| Real estate is not the correct answer, IMO. Never put all of your eggs into one basket. Real estate is hot now, but it won't always be. I guess nobody remembers the early 90's in southern california...
Anyway, probably the best thing would be is to maximize your 401k at work (currently allowed to put up to $14000/year), or if no 401k, then maximize an IRA. Either account should be well diversified (i.e., you didn't want to have 100% of your 401k in tech funds in Dec 2000).
Compound interest over long periods (we are talking 20-30 years here) will do wonders.
I wish I had started funding my IRA when I was 21 (started at 25, and those 4 years will make a big difference over the long haul).
On Edit: I don't mean to say that you should avoid real estate. Real estate can and probably should be a portion of a well balanced portfolio. While I don't have any investment properties, I do have a percentage of my assets in REIT's (Real Estate Investment Trusts). |