Should I invest?

[LuckyTaxi]

I'm 21 going on 22 pretty soon, and I'm about a year away from graduating college. I work PT now making pretty good money for someone my age. My macro professor advise me to invest in my company's 401k, and maybe look into an IRA account. I'm a little hesitent as to go that route for two reasons. It may sound stupid, but we've all heard the phrase "Life is short....blah blah"

1) I don't want to go into IRAs because you can't touch the money until you retire. Who knows if I will make it that long. I mean, I hate to think like this, but you just never know.

2) My co-worker advised me to just keep the money in my checking account. Since I'm a college student, I will always need money for something. You never know when you need money for the car or even tuition.

Then, one of my friends tells me about sharebuilder.com. I guess it's like etrade.com, but not as advance. I hate to go into the stock market, but investing there at this time may actually be a good time. We're all hoping wall street will recover pretty soon, and buying some stocks when the prices are low would be awesome if they shoot back up in the spring or whenever it decides to bounce back.

I've been told the stock market may not be the place to invest right now. But I'm not talking about putting all of my money into there. I can only hope by buying PALM stock @ $3 (as an example...i wouldn't buy PALM), and have that sucker shoot to $30 or so sometime next year would be awesome!

I guess in a way I'm in this for the short term. Yes, I would like to make some money, and I would like it now. I may only be dreaming, but hey, I'm willing to take a chance.

So, what do you guys think?

 

[Russ]

By far the best alternative is your company's 401K plan. This assumes, though, that it is invested in a diversified portolio of stocks - NOT just theirs. Don't worry about whether or not right now is a good time to get in to the market. This is your retirement fund and, long term, it will do just fine.

Investing in the market "short term" is an excellent way to get your financial ass handed to you.

At your age, and starting now, you'd be very surprised how little you need to put away on a regular basis in order to retire wealthy.

Russ, NCNE

 

[linuxboy]

Investing in the market "short term" is an excellent way to get your financial ass handed to you.

As much as I hate sounding like a purist in saying "long term only, that's where the growth is at", it really is a proven and fairly stable way of accumulating wealth.

You can get a much better return by not keeping funds in a checking account. Granted, you need some liquidity, but even a money market will get you a better rate.

Your long-term and overall best-bet would have to be the 401k (damn, you old people make so much sense, WHY !!! 😉 )

You don't really need the cash right away. All it will give you is some money to spend or possibly to put away for further return. If you want money to spend, let me tell you that things really provide temporary comfort (if you have a debt or some emergency and need money for it, still I'd pick traditional gambling to the stock market, there I at least know my statistical odds fully). If you want money to give you a good return, then think long term and really plan out your strategy and stick to it. Whatever you do, have a plan...

But definitely do the 401k and diversify.


Cheers ! 🙂

 

[DaveJ]

<< ) I don't want to go into IRAs because you can't touch the money until you retire. Who knows if I will make it that long. I mean, I hate to think like this, but you just never know. >>



No offense intended... but it's thoughts like this that make me realize why most people in the US are in bad shape when retirement comes. The earlier you start investing, the better, because you don't have to put nearly as much away as you would if you started saving at 30. I started an IRA at 18 and don't regret it one bit (I'm 25 now). If I never make it to retirement age, so what? I don't miss the money now, or the contributions I make...

Invest for the long term and you'll be much better off... 🙂

Dave

 

[heartsurgeon]

while you may not have much money now, what you have is time on your side. further more, the government gives you certain options each year for setting aside money for later in life that can be invested and accumulate value without being taxed! The ability to contribute to such a plan (401k, ira, etc), and avoid paying tax on the income it generates for you for the next 40 to 50 years should not be underestimated. you are being given a tax advantage that cannot be bought or recouped in the future, if you do not take advantage of it now, i guarantee you that you will kick yourself later, when your income increases. get the money, dump it in a 401k or ira, and invest in an large index fund.

financial independence is a total rush. it is the single greatest luxury out there. not because you can loaf off, but because it allows you to work and be productive in a way that suits and satisfies you the greatest, rather than grinding it out at a job you hate, or a job that could vanish overnite if your boss gives you the boot. the satisfaction of wealth is not just in material goods that you can accumulate (as you get wealthier, you will probably crave new "toys" less and less), but rather the feeling of freedom that it gives you to pursue your personal goals, not the goals of others. start now.