Temporary Employment- Beginning Investment Strategy - Tilted Forum Project Discussion Community

limited · 06-20-2005, 06:01 PM

I realize this is a tough question, so I'll thank everyone that answers in advance. I'm currently in college and will graduate in May 2006. My post-graduation plans are still unknown(grad school or employment). For the rest of the summer and following semester I'm doing one of the experiential education programs (co-op, basically) where I work at a company and get paid. I'm being paid a decent wage and have relatively low expenses. I realize the importance of compound interest and would like to begin investing. My employer offers a 401k plan through T. Rowe Price which initially looks appealing. I'm worried about tying money up in a tax-deferred account when I could be in a position to not receive a salary for another 6 years, if I decide to pursue a further education. I'm also concerned about what will happen to the investment once I leave the company at the end of December. My employer-matched contributions will not be vested in 6 months, so I'm really not sure if the 401k road is the best one to take in the first place. Can someone a little more experienced with me shed some light on what the smart investment would be. My instinct tells me I need to choose a blend between short and long term investments so that, however I'm lost as to what this blend should be given my current situation. I hope thats enough information for now, I'll be glad to chip in more if needed.

dimbulb · 06-20-2005, 06:11 PM

I'd suggest going for a Roth IRA. That invests after-tax money, but gains are tax-free. You can withdraw the principal with no penalties after 5 years.

Going for a 401K, which would defer your tax, (most likely to a higher tax bracket on your retirement), would not be a good idea. Might be worth it to contribute up to your employer's matching contribution though.

limited · 06-20-2005, 07:21 PM

The employer contributes matching funds, but they only vest completely after 3 years. Since I'll only be there for 6 months, I don't see much point in even considering their matching funds.

Lewis · 06-24-2005, 07:25 PM

This is all too complex for me. If you're a smart kid, go straight for the money in the way the banks do. You can start with a computer and US$300 and be OK in a year or so. Why bother with complicated stuff that's difficult to follow and stressful to work out?

Merlocke · 07-17-2005, 08:37 AM

What you'll hear being spouted out of every mutual fund advisor's mouth: Diversify.
What you'll see the rich people doing: Concentrate and make it big.

What should you be doing? - something in between.
If you PM me, I can share with you a few of the investments I personally have my own money in. I've got things from foreign exchange, to public stock, to private placements, to mutual funds, to short term (6-8 months) that can return 20% ROI. The hard part is deciding what percentage of your investment portfolio lives in each one to be optimal for where you are in life now. That part, I can't help with as it's more of a personal choice, but at least I can share a few options.

eribrav · 07-17-2005, 11:55 AM

I think the most important thing to do now is start an emergency fund for yourself. You're in a situation where you will likely be without income for quite while. Make sure you have 4 to 6 months of money somewhere safe. That doesn't mean a checking account; with short term yields rising you would be well served with a money market account with that portion of the money.

Merlocke, I'm sure you have some wonderful investments. Most of the things you've suggested, however, sound totally inappropriate for this young man. There is no way that forex and private placements fit in the situation that he described above.

Cynthetiq · 07-17-2005, 02:24 PM

Quote:

Originally Posted by eribrav

I think the most important thing to do now is start an emergency fund for yourself. You're in a situation where you will likely be without income for quite while. Make sure you have 4 to 6 months of money somewhere safe. That doesn't mean a checking account; with short term yields rising you would be well served with a money market account with that portion of the money.

Merlocke, I'm sure you have some wonderful investments. Most of the things you've suggested, however, sound totally inappropriate for this young man. There is no way that forex and private placements fit in the situation that he described above.

i'm for you keeping your money liquid and accessible just like eribrav suggested. you are in a state of flux for the next few years. you'll be able to recover that small amount of "savings" faster once you get your degree and get a respectable salary.

06-20-2005, 06:01 PM	#1 (permalink)
limited Crazy Location: upstate, NY	Temporary Employment- Beginning Investment Strategy I realize this is a tough question, so I'll thank everyone that answers in advance. I'm currently in college and will graduate in May 2006. My post-graduation plans are still unknown(grad school or employment). For the rest of the summer and following semester I'm doing one of the experiential education programs (co-op, basically) where I work at a company and get paid. I'm being paid a decent wage and have relatively low expenses. I realize the importance of compound interest and would like to begin investing. My employer offers a 401k plan through T. Rowe Price which initially looks appealing. I'm worried about tying money up in a tax-deferred account when I could be in a position to not receive a salary for another 6 years, if I decide to pursue a further education. I'm also concerned about what will happen to the investment once I leave the company at the end of December. My employer-matched contributions will not be vested in 6 months, so I'm really not sure if the 401k road is the best one to take in the first place. Can someone a little more experienced with me shed some light on what the smart investment would be. My instinct tells me I need to choose a blend between short and long term investments so that, however I'm lost as to what this blend should be given my current situation. I hope thats enough information for now, I'll be glad to chip in more if needed.

07-17-2005, 08:37 AM	#5 (permalink)
Merlocke Location: Canada	What you'll hear being spouted out of every mutual fund advisor's mouth: Diversify. What you'll see the rich people doing: Concentrate and make it big. What should you be doing? - something in between. If you PM me, I can share with you a few of the investments I personally have my own money in. I've got things from foreign exchange, to public stock, to private placements, to mutual funds, to short term (6-8 months) that can return 20% ROI. The hard part is deciding what percentage of your investment portfolio lives in each one to be optimal for where you are in life now. That part, I can't help with as it's more of a personal choice, but at least I can share a few options. __________________ -=[ Merlocke ]=-

06-20-2005, 06:11 PM	#2 (permalink)
dimbulb Riiiiight........	I'd suggest going for a Roth IRA. That invests after-tax money, but gains are tax-free. You can withdraw the principal with no penalties after 5 years. Going for a 401K, which would defer your tax, (most likely to a higher tax bracket on your retirement), would not be a good idea. Might be worth it to contribute up to your employer's matching contribution though.

06-20-2005, 07:21 PM	#3 (permalink)
limited Crazy Location: upstate, NY	The employer contributes matching funds, but they only vest completely after 3 years. Since I'll only be there for 6 months, I don't see much point in even considering their matching funds.

06-24-2005, 07:25 PM	#4 (permalink)
Lewis Artist and author Location: Ireland	This is all too complex for me. If you're a smart kid, go straight for the money in the way the banks do. You can start with a computer and US$300 and be OK in a year or so. Why bother with complicated stuff that's difficult to follow and stressful to work out?

07-17-2005, 11:55 AM	#6 (permalink)
eribrav Junkie Location: upstate NY	I think the most important thing to do now is start an emergency fund for yourself. You're in a situation where you will likely be without income for quite while. Make sure you have 4 to 6 months of money somewhere safe. That doesn't mean a checking account; with short term yields rising you would be well served with a money market account with that portion of the money. Merlocke, I'm sure you have some wonderful investments. Most of the things you've suggested, however, sound totally inappropriate for this young man. There is no way that forex and private placements fit in the situation that he described above.