Make a million dollars?

Question

I am 19 have 4,000$ in a CD and about 400$ in a savings. im trying to see if keeping it in a cd is a good idea? my plan is to just keep adding money into cd account and letting it build up. or does it make more sense to put it into something else? or should i save up a certain amount then put into something else?

Answer 1

Well, you're a couple of years behind the plan described in this article, but the general idea is still sound. The investment you're looking for is called a Roth IRA, and here it explains how you can, yes, quite literally, turn a small investment ($8000) into a million dollars by the time you retire:

http://www.freemoneyfinance.com/2005/12/...

Answer 2

One of the better-performing Vanguard mutual funds would probably do better in the long run, but will have periods with losses.  You could make monthly contributions and by dollar-cost averaging you avoid putting it all in at the peak of the market.

Eventually, you may need to diversify out of just one type of fund by investing partly in a Total market fund, an international fund and an emerging market fund.

Answer 3

You do get higher rates in the long run with a well-diversified portfolio, but with so few assets right now it might make sense to leave them in a relatively safe place for the time being; I'm taking it that you don't have a job at the moment, and if you were to need a quick $1000 for something or other while the markets were down you might find yourself in trouble.  Do you have a job right now?

Keep in mind that, by the time you retire, $1 million will probably not be a whole lot of money.  $1 million today is only about $150k in 1960 dollars.

Also, a Roth IRA is a tax-deferred account for retirement savings, not a type of investment.  You can put your earned income into a Roth IRA, but then you have to decide how the money in that account is invested.