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Old 06-17-2007, 01:45 PM
 
86 posts, read 350,237 times
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Hello,

I've just graduated from college and would love any advice you can give me before I start my first job! If you have any ideas about the best way to save for retirement, I'd love to hear them!

Thanks
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Old 06-17-2007, 02:08 PM
 
Location: Journey's End
10,189 posts, read 24,909,157 times
Reputation: 3840
I can't say what the "best" way to save is, but certainly I'd advise (a) starting a savings account immediately; (b) enrolling in job saving opportunities asap; (c) putting money into short and long term CDs and most of all (d) living within your means and limiting the use of credit cards.
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Old 06-17-2007, 02:35 PM
 
Location: Atlanta
738 posts, read 643,818 times
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Congratulations! Probably the first thing you should do is to find out about any retirement plans your company offers and learn how they work. Make it a point to contribute the maximum allowed under the plan. If the plan gives you a choice of mutual funds to invest in look for an index fund. That is a fund that is designed to mirror the S&P 500 for example.

Secondly, use credit very carefully if at all. I know it's tough getting started, but resisit the temptation to get credit cards and max them out. If you pay the minimum there is almost no way to dig yourself out of debt. Use them as convenience cards - pay them off every month.

Next, as your income rises and your credit is built up, look for a 3-4 bedroom house in an up and coming part of town. If you can afford it, or you can get some help from your folks, put down at least 10% and finance it with a 30 year mortgage. Next, rent out rooms in your new house to people you can trust. They will help make your mortgage payments for you! Over time, when you have extra cash, fix the place up - focus on the kitchen, the bathrooms and the curb appeal. As a single homeowner you can sell your house and claim up to a $250,000 gain tax free!

Best of luck to you in your new career and with your retirement planning!
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Old 06-17-2007, 03:17 PM
 
9,912 posts, read 9,301,860 times
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Quote:
Hello,

I've just graduated from college and would love any advice you can give me before I start my first job! If you have any ideas about the best way to save for retirement, I'd love to hear them!

Thanks
Congratulations on being a smart young person and looking to your future.

We are retired and believe me you can't live on Social Security ... if it's even there for you when you reach our age!

Check out your new employer's retirement plan ... if available and you can contribute ... contribute the max. Set a goal for yourself ... "I want to be able to retire when I am XX years old" ... no mortgage hanging over my head ... no maxed out credit cards ... even if you do not retire at that age you can be financially ready to do whatever you darn well want to do.

It would be wonderful to find an employer that offers a company paid pension plan, aside from employee savings or 401's but that is few and far between now. My husband receives two checks each month from company pension paid plans and when we were in our 20's it never entered our lame brain minds what this money would mean to us now.

Buy you a piece of dirt as soon as you can that you can call your own. Try your best not to over extend yourself and save all you can set aside to enjoy yourself in later years.
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Old 06-17-2007, 04:51 PM
 
Location: Sacramento
13,784 posts, read 23,805,237 times
Reputation: 6195
The first thing is to be aware of the need to fund a retirement account, and you appear to have addressed this.

Next is to hopefully hook up with an employers who makes some type of matching contributions to a 401K retirement account. For example, if you put 5% of your pay into this account per payday via payroll deductions, they would match this amount. Many employers have this feature, but some don't make it available or fully available until after you have worked a preset period of time.

Regardless, open up a 401K and/or Roth retirement account and save at least 5% of your income over your entire work life. Invest it as you feel comfortable, but some combination of money market funds, bond funds, and stock funds should be where you have your money placed (like 20% money market funds, 30% bond funds and 50% stock funds). This would give you a great start, and as you evolve you will find your risk tolerance and investment comfort levels.

Best of luck!
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Old 06-19-2007, 04:55 PM
 
Location: Oxygen Ln. AZ
9,321 posts, read 16,577,349 times
Reputation: 5692
Always live by the golden rule...It is better to be rich than to look rich. Don't buy things to make yourself look good, buy what you need and live simply. Ben Stein wrote a great book for older people still trying to save and for younger people like you. It is called "Yes You Can Still Retire Comfortably." I recommend it highly.
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Old 06-19-2007, 05:18 PM
 
86 posts, read 350,237 times
Reputation: 26
Thanks a lot. It's so confusing to me about what I should be doing with my money, but this certainly helps. I will look into that book!
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Old 06-19-2007, 08:41 PM
 
Location: WA
5,394 posts, read 21,390,738 times
Reputation: 5892
Start with regular contributions to a Roth IRA... once working your first priority should be making sure you get the most from any employer plan.
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Old 06-20-2007, 06:40 AM
 
Location: Sunny Florida
7,136 posts, read 11,011,591 times
Reputation: 9460
Congratulations on starting your new life!

I agree with all of the other posters:

contribute the max to your employer's 401K/retirement plan (sometimes they match your contribution)

open a Roth IRA and contibute as much as you can each year

pay off your credit card debt each month (those carry overs will kill you)

get an inexpensive apartment, save your money, and when you can buy a house you can maintain

each time you get a raise only allow yourself to take half of the money and invest the other half of it through some kind of direct deposit investment - you'll never miss it because you never had it and you'll still be getting more money because you're taking half of your raise

watch your small purchases - it's amazing how much money you can waste on a daily basis - one Starbucks, lunch out, a bag of chips, a cookie

be mindful of monthly expenses and get very honest with yourself, ex. If you're working and have an active social life do you really need cable tv?

live within your means - if you don't have the money don't buy it, save your money until you can buy it (It's weird but while you're saving the money to buy what you want you often find you really don't need it or want it anymore.)

The time goes by more quickly than you can imagine. You're very wise to think about saving for retirement now. Through the magic of compounding the more you save when you're young the better off you'll be later. I've never heard a retiree say, "Wow, I wish I would have spent more money when I was younger!"

Best wishes, welcome to the real world, and keep asking great questions!
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Old 06-20-2007, 03:22 PM
 
3 posts, read 6,085 times
Reputation: 10
Lightbulb you will love youngmoney.com

Hi Movingsoon 2007,
Congratulations on this great start you're making. I think the other replies are on track, and I just wanted to let you know about a site called youngmoney.com, which has really good advice specifically for personal finances of young adults.

Good luck!
Lanainorlando
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