in-person meeting. There is no cost to this step so let's see what we can discover together. We can consider your goals and circumstances and help create a plan for investing that 15% of your income, being strategic about taxes, and finding the investments that bring the greatest return at a risk level that you are willing to tolerate.
Next Article: Baby Steps 5, 6 & 7