[updated on 4/3/2014]
Climbing out of poverty requires steady income and a savings program. Money that people earn every week or month is called steady income. If people put some of their income into a bank account, they have a good savings program. It’s impossible to escape poverty without a savings program.
President Obama recently announced a new MyRA plan for saving money from each paycheck to buy $5 savings bonds. The savings bonds will have a low interest rate, BUT the attractive feature of the MyRA plan is that savers will eventually be able to deposit all of their savings bonds into a traditional individual retirement account (trad. IRA) after they slowly save $15,000. The trad. IRA is managed by professional people who can help invest the money. This is a great deal for young poor people with big plans for the future.
Be patient and save money in a bank until Congress approves the MyRA plan. Find somebody you trust, such as your public librarian, to help you understand the MyRA plan. To the person who saves $15,000, consider investing it in a stock-index mutual fund (e.g., VFINX) or stock-index ETF (e.g., VTI). Beware of the fancy plans offered by professional people; their job is to invest your money for you and they always earn a small trading fee for doing their job. Today’s trading fees are about $8-$10 each trade. You only need one trade to buy VFINX or VTI with $15,0000. Don’t let the professional people earn a lot of money from you by recommending fancy plans with many trades.