Investing after school

Hey everyone,

Thought I'd know if anyone had any good websites or could recommend books on how to invest after school and working for a while.

When I look online for post-college investing (or even a book I got) it is always the same advice. Pay off your school loans, you don't need a new car, try to use your company's match on your 401K, don't max out your credit card, etc. etc.

As for me I've been out of school for a few years now and have a pretty good job. Plan on maxing out my 401K, have no more school loans, and have about 1 year's living expenses in a savings account. I don't have a house and don't think I will plan on getting one at the moment. I'd like to be able to move if a new job opened up somewhere else that was more in line with what I want to do for the long term.

I probably will be going back to school - maybe in a year or so to get a master's and plan on taking a few classes part time before that. (I may end up doing school completely part time - I haven't decided yet).

Reading online it seems like mutual funds are the way to go, but it seems hard to figure out what are the right ones to choose and what kind of break down to invest with. I've seen lots of lists from financial investors or morning star ratings, etc. that suggest to invest in certain ones.

Being pointed in the right direction would be very helpful. I really don't have anyone in the family I'd probably be able to talk about with it.

Max out your company's contribution first and foremost (401k in your case).

After that, either max your 401k (pre-tax) or your Roth IRA (post-tax). I went with the latter to play around with the stock market, but most people I know just max out their 401k.

Some advice say to do 75% stocks and 25% mutual funds when you are young, and can take risks, and gradually move to 25% stocks and 75% mutual funds by the time you retire.

Put your savings in an online savings account, like ING, which gives you 0.80% APR, which is better than a lot of 5-year CDs I've seen.

[quote name='elessar123']Max out your company's contribution first and foremost (401k in your case).

After that, either max your 401k (pre-tax) or your Roth IRA (post-tax). I went with the latter to play around with the stock market, but most people I know just max out their 401k.

Put your savings in an online savings account, like ING, which gives you 0.80% APR, which is better than a lot of 5-year CDs I've seen.[/QUOTE]

Thanks. I right now am on track to max out my 401K for the year. I do have an ING account that I keep my savings in. I remember when I opened it back in college I think the interest was about 6%. It is "fun" to watch how it gradually just kept slipping further and further down.

I would recommend looking at Vanguard ETFs. I invest some of my money into VTI which is basically low-cost electronically traded fund (as opposed to an actively managed mutual fund with a fee) that buys about 3k different stocks. The primary advantage of an ETF is that it is much lower expense ratio (mutual funds are generally about 1% whereas ETFs are usually about 0.2 - 0.3%). Probably the safest best is a S&P 500 index. The S&P 500 is 500 of the biggest/best companies out there, as opposed to the Dow (which is 30 companies that do not generally include growing companies like Apple) or the NASDAQ (which is very overweight on Technology)

I do not recommend buying individual stocks unless you are willing to take the time, energy and effort to research and keep up with both the broader market (macro) and the individual stocks you own and their competitors. I have found I can outperform the averages by investing in individual stocks, but I spend a significant amount of time daily following them.

Not going to go into a tremendous amount of detail at this point but basically the younger you are, the more risk you should be taking. It really doesn't take a lot of effort to put together a portfolio that beats the market, historical market average is 8% including dividends.

Max out the "free" money and tax deferred options, as already stated.

With additional funds you still want to invest with, considering your young age, skip the fixed income crap and focus on risk assets with strong long term trends. Treasuries/Fixed income are basically worthless, the equivilant to putting money under your bed. The fed is making these types of investments a losing bet, when adjusted for inflation, and that isn't going to change for quite a while.

Use the S&P as your "low risk" allocation, with 20-25% of the capital you want to put at risk. Might want to consider 10-15% in metals, gold is a favorite but IMO Copper has more upside in a global economic recovery. Put 20-25% in emerging markets, you can do this with a fund if you like, focus on China, Russia and Brazil.

Finally use the rest for individual stock plays that feature dividend rates in excess of 2%, strong balance sheets and significant exposure to foreign markets.

If you feel like it you could take 10% or so and use it as pure speculation money. This would be investments that are high risk/ high reward. Plays on companies with unproven business models (social media, pretty much any alternative energy play etc.).

There are a million ways to build a portfolio and investment strategy depending on your risk tolerance and how much control you want of your holdings. Personaly, I always start with technical analysis strategies. I use pure technical strategies for short term trades (anything from day trades to holdings for a few weeks), long term holdings are judged using a combination of technical conditions + balance sheet and industry analysis.

I recommend Money Mondays on the Tom Leykis Show. It's usually on at 4PM on Mondays. Today's show (which included one hour of Rodney King talk and two hours of money talk) will replay until 3PM PST Tuesday.

http://blowmeuptom.com/

Much better than listening to Jim Cramer or Suze Orman or something. He won't tell you how to get rich, but it reinforces good financial habits from a male point of view, which also means not spending all your money on women, advice you will not get on the mainstream financial shows (if you are female, there is still a lot of good advice to be had). It's a call-in show, so you'll hear what other people are doing, positive and negative. Some common advice:

-Don't buy a house you don't plan to die in.
-Max 401k or IRA.
-Invest conservatively. Mutual funds or stable stocks like Verizon.
-Personal responsibility.
-Living frugally, not spending money you don't have on stupid shit.
-Do cost-benefit analysis on college. Consider the earning power of the major (i.e. not ethnic studies or communications).

For investing he recommends Vanguard. He does not sell books. He does not do seminars.