I am 26 years old and have admittedly in the past been very bad with my finances. I have no savings except for my 401K plan. I recently changed my 4% contribution to 7% with plans to increase to 10% in a few months. Currently, I make $35,000/year (but am waiting to hear about a raise - cross your fingers!)

In the next 5 - 7 years I plan to get married and would like to also purchase a home around that time. With no savings this looks pretty dismal.

After reading some financial planning books I decided to open a Roth IRA, both for retirement purposes and with the plan to withdraw money for money down on my first home. I understand that this is a qualified distribution and I may take out up to $10K for purchase of my first home. Are there any other restrictions I should be aware of? Is this a wise vehicle for my goal of purchasing a home? I plan to contribute $100 a month. Is it true I can avoid fees by making monthly contributions in lieu of one lump investment?

Also, to pay for the wedding, I was thinking to open either a mutual fund or a money market account.

Since I only have 5-7 years to grow the accounts, I need them to grow as aggresively as possible, all while protecting my original investments. The idea of a 1% return on a passbook savings account makes my stomach turn.

I am looking for some affirmation that I am doing the right thing and once I open these accounts, how should I direct the investment of my funds?

In my circumstances, should I go to a bank, brokerage, or mutual fund? How can I find a financial planner who will be willing to work with me and my limited assests?

The most scary thing you said is that you have no savings. How about credit card debt?

First thing you need to do is reconcile your income with your expenses. Someone who is 27, single and with 35k in income should be socking away a good percent of their salary. I would think you should be able to set aside perhaps 5K towards savings and investments. If not, then trim back your spending.

Buying a home ussually requires a down payment and other expenditures for drapes, paint, furniture. You might be able to participate in a "first time buyer" program some cities support.... but given your current financial status that is a number of years off.

The 401k plan is a good thing, especially if there is any matching component. Starting a Roth would be fine if you had some core assets for reserves. What would you do if your company cut your position or some emergency expense came up?

Perhaps a reasonable plan for you to make is to commit to one dollar into "reserves" and one dollar into a Roth.

You can NOT grow funds aggressively and avoid a risk of loss. Don't look for a 5 year solution because there are none out there. Perhaps you should subscribe to Kiplinger Financial mag to build up your experience on investment choices, budgeting, etc.

This similar discussion might be useful.

http://benefitslink.com/boards/index.php?showtopic=6713

Thanks Pax. Here is the other referenced thread - note that the max amounts are dated compared to the current 3k or 3.5k Roth limits.

http://www.benefitslink.com/mbmirror/6565.html