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Old 01-18-2008, 07:07 AM   #1
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New Worker starting to Save

Hi my name is Lauren and I live in the Boston area. I'm 24 and looking to start saving money for an early retirement. I was wondering what are my best options. I already contribute 10% pretax of the $50k salary to my 401k. I also have a $6000 Annuity fund from when I worked construction that brought me in 17% of interest last year. I was also thinking of buying some S&P 500, but I am unsure where to really start in that direction as I have never bought any type of stock before.

I am young and I know time is one my side with compounding interest. I live pretty simply so I get to save a lot of my current pay. I have about $6000 in stuent loans (interest free) to pay back as well.

Let me know what you think. Thanks.

Lauren
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Old 01-18-2008, 08:01 AM   #2
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Welcome Lauren. You are smart to start thinking about investing now and to have grasped the concept of compound interest so early.

Be sure to see the FAQ and "best of" threads on the main page of this forum.

I admire the Bogleheads straight approach and would recommend their new book and also have learned a lot by lurking on their website.

Guide to the Vanguard Diehards Forums
Amazon.com: The Bogleheads' Guide to Investing: Books: Taylor Larimore,Mel Lindauer,Michael LeBoeuf,John C. Bogle

You'll find that putting together a simple, low maintenance portfolio is easy and it will serve you for the rest of your life.

Good luck.

PS. Be sure you understand all the fees and expenses built in to your annuity. You may be unpleasantly surprised.
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Old 01-18-2008, 11:07 AM   #3
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Originally Posted by laurinsane View Post
Hi my name is Lauren and I live in the Boston area. I'm 24 and looking to start saving money for an early retirement. I was wondering what are my best options. I already contribute 10% pretax of the $50k salary to my 401k. I also have a $6000 Annuity fund from when I worked construction that brought me in 17% of interest last year. I was also thinking of buying some S&P 500, but I am unsure where to really start in that direction as I have never bought any type of stock before.

I am young and I know time is one my side with compounding interest. I live pretty simply so I get to save a lot of my current pay. I have about $6000 in stuent loans (interest free) to pay back as well.

Let me know what you think. Thanks.

Lauren
1)Triple the payment on your student loans until paid off.

2)Get info on the annuity as far as how high the fees are.

3)Once the loans are paid off, take your 401K up to the maximum your plan allows.

4)Open a Roth IRA and maximize the amount you can put in there, if you qualify.

5)Read and learn about investing, and visit this forum and the Bogleheads forum........

Starting early will pay HUGE dividends to you! Congrats!
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Old 01-18-2008, 11:24 AM   #4
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1)Triple the payment on your student loans until paid off.

2)Get info on the annuity as far as how high the fees are.

3)Once the loans are paid off, take your 401K up to the maximum your plan allows.

4)Open a Roth IRA and maximize the amount you can put in there, if you qualify.

5)Read and learn about investing, and visit this forum and the Bogleheads forum........
Although some of us on the forum have been known to question the number of french fries this guy has in his happy meal, he happens to be correct...well, mostly.

If you haven't already done so, put aside some savings to build up an emergency fund equal to at least 3 months of your expenses - 6 months would be better. Maybe fund this by doubling, not tripling your student loan payments.

Good job.
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Old 01-18-2008, 11:41 AM   #5
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It seems to me that if your student loans are interest free as you say then I wouldn't pay more than the minimum. Put the extra money towards increasing you 401k past 10% or starting a ROTH ira
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Old 01-18-2008, 01:23 PM   #6
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It seems to me that if your student loans are interest free as you say then I wouldn't pay more than the minimum. Put the extra money towards increasing you 401k past 10% or starting a ROTH ira
I'm wondering how the loans are interest free, borrowed from the parents, limited time at 0 percent, how?

I never had interest free student loans, neither did DW.
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Old 01-18-2008, 04:27 PM   #7
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I'm wondering how the loans are interest free, borrowed from the parents, limited time at 0 percent, how?

I never had interest free student loans, neither did DW.
I'm wondering too. Subsidized Stafford loans are at 0% while you're in school and I think for 6 months after. I never got any of those so I don't know the rules. I do have some unsubsidized Staffords at 4.5% that are scheduled to go to 3.5% about a year from now; I'm paying them off as slowly as possible and investing in the stock market where I can earn...uh...wait a second...

2Cor521
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Old 01-20-2008, 08:41 PM   #8
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Thank you everyone for your wondeful advice. The student loans are interest free loans given by the State of Massachuetts. I paid of all my subsidized loans and have a nice emergency fund in an ING saving account.
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Old 01-21-2008, 07:11 AM   #9
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Thank you everyone for your wondeful advice. The student loans are interest free loans given by the State of Massachuetts. I paid of all my subsidized loans and have a nice emergency fund in an ING saving account.

Good, I tell my kids to pay off all debt save as much as possible, live a bit under the radar, you don't need the fancy car fancy clothes, nice but not undooly expensive. Then go out there and live your life! Enjoy you are 24 go places do things see the world the country. Have good friends and when you turn around and you are 50 which is over 2X how old you are now it all will fall into place or fall off the board. We are not promised tomorrow. Smile and enjoy!
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Old 01-21-2008, 07:18 AM   #10
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Thank you everyone for your wondeful advice. The student loans are interest free loans given by the State of Massachuetts. I paid of all my subsidized loans and have a nice emergency fund in an ING saving account.

You're rockin' then! I think FinanceDude hit it on the head then, with the minor exception of the student loans. Of course, even interest free loans are nice to be rid of, once you have all the other areas covered. There's just something warm & fuzzy about having no debts. I think you're on the road to riches!
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Old 01-23-2008, 09:25 PM   #11
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I would say that it depends on what you're planning to do with your extra money. If you intend to purchase a home, you should start saving towards that goal as well. You might be better served to save 20% towards a down payment and pay no PMI in the future.
The Roth - as previously suggested is also another very good idea.
Maybe you could do both -either way, you won't lose.
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