Question: I was just wondering how young I should be to start planning for retirement?
Answer: Well how wealthy do you want to be when you retire? When you're younger you have compounding that can work for you. If you put aside $100 per month when you're 25-years-old, when you hit 65, assuming you're getting 8 percent interest, you're going to have about $335,000. If you start when you're 45-years-old, you're not even going to have $60,000, so it's a huge difference. I'm not saying it's easy to put aside $100 per month when you're 25, but at least try putting away $20, and then $25, and then grow from there. If you can actually discipline yourself, you'll have a good deal of money when you retire.
Question: I was wondering what are some good low risk investment strategies that you would recommend for families during the current economic times?
Answer: You can't just go low-risk because right now stocks are being sold at a discount, and that's when you want to buy stuff. So when stocks are really high you're buying at the top of the market, so you want to still be buying some now. You're better off in a mutual fund that you trust. But to get your highest return you need to go online and start looking around. A good place to start is bankrate.com and look at what they're paying for a 6 month or a 2 year CD. So if you go online and look for the best deal then you're going to find 3.5 to 4.5 percent. If you stay local and just look in your neighborhood, you may get just 1.5 percent.
Question: I'm young and single and I am wondering if I need life insurance?
Answer: No. You only buy insurance for a loss you can't afford. So if you get into a bad car accident, you need insurance because you don't have enough money to fix their car. If you're married and have a non-working spouse then if you die you're going to leave them in such a horrible situation. But if you don't have responsibility for someone else and don't have children yet then there's no reason to buy life insurance now.
For more of Michael Finney's consumer stories and advice, visit 7 On Your Side.