What's the best way to set up a retirement fund?
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dreamvsps2
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x HELP ME PUNXSEXzionoverfire
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Go to work, harass the personnel department for information.
TheBlueWizard
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If you want to save money for retirement, I'll just agree with the earlier post. The first thing that you want to do is start your 401k at work. Many companies match funds, so for sure you want to do that much. Its free money.
Also, you really should try to get a Roth IRA. I don't have one, but honestly, it will help many people out. Its after tax money going in (unlike a 401k), but you won't pay any taxes on it when you remove it later in life. Its a great deal, really and can definately help with the taxes you will incur on the 401k when you pull it out after you retire.
When you ask how much to put in the 401k, pick a percent of your income that you think is reasonable. Then double it, if you can. The more you save now, the better you will be later on.
If you are independently wealthy, get a broker and start with some mutual funds. Those are great for a while, but I've heard once you hit about 50k, they will get rid of the funds and start buying you stocks, since you can get decent chunks at a time. The bad thing about this is capital gains. You have to pay tax every year on this, for dividends. When you sell those funds, I think that you have to pay capital gains tax on the profit. I'm not a tax expert, but when you start to have this problem, you should be able to afford to get someone to figure it out for you.
Hope this helps some.
TBW
Also, you really should try to get a Roth IRA. I don't have one, but honestly, it will help many people out. Its after tax money going in (unlike a 401k), but you won't pay any taxes on it when you remove it later in life. Its a great deal, really and can definately help with the taxes you will incur on the 401k when you pull it out after you retire.
When you ask how much to put in the 401k, pick a percent of your income that you think is reasonable. Then double it, if you can. The more you save now, the better you will be later on.
If you are independently wealthy, get a broker and start with some mutual funds. Those are great for a while, but I've heard once you hit about 50k, they will get rid of the funds and start buying you stocks, since you can get decent chunks at a time. The bad thing about this is capital gains. You have to pay tax every year on this, for dividends. When you sell those funds, I think that you have to pay capital gains tax on the profit. I'm not a tax expert, but when you start to have this problem, you should be able to afford to get someone to figure it out for you.
Hope this helps some.
TBW
401k if you're with a company that has one. If not, Roth IRA is a great way to put money away that will earn interest tax free (you're making free money!). I don't know how to set one up, but a financial advisor will. Go in to your bank and ask to talk to one, usually if you're a customer, their services are free. Or you can always try some place like Morgan Stanley or an investment firm like that... they'll have tons of options.
It would probably be best to get your advice from someone who does this for a living and not from a community of people who's main purpose is saving a few bucks on video game entertainment. We can find you cheap games, but get the straight info from a financial advisor.
It would probably be best to get your advice from someone who does this for a living and not from a community of people who's main purpose is saving a few bucks on video game entertainment. We can find you cheap games, but get the straight info from a financial advisor.
Your best bet is a 401k as an initial investment. It doesn't require too much (as long as you have a stable job to fund it). Once you've gotten better jobs (and more $$$) consider starting a Roth IRA as it has more versatility investment-wise (but requires a higher amount of $$$). Also, when you talk to a money manager, since you're young, go with a highly aggressive portfolio meant to give high returns in short time. Consider stocks, money market funds, and other aggressive investments. But when you do all this, excluding the 401k/Roth IRA, consider doing it through a special investment vehicle - life insurance. Specifically, something known as Variable Universal Life. It allows you to make investments and defer a lot of taxes normally associated with such investments plus allows you to have a burgeoning life insurance policy. It's a bit complicated and I'm too lazy to explain the specifics but that should be enough to pique your interest/curiosity to ask the right questions to your financial advisor(s).
GuilewasNK
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401K, if available is nice. My employer matches up to 4%.
I wouldn't pass up good, old fashioned saving either.
I wouldn't pass up good, old fashioned saving either.
Agreed, if your company matches, contribute *at least* as much as you need to to get the max match. Otherwise you're throwing money away.
Diversify.
Think long-term--most people here are young enough that you can weather an 8% decline over six months. That's part of what caused the tech bubble popping of the late 90's, people doing the daytrading and treating the market like a slot machine rather than a long-term investment in companies they want to succeed. But at this age you can go aggressive [not with everything, but a large portion] without too much risk.
If you go on your own, definitely watch the commissions--some plans have commission fees that are higher than the rate of return.
My 401k at work matches 1/2 of the first 6% i contribute, and I can put in up to 25% of my salary in either pre-tax or post-tax contribs. If it's pre-tax, I can then borrow from myself and pay myself back the interest, if it's post tax, I can withdraw it tax-free for the most part [since the taxes have already been paid]. Of course, I *shouldn't* do that, because I lose that year's worth of compound interest, which could make a big difference 30 years down the road, but it's there if I need to.
Taking another tack--check your spending. Create good spending habits now, including 'paying yourself'. Until you decide what to do, stick a certain percentage of your income in a safe place, even just a savings account. Get in that habit, and if/when you get raises, increase your contribs as well.
Do you have credit cards? PAY THEM OFF. If you are paying 18% interest and carrying a balance, paying that off will be like earning 18% on your money. And credit card debt is basically worthless, and harmful. You can/should still use credit cards, but get in the habit of paying it off before it's due, and don't carry a balance. Home loans and auto loans are 'acceptable' debts, since they are helping build assets, but of course you want to minimize your rate there as well.
Diversify.
Think long-term--most people here are young enough that you can weather an 8% decline over six months. That's part of what caused the tech bubble popping of the late 90's, people doing the daytrading and treating the market like a slot machine rather than a long-term investment in companies they want to succeed. But at this age you can go aggressive [not with everything, but a large portion] without too much risk.
If you go on your own, definitely watch the commissions--some plans have commission fees that are higher than the rate of return.
My 401k at work matches 1/2 of the first 6% i contribute, and I can put in up to 25% of my salary in either pre-tax or post-tax contribs. If it's pre-tax, I can then borrow from myself and pay myself back the interest, if it's post tax, I can withdraw it tax-free for the most part [since the taxes have already been paid]. Of course, I *shouldn't* do that, because I lose that year's worth of compound interest, which could make a big difference 30 years down the road, but it's there if I need to.
Taking another tack--check your spending. Create good spending habits now, including 'paying yourself'. Until you decide what to do, stick a certain percentage of your income in a safe place, even just a savings account. Get in that habit, and if/when you get raises, increase your contribs as well.
Do you have credit cards? PAY THEM OFF. If you are paying 18% interest and carrying a balance, paying that off will be like earning 18% on your money. And credit card debt is basically worthless, and harmful. You can/should still use credit cards, but get in the habit of paying it off before it's due, and don't carry a balance. Home loans and auto loans are 'acceptable' debts, since they are helping build assets, but of course you want to minimize your rate there as well.
[quote name='dtcarson']Agreed, if your company matches, contribute *at least* as much as you need to to get the max match. Otherwise you're throwing money away.
Diversify.
Think long-term--most people here are young enough that you can weather an 8% decline over six months. That's part of what caused the tech bubble popping of the late 90's, people doing the daytrading and treating the market like a slot machine rather than a long-term investment in companies they want to succeed. But at this age you can go aggressive [not with everything, but a large portion] without too much risk.
If you go on your own, definitely watch the commissions--some plans have commission fees that are higher than the rate of return.
My 401k at work matches 1/2 of the first 6% i contribute, and I can put in up to 25% of my salary in either pre-tax or post-tax contribs. If it's pre-tax, I can then borrow from myself and pay myself back the interest, if it's post tax, I can withdraw it tax-free for the most part [since the taxes have already been paid]. Of course, I *shouldn't* do that, because I lose that year's worth of compound interest, which could make a big difference 30 years down the road, but it's there if I need to.
Taking another tack--check your spending. Create good spending habits now, including 'paying yourself'. Until you decide what to do, stick a certain percentage of your income in a safe place, even just a savings account. Get in that habit, and if/when you get raises, increase your contribs as well.
Do you have credit cards? PAY THEM OFF. If you are paying 18% interest and carrying a balance, paying that off will be like earning 18% on your money. And credit card debt is basically worthless, and harmful. You can/should still use credit cards, but get in the habit of paying it off before it's due, and don't carry a balance. Home loans and auto loans are 'acceptable' debts, since they are helping build assets, but of course you want to minimize your rate there as well.[/QUOTE]
Very good stuff here. I've developed a savings pattern myself over the past year. It's amazing how quickly savings adds up when you just let it sit there. I just moved my money into a money market account and I've already made more interest in one week than I had in 6 months alone.
I'm about to accept an offer for my first real "job". They match $0.50 for every $1 that you put into your 401k (up to 6% of your salary). What amount of my paycheck should I be putting into my 401k to begin with? I'm relatively young, and my only expenses are general living and a car loan, so I'll end up having one paycheck (plus a little) that is completely free every month. Suggestions?
Diversify.
Think long-term--most people here are young enough that you can weather an 8% decline over six months. That's part of what caused the tech bubble popping of the late 90's, people doing the daytrading and treating the market like a slot machine rather than a long-term investment in companies they want to succeed. But at this age you can go aggressive [not with everything, but a large portion] without too much risk.
If you go on your own, definitely watch the commissions--some plans have commission fees that are higher than the rate of return.
My 401k at work matches 1/2 of the first 6% i contribute, and I can put in up to 25% of my salary in either pre-tax or post-tax contribs. If it's pre-tax, I can then borrow from myself and pay myself back the interest, if it's post tax, I can withdraw it tax-free for the most part [since the taxes have already been paid]. Of course, I *shouldn't* do that, because I lose that year's worth of compound interest, which could make a big difference 30 years down the road, but it's there if I need to.
Taking another tack--check your spending. Create good spending habits now, including 'paying yourself'. Until you decide what to do, stick a certain percentage of your income in a safe place, even just a savings account. Get in that habit, and if/when you get raises, increase your contribs as well.
Do you have credit cards? PAY THEM OFF. If you are paying 18% interest and carrying a balance, paying that off will be like earning 18% on your money. And credit card debt is basically worthless, and harmful. You can/should still use credit cards, but get in the habit of paying it off before it's due, and don't carry a balance. Home loans and auto loans are 'acceptable' debts, since they are helping build assets, but of course you want to minimize your rate there as well.[/QUOTE]
Very good stuff here. I've developed a savings pattern myself over the past year. It's amazing how quickly savings adds up when you just let it sit there. I just moved my money into a money market account and I've already made more interest in one week than I had in 6 months alone.
I'm about to accept an offer for my first real "job". They match $0.50 for every $1 that you put into your 401k (up to 6% of your salary). What amount of my paycheck should I be putting into my 401k to begin with? I'm relatively young, and my only expenses are general living and a car loan, so I'll end up having one paycheck (plus a little) that is completely free every month. Suggestions?
First, congrats on your job 
For the 401k, definitely at least 6%, you want that match; then, not to be flip, but 'as much as possible'. I think the max is 25% unless you're 'highly compensated', and even then, you can find ways to save more [savings bonds, t-bills, etc]. It sounds like you have a great opportunity to get a very solid financial start. But you don't want to be a fiscal hermit either. Do you have a budget written up, with your standard expenses and your 'extras' [food, dining out, entertainment, emergency, insurance, etc]? That might be a way to start, so you can see what you can 'afford' to save while not resenting saving money. Or try it the other way--depending how easy it is to change your contributions, start contributing 25% or 20%, try that for a month or two, then drop it down a percent or two at a time if you need to. Depending on your future plans [buy a house? marry? family?], you may want to save some in a more 'accessible' place so you can get to it without too much of a penalty/fee if you need to. Or if your 401k lets you take out a loan and pay yourself, that's an option for the future as well. If you start contributing a lot now, you will 'get used to it', and won't even notice it's out of your paycheck, but you'll be pleasantly surprised when you check your account balances. It's easier to go that way than the other [increasing savings when you've gotten used to spending what you have].
For the 401k, definitely at least 6%, you want that match; then, not to be flip, but 'as much as possible'. I think the max is 25% unless you're 'highly compensated', and even then, you can find ways to save more [savings bonds, t-bills, etc]. It sounds like you have a great opportunity to get a very solid financial start. But you don't want to be a fiscal hermit either. Do you have a budget written up, with your standard expenses and your 'extras' [food, dining out, entertainment, emergency, insurance, etc]? That might be a way to start, so you can see what you can 'afford' to save while not resenting saving money. Or try it the other way--depending how easy it is to change your contributions, start contributing 25% or 20%, try that for a month or two, then drop it down a percent or two at a time if you need to. Depending on your future plans [buy a house? marry? family?], you may want to save some in a more 'accessible' place so you can get to it without too much of a penalty/fee if you need to. Or if your 401k lets you take out a loan and pay yourself, that's an option for the future as well. If you start contributing a lot now, you will 'get used to it', and won't even notice it's out of your paycheck, but you'll be pleasantly surprised when you check your account balances. It's easier to go that way than the other [increasing savings when you've gotten used to spending what you have].
Trancendental
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[quote name='punqsux']:lol:
im not sure of your reason for thinking that, but it always happens irl, because im short and look younger than i am i guess.[/QUOTE]
But you're still a chick, right?
im not sure of your reason for thinking that, but it always happens irl, because im short and look younger than i am i guess.[/QUOTE]
But you're still a chick, right?
[quote name='dtcarson']First, congrats on your job
For the 401k, definitely at least 6%, you want that match; then, not to be flip, but 'as much as possible'. I think the max is 25% unless you're 'highly compensated', and even then, you can find ways to save more [savings bonds, t-bills, etc]. It sounds like you have a great opportunity to get a very solid financial start. But you don't want to be a fiscal hermit either. Do you have a budget written up, with your standard expenses and your 'extras' [food, dining out, entertainment, emergency, insurance, etc]? That might be a way to start, so you can see what you can 'afford' to save while not resenting saving money. Or try it the other way--depending how easy it is to change your contributions, start contributing 25% or 20%, try that for a month or two, then drop it down a percent or two at a time if you need to. Depending on your future plans [buy a house? marry? family?], you may want to save some in a more 'accessible' place so you can get to it without too much of a penalty/fee if you need to. Or if your 401k lets you take out a loan and pay yourself, that's an option for the future as well. If you start contributing a lot now, you will 'get used to it', and won't even notice it's out of your paycheck, but you'll be pleasantly surprised when you check your account balances. It's easier to go that way than the other [increasing savings when you've gotten used to spending what you have].[/QUOTE]
Sorry punq for stealing your topic.
I've had a budget for quite some time now. I basically know how much comes in and goes out each month. I'm not really resenting saving any money right now. If I see something I want, and it's within reason, I buy it. That being said I am looking towards eventually buying a house (but not for at least 2 years). I'll probably try to max it out at first. This new job is about a 54% raise over what I make now, and I'm able to save now...so I should be able to save more in the future...I would think.
For the 401k, definitely at least 6%, you want that match; then, not to be flip, but 'as much as possible'. I think the max is 25% unless you're 'highly compensated', and even then, you can find ways to save more [savings bonds, t-bills, etc]. It sounds like you have a great opportunity to get a very solid financial start. But you don't want to be a fiscal hermit either. Do you have a budget written up, with your standard expenses and your 'extras' [food, dining out, entertainment, emergency, insurance, etc]? That might be a way to start, so you can see what you can 'afford' to save while not resenting saving money. Or try it the other way--depending how easy it is to change your contributions, start contributing 25% or 20%, try that for a month or two, then drop it down a percent or two at a time if you need to. Depending on your future plans [buy a house? marry? family?], you may want to save some in a more 'accessible' place so you can get to it without too much of a penalty/fee if you need to. Or if your 401k lets you take out a loan and pay yourself, that's an option for the future as well. If you start contributing a lot now, you will 'get used to it', and won't even notice it's out of your paycheck, but you'll be pleasantly surprised when you check your account balances. It's easier to go that way than the other [increasing savings when you've gotten used to spending what you have].[/QUOTE]
Sorry punq for stealing your topic.
I've had a budget for quite some time now. I basically know how much comes in and goes out each month. I'm not really resenting saving any money right now. If I see something I want, and it's within reason, I buy it. That being said I am looking towards eventually buying a house (but not for at least 2 years). I'll probably try to max it out at first. This new job is about a 54% raise over what I make now, and I'm able to save now...so I should be able to save more in the future...I would think.
[quote name='mtxbass1']Sorry punq for stealing your topic.
I've had a budget for quite some time now. I basically know how much comes in and goes out each month. I'm not really resenting saving any money right now. If I see something I want, and it's within reason, I buy it. That being said I am looking towards eventually buying a house (but not for at least 2 years). I'll probably try to max it out at first. This new job is about a 54% raise over what I make now, and I'm able to save now...so I should be able to save more in the future...I would think.[/QUOTE]
You know how you should be able to increase your net worth? If you see something you like, such as a car or tv, develop an income stream to finance it. Your job is but one stream. Your stock portfolio is another. Find other ways to make money. Because once you develop a constant stream of $$$ using a tangible product as a goal, once you've bought that item, the income stream stays and allows you to be able to afford other things.
An example I overheard is this 10 yr old kid who wanted to buy as many comic books as he wanted but his parents were poor. So he went around the neighborhood asking for any recyclable stuff ppl might have. Over the span of a week, he was able to accumulate $80 from recycling and chores for his parents/neighbors. He figured he could buy a lot of comics with that money but then he had a better idea. He asked his dad to help him build a small clubhouse in the backyard. His dad was a skilled carpenter and always had spare wood scrap. He was able to pimp it out with custom detailing such as fine wood shelves as well as kid-sized chairs and tables. Once this was done, the kid bought 2 issues of each comic he liked - one to read and one to store in his personal collection. The ones in his personal collection went into storage in the basement while the ones he read he put them all on the shelf in the clubhouse. He then invited his friends to his clubhouse where they could eat and drink lemonade for free but if anyone wanted to read his comics, he would charge them $1 for the whole day which isn't that much for a kid's allowance. If anyone ripped a comic, he simply told them to pay the cost of the comic so he could get a new copy.. Although he was poor, he had a lot of friends and was able to accumulate $10 that week. A funny thing then happened. Soon neighborhood kids he didn't know started coming in and he had to start taking inventory of his stuff (lest they steal it). So he hired his 8 yr old sister to 'work' at his comic library for 50 cents a day to keep an eye out for ppl trying to take their stuff. Soon he started accumulating a lot of money - a lot more than he originally wanted. His parents noticed this and decided this would be a good way for them to fund his college. So they took half of their son's weekly earnings (which grew to $50 a week) and put it in an interest bearing savings account while they let their son have the other half. A consequence of this was that the parents told their son that he wouldn't get an allowance anymore. He didn't mind as he was making more than the allowance anyway. This became true for his sister as well and he was able to increase her salary to $1 as that still left him enough money to buy comics for the week.
I've had a budget for quite some time now. I basically know how much comes in and goes out each month. I'm not really resenting saving any money right now. If I see something I want, and it's within reason, I buy it. That being said I am looking towards eventually buying a house (but not for at least 2 years). I'll probably try to max it out at first. This new job is about a 54% raise over what I make now, and I'm able to save now...so I should be able to save more in the future...I would think.[/QUOTE]
You know how you should be able to increase your net worth? If you see something you like, such as a car or tv, develop an income stream to finance it. Your job is but one stream. Your stock portfolio is another. Find other ways to make money. Because once you develop a constant stream of $$$ using a tangible product as a goal, once you've bought that item, the income stream stays and allows you to be able to afford other things.
An example I overheard is this 10 yr old kid who wanted to buy as many comic books as he wanted but his parents were poor. So he went around the neighborhood asking for any recyclable stuff ppl might have. Over the span of a week, he was able to accumulate $80 from recycling and chores for his parents/neighbors. He figured he could buy a lot of comics with that money but then he had a better idea. He asked his dad to help him build a small clubhouse in the backyard. His dad was a skilled carpenter and always had spare wood scrap. He was able to pimp it out with custom detailing such as fine wood shelves as well as kid-sized chairs and tables. Once this was done, the kid bought 2 issues of each comic he liked - one to read and one to store in his personal collection. The ones in his personal collection went into storage in the basement while the ones he read he put them all on the shelf in the clubhouse. He then invited his friends to his clubhouse where they could eat and drink lemonade for free but if anyone wanted to read his comics, he would charge them $1 for the whole day which isn't that much for a kid's allowance. If anyone ripped a comic, he simply told them to pay the cost of the comic so he could get a new copy.. Although he was poor, he had a lot of friends and was able to accumulate $10 that week. A funny thing then happened. Soon neighborhood kids he didn't know started coming in and he had to start taking inventory of his stuff (lest they steal it). So he hired his 8 yr old sister to 'work' at his comic library for 50 cents a day to keep an eye out for ppl trying to take their stuff. Soon he started accumulating a lot of money - a lot more than he originally wanted. His parents noticed this and decided this would be a good way for them to fund his college. So they took half of their son's weekly earnings (which grew to $50 a week) and put it in an interest bearing savings account while they let their son have the other half. A consequence of this was that the parents told their son that he wouldn't get an allowance anymore. He didn't mind as he was making more than the allowance anyway. This became true for his sister as well and he was able to increase her salary to $1 as that still left him enough money to buy comics for the week.
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