David Bach

You can look at what's called 401k millionaires and there's over 600,000 of them now.

They put 14% of their gross income away and the way their money is managed in their IRA account

is 75% stock and 25% bonds.

So when you sign up for the 401k plan, you want to make sure you're signed up for what's called a target dated mutual fund.

And that's a one-stop solution, completely automated.

You don't have to spend any time thinking about this, where you pick the age you think you want to retire.

It could be 25 years from now.

You select that fund and it'll all be done for you.

And that would be the first thing I would do.

Now, if you asked me what would be the second thing I would do, I would go and sign up for a emergency account.

And you can't usually do that with your employer.

And I would go to a major brokerage firm, Fidelity, Schwab, Vanguard, or I would use an online company like Acorns.

And I would set up an automatic plan to put money every time I got paid into that emergency account.

It should be a money market account.

Money market accounts are paying about 4% right now in terms of interest.

So you're not going to get rich on that, but your emergency money should be super safe and liquid.

You do those two things, having listened to this show today, and you will be in a much better place financially.

And so the third bucket is a dream account.

And that's usually what people consider their buying a home account, right?

They save money in an account for a down payment.