Originally posted by: Auggie
does that 280/month include food/transportation/entertainment?
if so, you've got ~$330/month of expendable income.
since you're young and probably without lots of responsibilities, you can probably get away with a "safety net" of about two thousand dollars, which will take 6 months to save up to.
you want to have at least two grand in money that you can quickly and tax-free-ly access... i highly suggest you do that by having a savings account instead of relying on credit cards.
after six months, just start throwing all your expendable money into a Roth IRA. fifty years later... profit.
BUT SERIOUSLY DON'T ASK ATOT QUESTIONS LIKE THIS - TALK TO A BANKER/ASSET MANAGER.
sorry for the caps, but... dude, you're asking strangers for advice on how to save/spend all your money
Yes, nobody is knowledgable about finance except for a guy you have to pay. That's about the more idiotic statement I have ever seen here.
Unless your company does matching, I wouldn't start a 401(k).
Personally, if I had extra money that I wanted to start investing, I would follow JS80's advice. A 401K is only a plan that allows you to take pre-tax deductions from your checks and apply them to a investment account, an employer may or may not match your funds in that account. Among the investment options in your investment account will be anywhere from 5-infinte investment options, most of the time mutual funds offered by the plan administrator (Ameriprise for mine, Fidelity for my wife's).
These funds will usually be a large-cap, mid-cap, small-cap, international, and a bond fund. Of course there are other permutations, such as a value (low fundamental metrics but high value) or growth (high fundamental metrics but also high growth potential).
You can essentially get the same effect of a 401k, minus the tax benefit (which is small in your situation) by just saving money from each paycheck and putting it into a brokerage account at a discount broker (Etrade or such). Once you reach the minimum for an Exchange Traded Fund, or another targeted mutual fund (like the ones offered by the 401k plan administrator), invest your funds.
Do not invest in single companies, only stick to index funds or mutual funds. Speculative investing takes time, research, and knowledge, and shouldn't be done by most individuals if they do not have all three.
An index fund is basically a match of the popular indexes (S&P 500, S&P 1000, Russel, DJIA, NASDAQ) where you essentially buy a small undevided slice in an overall fund, which includes multitudes of other investors. The fund administrator purchases, in the exact index weighting, every stock in the index, effectively mirroring the whole targeted stock index.
This gets you massive diversification with low fees (unlike mutual funds, which are high fees for administration) and also gives you long-run less risky returns.
As far as not getting advice from a message board. I personally have my CFA, which is the highest certification (IMHO and market opinion) you can get for investment management (sorry CFPs, your test is much easier and isn't nearly as detailed) and an MBA concentration in finance and I work in the capital markets.
JS80 is pretty dang good at this stuff also and has a lot of familiarity with the capital markets. Other people on here have a lot of practical experience but not really the flashy certifications, which is fine since experience counts for more than just a certification. People who study the capital markets and finance are pretty knowledgable. I think one of the most interesting guys I know in this area I met while discussing finance on Genmay and he is a car mechanic, he knew more than me in some areas!
It's great that you want to start early. If your budget allows for it, certainly do so, because it will definitely help you out down the road.
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