I have just paid off all my debt. What are the next best steps? Where should I begin investing?

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Answered by Pamela J. Horack, , CFP®PRO+ in Lake Wylie, SC
Woo hoo! Great job - you should be proud of yourself for getting your debt under control. If you have not done so already, work on building up your emergency fund. The guideline is 3 - 6 months worth of expenses, but everyone's comfort level is different. Once you have this in place, then you can start investing for other goals.

I know this is not a sexy answer. Emergency funds are dull and boring. Here's why you need one. Let's say you invest money through a 401(k) or IRA account, then you find you need a new heat pump for your home. Or you have a car accident, Or any other emergency where you need funds quickly. If your money is all tied up in retirement accounts, you will not be able to access it for these immediate needs without the potential of losing money or paying taxes and fees. I see this happen way too often.

So, sock away some cash, and work on educating yourself about mutual funds, the stock market and the different types of investment accounts. Then, you will be ready to invest. Good luck! | 01.16.15 @ 21:17
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 07:22
Answered by Kate Holmes , CFP®PRO+ in Las Vegas, NV
Congratulations! That's an awesome way to start the year.

If you don't already have an emergency fund, that would be the next best step. If you're single, it would be good to have 4-6 months of necessary expenses saved up. Keep in mind, if you were to lose your job, you would likely cut back on your discretionary (fun) spending but you want to ensure you can continue to pay your rent/mortgage, utilities, transportation, medical and food expenses.

Then, do you have a company retirement plan, like a 401(k) or 403(b)? If they match your contributions, absolutely take advantage of that - it's free money for something you should be doing anyway!

Otherwise, open an IRA or a Roth IRA (Individual Retirement Account), depending on your age. If you're in your 20s or 30s, you should go with a Roth IRA. Select an online discount broker like Schwab, TD Ameritrade, Vanguard or Betterment and choose low-cost mutual funds. Then set up an automatic monthly transfer from your checking account so you're sure to save each month. The maximum IRA contribution for 2015 if you're under age 59.5 is $5.500.

As you can see, there's a lot to think about and the advice depends on your age, goals, income, budget, expenses, employer, relationship status, etc. I think you'd find it valuable talking over your situation with a fee-only financial planner and coming up with a plan for how best to move forward and live a life you love! | 01.16.15 @ 21:19
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 07:22
Answered by Christopher Nesbitt, Insurance Agent in San Clemente, CA
I agree that your next big step is to save up for an emergency fund, as has been mentioned a few times already. But for your second question, (Where should I begin investing?), that's nearly impossible to answer, as there is too much missing info... How old are you?, when do you hope to retire?, what is your life expectancy?, what are your thoughts about leaving an inheritance?, what are your goals, dreams and needs in retirement, what is the cost of living in Henderson, and wherever you plan to retire?, what is your income level?, are you a homeowner, and if so, what is your home's value?, what is your tolerance for risk?, what is your opinion about the markets, currently and in general? ...and more! This is just one of the reasons why it's so important to meet with a professional. Interview several, then spend a few hours with the one you've selected and discuss all this together. | 01.20.15 @ 08:58
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$commenter.renderDisplayableName() — {comment} | 12.10.16 @ 07:22
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