X2 what bean said. Also look into trading futures and foreign exchange. At least that is what I do.
[quote]cryptik wrote:
X2 what bean said. Also look into trading futures and foreign exchange. At least that is what I do.[/quote]
That may be good for some people but, foreign exchange, and individual stocks is not something I feel comfortable with.
Would it be a good idea to open a roth IRA as well? I read somewhere that although you may have a 401k it is a good idea to open a roth because it is not get taxed.
[quote]EvanX wrote:
[quote]cryptik wrote:
X2 what bean said. Also look into trading futures and foreign exchange. At least that is what I do.[/quote]
That may be good for some people but, foreign exchange, and individual stocks is not something I feel comfortable with.[/quote]
Oh I would definitely demo trade for a year till you felt more comfortable with it. It is not something I would just throw my money in. Demo trade and read your ass off and make sure you put the time in front of the charts. They really do start to speak to you if you know what I mean. I have been trading for 6 or so years. I make money but not enough to completely live off of. It is just another vehicle for my investing. But I do hope to be able to live off it one day.
I didn’t take advantage of my 401k at my previous job. About 1.5yrs worth of it that I missed out on. I had a CD but ended up cashing it in (after it ended) to pay off all my credit card balances. Currently I have no debt but I also have no savings. Once I get on the right track and start bringing in money again, I am going to need advice like this.
That was a round-about way of saying I like this thread and will follow.
I’m an accountant, not a financial planner so I won’t give any advice, but here is a paper I found interesting (if you speak fluent finance to follow along).
http://www.chicagobooth.edu/faculty/selectedpapers/sp84.pdf
The problem I have is with finding lowly traded companies with high book to market values.
[quote]EvanX wrote:
Would it be a good idea to open a roth IRA as well? I read somewhere that although you may have a 401k it is a good idea to open a roth because it is not get taxed.[/quote]
Yes and no.
You contribute after tax dollars to the ROTH, so the income IS taxed.
The income your contributions earn is not taxable.
Is it a good idea? Sure, can’t hurt. You fall under the income limits.
Good thread evanx.
I am in grad school right now and have been able to save a little bit from my stipend (around 3k). What would you guys recommend I do with it? I will graduate in December, and I have no idea what kind of initial expenses I am going to have when I have to start a real life. Should I just hold on to it in case I need it for a down payment on a house/car or something?
[quote]countingbeans wrote:
[quote]EvanX wrote:
Would it be a good idea to open a roth IRA as well? I read somewhere that although you may have a 401k it is a good idea to open a roth because it is not get taxed.[/quote]
Yes and no.
You contribute after tax dollars to the ROTH, so the income IS taxed.
The income your contributions earn is not taxable.
Is it a good idea? Sure, can’t hurt. You fall under the income limits.[/quote]
Thanks, thats what I meant. Well, the max income is up to 106 K for a full contribution, it will be a few years before I make that. The reason I was looking into it was because you can withdraw at any point, use the money for school and first home.
There is just so much to read/look into but, I figure it will pay off in the end.
I’m an investment advisor of sorts. Send me whatever extra money you have to invest and I will handle it for you. PM for details.
Good stuff so far.I realize that right now I am not in position to do that much but, I have always liked to plan in advance. From What I have read, I am planning to do the following
1)Open bank account
2)Put percentage of money in savings
3)Buy CD’s with different maturity lengths
4)Open Roth IRA “contribute max”
5)When I become ATC, contribute to 401K
6)Have an emergency savings that will support me for at least 6 months
So far so good?
Somewhat related, would it be smart to get a credit card soon to build up credit? Or are other methods better?
Just wanted to pipe in here. At your age, and at currently making $800, I would put off investing for a little bit and work on savings right now. The goal at this point is to avoid debt. Don’t run up a credit card, etc. Before you invest, you should start building up a 6 month living expense savings. Tally up your projected monthly expenses for when your parents aren’t paying stuff any more (rent, cell phone, insurance, food, etc) and then save up 6 months worth.
For example, when I graduated college, my monthly bills were $1200 a month including my small loan payment. So I saved up $8000 to have a little extra for car maintenance before investing.
Having an emergency savings for the sole purpose of meeting costs if you lose your job or get cancer or whatever is essential. Many people who live debt free month to month suddenly hit complete financial ruin and mega debt to the point of bankruptcy because they didn’t have an emergency fund in place. I’ve seen it happen many times.
Make sure you have a good running car if you need it for your location. You don’t want to worry about investing if your car is about to die at any moment.
Pay off debt you might have first, with the exception of long term things like student loans. So if you have a $2000 credit card balance, pay it off. You’re losing more money in high interest payments over the long term than you would make in investment interest with that $2000.
Once you have your bases covered, then invest. I know this delayed gratification thing sucks, but I started doing this when I was 20, I’m 22 now and have almost a year of living expenses in savings, I have no debt, I drive a newish car that is in perfect shape, I have a big TV and a good computer and a million gadgets, and my mid figure salary lets me literally live like I am a millionaire, all because I took the boring route first and didn’t blow my money on iPods and beer. Hang in there and make good decisions, and not only will you demonstrate yourself to be wise beyond your years, but you’ll also be able to live a comfortable life even on a smaller salary.
EDIT: Pick up Dave Ramsey’s books or check out his website. Look at the Total Money Makeover in particular. There are some religious elements, but it isn’t heavy handed, and this man’s advice is very sound and an excellent place to start.
[quote]CapnYousef wrote:
beans:
How would you advise someone manage their money in ways that don’t involve interest? Culturally, I can’t deal in interest (or any “guaranteed” type thing, stocks are great but CDs aren’t, naw mean?)
Any preferences in investments on that route?[/quote]
Maybe look into getting some precious metals? I’ve been getting a few silver ingots off eBay every pay check. Silver’s been rising in price pretty steadily for awhile now, and is almost $20. It isn’t guaranteed, obviously, but at least you have an actual object that may retain its value someday and not a piece of paper that ‘guarantees’ a certain value.
[quote]Fezzik wrote:
Good thread evanx.
I am in grad school right now and have been able to save a little bit from my stipend (around 3k). What would you guys recommend I do with it? I will graduate in December, and I have no idea what kind of initial expenses I am going to have when I have to start a real life. Should I just hold on to it in case I need it for a down payment on a house/car or something?[/quote]
Save as much as possible. The job market fucking blows right now. Save and move back in with yoru parents if you can.
[quote]Squiggles wrote:
[quote]CapnYousef wrote:
beans:
How would you advise someone manage their money in ways that don’t involve interest? Culturally, I can’t deal in interest (or any “guaranteed” type thing, stocks are great but CDs aren’t, naw mean?)
Any preferences in investments on that route?[/quote]
Maybe look into getting some precious metals? I’ve been getting a few silver ingots off eBay every pay check. Silver’s been rising in price pretty steadily for awhile now, and is almost $20. It isn’t guaranteed, obviously, but at least you have an actual object that may retain its value someday and not a piece of paper that ‘guarantees’ a certain value.
You have to understand, you are buying these things at the highest prices they have ever been, in the most uncertain economic climate since the depression.
I wouldn’t count on getting an long term returns on any precious metal. (By long term here I mean 5+ years, not tax return long term.)
You could always try an ETF that pays dividends (paid monthly or quarterly). The price per unit is fairly low (usually $15-30) and the one I’m buying right now has a pretty safe basket of companies in it. It pays a certain amount like $0.10 per unit monthly. This is what I’m doing what now and its working ok, maybe people here can critique it:
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$5000 yearly contributions, if i stay under 5000, any investment income remains tax-free.
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$5000 a month works out to around $416/month
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Buy $416 worth of shares each month
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Set up a dividend reinvestment plan that automatically buys shares with dividends
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Repeat for 5 years
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Decide what to do with money after that
I like ETFs cause of their relatively low price, variety, and the ability to buy/sell when you want, and only have to pay the fees associated with normal trading.
Great post and I will be following. I recently graduated college and I’ve been thinking about a lot of this stuff. I have a bachelors degree and a teaching license, but haven’t had any luck finding a job so I’m living with my parents and saving as much as I can. There’s a lot of valuable information in this thread so keep it coming…