Starting the Savings

Dave lets Caleb know that he can't do a 401k as an individual - he'd have to do a Roth IRA.

QUESTION: Caleb is 19 and is about to start college. He has the money to pay for it and wants to start a 401k. How can he do that?

ANSWER: You can do an IRA, but you can’t do a 401k as an individual. You have to get that through a company. Get a Roth IRA in a good growth-stock mutual fund. Make sure to have a full emergency fund of three to six months of expenses before you invest, because if you don’t then you’ll withdraw or borrow on the investment when a rainy day comes.