Originally Posted by Anti-Polar Bear
Ha! I too am relatively liberal but lets face the facts; that money will be pissed away. For example, why pay a bunch of county employees to take 6 months to construct a new road when they can pay a company looking to turn profit 2 months.
Privatization my friend. I am all for paying the money and helping people out, but the way the system is set-up now is a bunch of lazy asses get FAT unionized checks and get very little done, thus helping very few.
Agreed?
So, you guys are all good with money it seems.
What is the best way to make money in terms of investment? buying property? flipping houses in addition to your job? stock market? ira? mutual funds?
How can I pay the least taxes upon graduation? Say you make 50,000 out of college, what is a good percentage of that to save immediately?
Good point. I'll second that.
Depends on a few things - expected retirement age and your risk aversion. I'll assume you'll be 22 when you finish up and expect to work until your 60 (if you make $50K coming out of school, you probably won't want to work 'til 65). So you've got about 40 years of work to save for retirement. Use this to determine your expected net earnings and then pull out your finance book to reverse estimate the growth over time.
Regarding where to invest - depends on the amount of time you have available. Buying property will be the largest investment of your life and you'll need some cash and earnings potential to pull it off. Buying/selling (flipping) houses can be a strategy but has time and risk associated.
We had a guy from Charles Schwab come talk to our company @ a conference a month ago - he just kept preaching diversification. Max out whatever the company matches to your 401k and put away the max in a Roth IRA (pre-tax baby). If your comfortable investing, you can pick your own stocks but there are tons of great mutual funds (no load, no spiff for the firm) that you can set your diversification (large cap, mid cap, growth, international, etc.). Here's a pretty standard way to keep your investments health for the long term:
Conservative
You seek current income and stability, and are less concerned about growth.
Fixed-income investments: 50%. Cash: 30%. Stocks: 20%.
Moderately Conservative
You seek current income and stability with modest potential for increased investment value.
Fixed-income investments: 50%. Cash: 10%. Stocks: 40%.
Moderate
You’re a long-term investor seeking steady growth potential without the need for current income.
Stocks: 60%. Bond funds: 35%. Cash: 5%.
Moderately Aggressive
You’re a long-term investor seeking good growth potential.
Stocks: 80%. Bond funds: 15%. Cash: 5%.
This portfolio could be volatile.
Aggressive
You’re a long-term investor seeking high growth potential.
Stocks: 95%. Cash: 5%.
This portfolio may have substantial year-to-year value fluctuation.
Regarding 'how much to save' - as much as you can. A dollar today is worth more than a dollar tomorrow. Lock in your student loans if you just graduated (by 7/1) as interest rates are risking. And pay off any credit card debt before you begin investing. Cheers-
WHAT A GREAT QUESTION from somebody getting ready to get out of college.
Most individuals your age are pissing money away rather than thinking how to save it. And it's not that I'm a geezer at 37, but I think it's great that you are thinking about this as early as you are.
First off, I'll preface my views by saying that I work for a large bank and do nothing but Home Loans. As my 5 year old daughter says when she introduces me to her pre-school friends, "My dad helps people buy houses". And with all the programs our bank has, and the fact that I'm fair with people I'd say I'm one of the best at what I do.
So I'd have more inside information regarding real estate investing as opposed to the stock market....but I have personal experience and interest in both.
That being said, I started investing money in mutual funds at age 22 and in the stock market at age 25 (and I saw the best and worst since I'm VERY risk averse and look mostly at tech stocks). I've also been in a 401K from the day a company allowed me to be in one.
I'll offer some general thoughts and a step by step process as general views and anybody can comment as they see fit.
Coming out of college, I'd pound the table for you doing two things, and they go hand in hand. These two things IMO serves as your foundation for the "future". Once that foundation is set, then you branch off in riskier things such as Real Estate, Stocks, Flippings...etc...as you see fit.
401K
ROTH IRA
1. Get in a 401K plan ASAP and contribute at least what a company will match money to. For instance, a past company I worked for would put up to 5% into my 401K account if I contributed 10% of earnings. So I contributed 10% so for every$100 I earned $15 was put into my 401K account. My current bank contributes up to 3% of earnings if I put 6% in. So I contribute 6%. So for every $100 I make, I put $6 in my 401K account, but since that $6 is not taxed since it's put in a 401K I'd estimate I only lose $4 off that $100 on my actual paycheck if I dindn't have a 401K. And I set aside $6 and the company give me $3 for $9 in future savings plus the interest it will appreciate over the years.
2. Personally, my second biggest mistake in investing was not starting up a ROTH IRA when I was 22. I bought a Hot Red Ford Probe and had it paid off within 12 months. I spent a lot of money on booze and fun. But I was not setting aside enough money cause I was just living the good life.
Even if you only can afford to contribute $1000 a year, get that ROTH IRA started early. This is different from a Traditional IRA or 401K in that you put money in the ROTH after it's been taxes. BUT, and a very important BUT for youngyans, the accrued interest that money makes over time in that ROTH IRA is NOT taxed when you take it out at Retirement. So if you invest 100G over the next 40 Years and the value of that ROTH IRA is 250G and you wait til retirement age to cash it in, you get the 250G. That's a powerful investment.
Retailguy, or any, if I'm slightly off on anything in here, please correct me. But I think most will agree that to set up your future base you invest in your 401K if the company contributes and a ROTH IRA for to set your foundation for your future.
The second part of your question deserves another post so I'll give that a wing as well
The answer to this question is short and simple IMO. Be sure you have good credit, and buy a house.
Many years ago people had to have a lot of money down to buy houses. Rules have loosened if you have good credit. Honestly rules have changed for everyone, but I hate seeing young buyers with challenged credit get rakes over the coals by high risk brokers with outrageous interest rates and fees.
If you don't have good credit then spend a year renting and build your credit score up to where you do have good credit and can get approved with a reputable bank that will treat you fairly.
If you are not self employed or a business owner, home ownership is one of the most effective ways to keep the money you pay into Uncle Sam low while watching the equity of something you own go up.
I THINK THERE ARE A LOT OF GREAT POSTERS WHO COULD OFFER A LOT OF GREAT IDEAS ON PARTIAL"S INQUIRY.
I started a thread called "SHOW ME THE MONEY" for the postings so we don't throw Tanks' blog way OT. Hope to see some great commentary there.
It's 11:00 PM Saturday on Tank's Blog; Wondering if he's drunk, stoned getting some booty, or all of the above.
Cheers,
B
Well, I am not one of them for I am not a finance major. Although both deals with money somewhat, there is a big difference between economics and finance. Where I am at, they fall into different division under the Business Department. Economics is about supply and demand, scarcity, inflation, the interest rate, human resource, jobs, the production, distribution and consumption of goods and services, macro and micro social theories, etc. Whereas finance deals with money, money and more money (with respect to the interest rate).
I chose economics because, as a liberal, I want to improve the world's welfare. Obviously, because of the scarcity of resources, it is difficult to archive an utopia, but that is one of the motive behind me majoring in econ, nonetheless.
As for the tax question, i took an advanced income tax accounting course last semester (it is a mandatory core course). But I didnt pay much attention to it or study much. Ended up with a C. I subsribe to the notion that i can always hired someone, such as retail guy, to do my taxes. I will take another tax class before i graduate and pay attention. It would help me if i decides to take the CPA (i am minoring in accounting; may double major; the internship this summer deals more with accounting).
I'm not going to stop the wheel. I'm going to break the wheel.
Me and the roommates and some other friends went to a strip club tonight. it was too crowed so we didnt stay long. I am chatting with some friends on AIM right now. that is why i am also in here. We just ordered pizza and some are watching a movie. Yes, there is pot and beer. No, no minors are present.
I'm not going to stop the wheel. I'm going to break the wheel.
How was the strip club ? Why are you back so early ? Did ya get a lapper ?Me and the roommates and some other friends went to a strip club tonight. it was too crowed so we didnt stay long. I am chatting with some friends on AIM right now. that is why i am also in here. We just ordered pizza and some are watching a movie. Yes, there is pot and beer. No, no minors are present.
These are the details the make blogs !
Dont tell me you are a virgin to the Nudie Bars too.
I'm not going to stop the wheel. I'm going to break the wheel.
Partial,
Bretsky is right. Your first two no brainers are maxing out your 401K and your Roth IRA. I would do that even before buying a house. The 401K is great because of company matching funds and deferred taxation. The Roth is a great place for you to begin investing because unilike taxable accounts, any earnings you generate in a Roth are not taxed. And until you get married and buy a house, Uncle Sam will be taking ridiculous amounts of money from you if you land a decent job out of school.
Dont tell me you are a virgin to the Nudie Bars too.
Not going to disappoint you there; been to plenty of those over the years and was in search of a good place to go on way back from Green Bay to Madison. Paradise Club in Appleton was sub par.
I think I'd agree with Scott's further points as I was pondering my post regarding the duplex. It's a good idea, but not a necessity right away, and not a must like the 401K and ROTH should be.
That is good. I am too lazy to write a blogg about what transpired last night. Basically, unlike before, the place was too crowed and we couldnt find an available table. Usually, we like to sit and relax and drink beer and watch women dance naked and if someone likes a dancer he tips her and after awhile as her for a lap dance. But last nite we had to stand up all the time and it wasnt fun that way so we left about an hour after we arrived.
I'm not going to stop the wheel. I'm going to break the wheel.
This blog is the dumbest thing since sliced milk ... and I can't stop reading it! Will Charlie Brown get a date with the Little Red Haired Girl? I'm on the edge of my seat!
An hour!? An hour!? I think an hour is a very long time to spend in a strip club.
I used to go to Visions every once in a while, a TERRIBLE strip club in Madison. I think the longest I ever made it was about 45 minutes. Crappy music, nasty women. But my buddy & I would come back again in a few months when we got bored enough. Usually you got to see one hot body in 45 minutes and could leave with a happy memory stored away for access later that evening.
I like to go to strip clubs that are so low class that some are the dancers are pregnant. There was this place called the Cajun Club right on the border of Minnesota and Wisconsin right before you crossed into Stillwater. I would go in there on a Tuesday night with a couple of buddies and just laugh my ass off, and just get loaded. One dance had on roller skates and boy did she know how to use them.
Hah! When I was a highschool lad in Hudson, there was only one strip club in the friggin county, some little place in Somerset, I forget the name.
18-year-old drinking back in those dinasaur times. Anyway, us senior boys took a trip up der, and who would be front and center but Mr. Grubbs, the Chemistry teacher, with his coke bottle glasses and slide rule in his pocket. Wait a second, maybe that wasn't his slide rule!
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