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Will be graduating in May, already have a job lined up and will have extra cash...

P

PizzaDude

Golden Member
I will be graduating in May of 2007(from college...) and I already have a full time offer lined up. I will have a fairly substantial amount of money left each month after bills to be able to invest, but I don't know where a good place to start will be.

I guess my two main financial goals are to a) be able to buy a house/condo as soon as possible and b) save for retirement.

Any insight is appreciated.

Thanks.

EDIT: Roth IRA and 401k will be maxed out through my employer. My question pertains to possible investment options on top of this. Thanks.
 
Originally posted by: AgaBoogaBoo
Depending on how far away those goals are, you can always earn an easy 5% with savings accounts.
Click to expand...

right but the stock market has earned an average of ~10% over its lifetime...
 
One good option is to start saving for a house. You can throw your money into a tax sheltered Roth IRA. Once your account is five years old, you can withdraw up to 10,000, tax and penalty free if you use the money to purchase your first house.
 
Originally posted by: giantpinkbunnyhead
Best advice? Find a good financial planner.
Click to expand...

Probably true, but I'm trying to avoid the hefty trading fees if possible. That's why I'm curiously asking here first.
 
Originally posted by: PizzaDude
Originally posted by: AgaBoogaBoo
Depending on how far away those goals are, you can always earn an easy 5% with savings accounts.
Click to expand...

right but the stock market has earned an average of ~10% over its lifetime...
Click to expand...
No doubt about that. When you say you will have money left over, is that after maximizing your retirement funds? You should really put as much into that as you can.
 
Originally posted by: jhayx7
One good option is to start saving for a house. You can throw your money into a tax sheltered Roth IRA. Once your account is five years old, you can withdraw up to 10,000, tax and penalty free if you use the money to purchase your first house.
Click to expand...

Oh, and I forgot to mention I will be maxing out my Roth IRA and 401k through my employer...so what I'm asking about is on top of these 2 investments. Good point, though, and thanks for reminding me.
 
Originally posted by: AgaBoogaBoo
Originally posted by: PizzaDude
Originally posted by: AgaBoogaBoo
Depending on how far away those goals are, you can always earn an easy 5% with savings accounts.
Click to expand...

right but the stock market has earned an average of ~10% over its lifetime...
Click to expand...
No doubt about that. When you say you will have money left over, is that after maximizing your retirement funds? You should really put as much into that as you can.
Click to expand...

yes. see edit 🙂
 
Originally posted by: PizzaDude
Originally posted by: jhayx7
One good option is to start saving for a house. You can throw your money into a tax sheltered Roth IRA. Once your account is five years old, you can withdraw up to 10,000, tax and penalty free if you use the money to purchase your first house.
Click to expand...

Oh, and I forgot to mention I will be maxing out my Roth IRA and 401k through my employer...so what I'm asking about is on top of these 2 investments. Good point, though, and thanks for reminding me.
Click to expand...

Roth IRA is not set up via your employer, but thru another party such as Vanguard or Fidelity. The max one can contribute is $4000 per year for those under age 49, of after tax money. I'd try to put in the $4000 for the 2006 tax year if possible as well (must be put in by April 15 2007).

Also, by maxing your 401k, I assume you mean putting in the max you can up to the employer match, say 5% or so. You can put in even more than that, up to $15,000 per year, which would be a lot for someone just starting out of college.

Depending on your employer, they may offer an employee stock purchase plan - these are generally a great deal because often you get to buy the stock with at minimum of a 15% discount every 6 months - which works out to a 60% return on investment because they on average hold your money for 3 months. Very hard to beat that on the open market! And it gets even better if the company stock is rising during the period before disbursment, because they often take the lowest price at either the beginning or the end of the period. Be careful though, don't want too many eggs in one basket, so you might want to sell at least some of the stock when you get it (usually no minimum holding period)
 
i'd max out all the tax-favored retirement accounts first (don't forget the health savings account).

considering you're saving for a down payment on a house, i'd go with something low risk to sock that money away. bonds, CDs, maybe even a high-yield savings account. you're not looking for the big home run with this money, just something solid so it can earn for you while socked away.

though the stock market may average 10% over any 15 year period, you sound like you want to cash out the down payment pretty shortly, so your risk tolerance for that money is probably pretty low.
 
Originally posted by: ElFenix
i'd max out all the tax-favored retirement accounts first (don't forget the health savings account).

considering you're saving for a down payment on a house, i'd go with something low risk to sock that money away. bonds, CDs, maybe even a high-yield savings account. you're not looking for the big home run with this money, just something solid so it can earn for you while socked away.
Click to expand...

I've got a car that needs to be restored, you could give me the money to put into that, and when it is finished and beautiful it will put a smile on your face to know you did something nice. This is very good for your heart and stress levels. A very wise investment.
 
I'd just sock it into an ING account until you've got a downpayment for a house..... Buying equity and taking an easy tax write-off instead of pissing away rent is one of the best investments you can make IMHO.
 
I would not put money that you are saving for short-term goals (next year or two) in the stock market. Yeah the average returns are high, but they fluctuate a lot and you don't want to have to pull your money out when you're down.

Also, I wouldn't put ANYTHING in the stock market unless you have 6 months of living expenses in a high yield savings account.
 
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