Mon Aug 05 2024, by Tyler Gardner

How to Invest $10,000: A Guide for Women in Their 20s and 30s

I'm Tyler, a former financial advisor and portfolio manager, now dedicated to providing free financial content to help you navigate your investment journey.

1. Maximize Your 401k Contributions

I would put 15% of every paycheck directly into a 401k. Most financial textbooks suggest that men contribute 10%, but it's crucial to recognize the disparities women face in earnings and workforce participation:

• Women earn, on average, 80% of what men do.
• They are out of the workforce for an average of 11.5 years compared to 16 months for men.
• Women typically outlive men by about 7 years.

2. Invest in Index and Growth Funds

Next, I would allocate 75% of the investment into a no-cost index fund, such as Fidelity's FNILX, or whatever S&P 500 fund your 401k offers. The remaining 25% would go into a growth fund like Vanguard's VUG.

With several decades ahead for compound growth, maximizing risk early is beneficial, especially if you don't need that money for 30 to 40 years. This approach allows for weathering market downturns for an eventual higher payout.

3. Open a Roth IRA

Finally, I would open and fund a Roth IRA to complement my 401k. This gives you:

• A pre-tax retirement account for lower tax brackets down the road.
• A post-tax retirement account if you find yourself in a higher tax bracket later.

This strategy hedges your bets as you prepare for the future.

If any of this information is helpful, please like and follow for more tips to help you get closer to your financial goals!

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