Purplezr2

Ok, so I'm fairly young yet(26). All I know is the more you invest at a young age the more you will make in interest, the issue were to invest and how to do it.
Back ground

Will be 27 when I graduate from NDSU with Mechanical Engineering degree, I have done two internship and will more then likely be doing another this summer, I don't think that getting a good paying job will be an issue.

I will graduate with no debt what so ever, I have about 40k in saving for a down payment, living expense for a house after I graduate. I owe nothing on my car/truck/toys/tools, so all my income will go for basically house payments and retirement as soon as I graduate. Most grads from my school make in the 50-60k range, or about 3k a month after taxes. I don't plan to buy anything big other then a small house. No new cars, or toys, I have the ability to keep the junk I currently own on the road for the next 5 years or more.

Does anyone have some thoughts, books, suggestions? I just want to get started on the so that I have a shot at retiring before I die.

Adaminak

Honestly, you sound like you're in a very good place financially. I would take your financial records and visit a licensed investment broker...they'll take a small portion of your profits, but they'll manage your money for you, so you don't have to worry about what changes are going on within the stock market. Had I done that, I'd be sitting on a lot more money in my retirement account right now; I was deployed when the tech market bubble exploded in Aug 2000 and couldn't get access to my e-trade account in time to stop the hemorrhaging. I lost roughly 80% of my retirement fund, and compound interest can't work when there's no money left to leverage. That experience made me realize managing money was a specialized skill that took attention to detail and frequent upkeep...things I wasn't prepared or able to provide all the time, which put me on the path to an agent. Since then, I haven't lost more than 18% (2008-2009 crash, and I feel very, very lucky) and I'm now up about 8% adjusted from where I was in 2007.

If you can stomach the idea of a large buy-in, Vanguard has three of the four highest performing mutual funds for the last 11yrs running...only catch is they have a $5K minimum buy-in. Your personal situation will also dictate the need for a traditional IRA or a Roth IRA...if you can make ends meet, do both as the near-term tax benefits for the traditional are substantial, but you won't pay taxes on the dividends from your Roth. It's like winning on both ends.

Justwannabeme

put a dedicated amount away monthly and do not touch it. this tax and investment law changes are strident, agree with adam* let a pro manage the account.

Bark

I agree with both of the above. Also, when you do buy a house, try to get land. Those 0 lot line and 1/8 acre places are nice but dont seem to hold value like a nice chunk of property. If you cant step outside and take a whizz without the neighbors complaining than you need to look at a different lot.

Lary Ellis (Top)

Land is a good investment...they ain't making any more of it

TJE

I find books by Dave Ramsey to be of good advice. Might try reading some of his books.

Good luck

RTillery

Save, save, save. Check into Dave Ramsey and read a couple of his books. At 26 you are doing great and it sounds like you have your head on straight as far as staying out of debt. I didn't figure the time value of money until my mid-forties and man does it make things harder.

Start a Roth IRA as soon as possible. Fidelity is a good company to get it setup with and you have many investment options that you can switch between. You can watch and manage it online, or set it up with one of their advisors at a service center. You can still get one going for 2010 and fund it with $5000 every year. Your investment will grow TAX FREE and you will not have to pay anything when you withdraw it. It is one of the best long term things you can do and if you start now, you should easily be a millionaire when you retire. It is also a great tool to pass wealth on to your kids. The company you go to work for will probably have a 401K with some kind of matching contribution. Make sure you get in and go for at least enough to get the full match. It is like making 100% interest (in most cases) on your contribution and it reduces the taxable income to you. Do anything within reason to avoid taxes.

Be careful of gold. If you take just the last few years, it looks pretty good but it is a terrible investment when looking at long term history. You hear the stories of the twenty dollar gold piece buying a suit in 1870, and still buying a suit (or two) in todays dollars but lets look at it:
Gold in 1870 was $19 an ounce, today it is $1330. What a great appreciation!

The stock market over the same period of time has averaged between 7% and 8%. If you would have taken that same $19 in 1870 and invested it and averaged 7% a year, you would have over $333,000 dollars! You could get a new suit, a house, a new truck, and a good looking gal to go with em! Check into growth mutual funds with low administration fees, invest regularly, and watch it like a hawk. Go online and check out some Financial Calculators. Plug in some numbers and play with them. It is amazing what a little interest and a few decades can do. You've got 40 years and you will have ups and downs but starting at 26 is HUGE at stacking the deck in your favor. Best of luck.

hamilton71801

I was talking the other day about buying a house and ran some #'s. Ok, say you buy a $150K house and your payment is $1K per mth for 30yrs and it might be worth 300K at the end of the note. You could rent a nice place for $700 (at least around here), have no maint/ins to pay for and sack that $300 away in stocks. So now you've invested $108K over 30yrs and if you make a measly 5% you've made 251K. If your investments pay 10%, you've made 651K.

http://www.moneychimp.com/calculator...calculator.htm
http://personal.fidelity.com/toolbox...h/growth.shtml

Of course there is nothing like home ownership as long as you don't buy a money pit but this is something to think about.

chromehound

60-70% stocks, 20-30% bonds, remainder in something with high liquidity. Begin moving out of stocks and into bonds between 48 and 50. Pic stocks that have high growth potential and be prepaired for the normal market swings and don't panic. Yahoo has some financial pages that give good advice but if you are unsure seek professonal financial advice but use someone who gets paid hourly not on commision. Remember the compounding power of time.

04ctd

my financial guy picked this for me,
I can't stand to lose money, so i like the guarantee:


MetLife The Guaranteed Minimum Income Benefit Plus (GMIB Plus)


I would sit down with at least two professionals, and get independent plans, then mix & choose.

I have used 3 pro's over the years, (moved alot) and the most recent was impressed how the other 2 got me this far.

cougar

Do not put money into a "pre tax" retirement fund. Think about it, does income tax go down? What are the interest rates on those pre tax accounts? It's a loosing deal. Pay today's income tax at today's rate and they can't tax you again later at a higher rate. Do not borrow money or only borrow as little as possible and pay it off asap. If you have a mortgage, you don't own it and it can be taken away from you.

Adaminak

Generally, the plan here is that your retired income will be much less than your working income, and thus put you into a lower tax bracket, which is why you'll pay less money in the long run. Again...individual circumstances dictate, and you can only invest a certain dollar amount into Roth accounts so a traditional (tax-deferred) IRA is one of a few available options.

SolarExpress

You are in an awsome position. Dont ever get a credit card. save up and pay cash for everything. Read Dave Ramsey as was previously mentioned. In a nut shell this is probably what you will learn from him. Make a budget and stick to it. Save 3-6 months of living expenses for emergencies/job loss. Save 15% of your income for your retirement. If you have a 401k with employer match, put in up to the amount the employer matches (if they match 3%, you put in 3%, you're getting 6%). Take the remaining 12% and max out a Roth IRA and out the rest in growth stock mutual funds. There is a limit as to what you make which can determine IF you can contribute to a Roth. If you want a new vehicle in three years, divide up the cost of the vehicle over 36 months and start saving. This next one is tough for some of us. He would recommend not buying a brand new vehicle. But at least 3 years old. Example, my wifes Aspen is worth less than half what we purchased it for 3 years ago. I can pickup really nice low mileage Aspens for $20K or less now. The $20K you saved on the purchase price makes it a little more bearable if you have to incurr a repair. Your still ahead even without a warranty. Plus you have the emergency fund if needed to make the repair. There is a lot more, but read the book..

wyododge

X3 on Dave Ramsey. He has most of the tools you need on his website.

Trust your gut, it has gotten you this far.

Well done by the way.