I'm posting this here so that I can find it whenever I need it:

Do these in this order

1. Make a will.

2. Pay off your credit cards.

3. Get term life insurance if you have a family to support.

4. Fund your 401(k) to the maximum.

5. Fund your IRA to the maximum.

6. Buy a house if you want to live in a house and can afford it.

7. Put six months' worth of expenses in a money market account.

8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker, and never touch it until retirement.

9. If any of this confuses you, or if you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner.

The only modification I'd make to this is to suggest that the bond investments be on sort of a sliding scale proportional to your age. The bonds are there as a hedge against downturns in the stock market. The closer you get to retirement, the more you need that, because you have less time left to ride out rough patches. If you're in your 20's, there's nothing wrong with going 100% stocks. By the time you hit your 40's, though, you should definitely start putting some bonds in the mix.

Posted by: Harvey at 10:30 AM | No Comments | Add Comment
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