In his case, the bulk of his savings will stay in the current savings account, with the goal of setting aside maybe every 6 months to a year. The current savings account will fund a vehicle, with a reserve for needed repairs and other life incidentals. Our thinking is that right now, he has no bills (he is not driving yet) and no obligations so a small portion set aside for the long-term future will not hurt as much now as it will later.

You are smart to encourage him toward both short- and long-term savings and investments. Low cost index funds such as large cap EFTs are a good place to start for young people.

There's so much info available online, so if you're not using an advisor, you can do some homework to find good bets.

If I were 17 today, I'd be investing heavy in medical. Providers, suppliers, etc., are reaping huge capital gains and paying generous dividends. My advice is don't be shy at 17. Go for growth.

DRIP investing is a good start and anything tied to reap huge profits compliments of ACA.

Since his tax rate is probably very low right now, if I were him, I'd open a Roth IRA. Then, the money can grow tax free his whole life and he won't have to pay taxes on the gains or withdrawals when he's presumably in a higher tax bracket at retirement. I wish I had started a Roth IRA when I was 17!

I would encourage him to start now in savings for retirement in something that is geared toward more long-term growth and is not as conservative, perhaps, as something you have at your age--that can be adjusted periodically as he gets older. I started saving for my retirement with my first job. In some years I did not have a job, my parents gave me the money to put in an IRA for that year. I think if you don't just start immediately, even with a small but set, specific amount, it's hard to get started later on. I have friends, my age about, ( 50+) who have negligible retirement savings (and at this point aren't likely to accomplish much), because they are in professions where retirement was self-funded for the most part, and there was always something "more important or pressing" to save for. They made the repeated mistake of saving for cars and houses and trips and furniture instead of for retirement, rather than after they had set aside for retirement, a pattern that continued for their entire work lives.

Yes, Roth IRA now! Great ebook for young people re financial advice: If You Can

It is short and available as a free download pdf. Just google if you can free ebook

Roth IRA. He/you might can look into Zero coupon bonds which double every 7 years. Unsure of the yield right now though with the stock market up.

I agree, set up an IRA. People always start retirement savings too late. It's good to get him thinking that, from now, on, every time he earns money at least a portion must go to retirement.

I'd look at Vanguard, well known as one of the lowest cost fund groups. He should invest aggressively given the long horizon of course.

Easy summary

It is absolutely appalling the number of Americans who have little saved for their retirement. It's as if they naively believe that they'll live off Social Security and/or the appreciated value of their home. It scares me when I read the various studies published in the financial columns.

It's something we've always stressed to our kids. Whenever they received money for birthdays or holidays we always told them we'd match it dollar for dollar if they'd put it in the bank. How interesting to watch what each decided - the eldest usually spent it quickly, the middle son saved most of it and DD usually gave it to me to put into her savings account.

Back when banks offered decent interest they invested their savings into CD's. As they got older we opened Investment accounts for them and as soon as they started getting paychecks we opened Roth IRA's. They are all in their 30's now and have accumulated some nice sums. Fortunately 2 of them have employers who will also match a percentage of their deposits into 401K's. DD works in the arts and knows she'll probably never have an 401K at work so she concentrates on funding the maximum into her Roth IRA every year. She has a low threshold for risk so she has about 40% in the Vanguard Fund and lets her financial advisor invests the rest in various stocks and other markets.

DH has always told the kids that when they get paid they should pay themselves first. Which means they should always set aside a % of their pay for their savings.

Yes, yes, yes to a Roth IRA. I agree with Mtn, Vanguard is an easy, low cost way to go.

Vanguard offers Roth IRAs with low minimum opening deposits. Keep in I mind, federal income taxes must be filed the year that you add to your Roth to prove that you had earned income.

This is from the IRS website - there are other restrictions depending on income and marital status, but an unmarried taxpayer could contribute $5500 this year.

for 2015

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Retirement Topics - IRA Contribution Limits

For 2014 and 2015, your total contributions to all of your traditional and Roth IRAs cannot be more than:

• $5,500 ($6,500 if you’re age 50 or older), or
• your taxable compensation for the year, if your compensation was less than this dollar limit.

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits

Thank you for the help. We will begin looking into the Roth IRA. He does file a tax return as the way things are set up at the church Social Security is not withheld which gave him another important life lesson. I laughed when he asked why he had to pay taxes.

Here's a link to Dave Ramsey's Guide to Budgeting. The most important lesson you can impart is to help him understand how budgeting works and the power that comes from living on less than you earn. The specifics of which investment vehicle are most important are not as important as learning to live within your means and never incurring the great burden of debt, which so many young adults seem to do. http://www.daveramsey.com/blog/free-download-budgeting-guide/