Investing?

[bkoguy07]

I'm currently 19 years old, enrolled in college (Electrical Engineering), and upon graduating college I'm hoping to make some serious money. I understand investing money is extremely intelligent and I'm hoping that I will be able to do this well. Any tips or ideas on how and where I should get educated on this topic? I've been googling it for a while now and I'm curious how do I learn from the most successful people. Who or what companies should I contact for knowledge and advice? I know upon graduating I will have a very steady and comfortable income, BUT I want my money to make money for me if you know what I mean! Any advice? Thanks Guys.

[LOL!]

We had a long thread about this with lots of links to read. Probably best is to go get some books on the subject.

Maybe young folks don't read books anymore though?

Here's the thread: http://www.early-retirement.org/foru...ial-31324.html

[bkoguy07]

Between my studying and extra activities no I don't read at all lol. I guess I'll head over to the library and do the research. I would look into a financial adviser but I don't trust people I don't know with my hard earned money. (or when I start making it haha)

[bkoguy07]

Thanks for the link.

[audreyh1]

First - get that degree!

And then when you get that nice paying job, max out your 401K!

Audrey (BSEE, MSEE)

[jazz4cash]

One of the best things that happened to me was my freshman engineering economics course...time value of money, present value, etc.

[vvsonikvv]

jazz4cash, good point.

I have a computer engineering degree, and I'm actually pretty young myself. I took a bunch of business courses. I'd recommend taking them to get a good breadth of experience. An accounting class works well. But yes, time value of money, npv, and all that is very useful.

My teacher always told us we could be millionaires just by using compound interest and listening to him.

[RetireeRobert]

Quote:

Originally Posted by bkoguy07 ..........and I'm curious how do I learn from the most successful people. Who or what companies should I contact for knowledge and advice? I know upon graduating I will have a very steady and comfortable income, BUT I want my money to make money for me if you know what I mean! Any advice? Thanks Guys.

Getting an education and going for an EE degree (assuming it suits your interests and aptitudes) is a wise move. Coming to this forum was another wise move. ASKING for help from those who have been successful is perhaps your wisest move of all. I commend you.

My advice:

1) I am convinced the biggest determinant of amassing wealth is *perserverence* over a decades long investment timespan.

A)Finish you education, get that good job, then start forming a "saving/investing" habit. Use automatic payroll deduction to save.

B)Max out any tax advantaged saving plans your employers provide like 401k, 403b, 457, or TSP plans (depends on whether you work for private industry or government).

C)Max out your own IRA accounts, either Roth or traditional IRAs.

D)Start a taxable investment account with any remaining free funds.

E)When ready, buy your own home.

2)Understand and use the benefits of "asset allocation" and "diversification" to protect your investment returns.

3)Let the power of time and compounding work for you. Start young saving/investing and stick to it through thick and thin.

4)Do a LBYM lifestyle while you're young, and in your ER you can live it up (likely beyond your foundest dreams now).


As for me (and I am sure many on this forum), I started in my late 20's (nearly 30), saved/invested regulary, took advantage of all available tax advantaged accounts to the max, then used taxable accounts. I stuck to my saving/investing routine and was able to FIRE at 54, AND save/pay for three kids for college (one done, one starts next Fall, one in four years). Our home is mortage free, we are getting ready to build a new home paying cash without selling the old one.

Along the way, I made many mistakes with investment choices, investment timing, but none of that seemed to matter in the end.

What inexorably made me wealthy was saving/investing regularly and PERSISTENTLY over a few decades and using some diversification and asset allocation. These overwhelmed all mistakes I made otherwise.

Welcome to the forum, good luck, and please share your journey with us as you proceed.

And for heaven's sake---KEEP asking questions!

[Animorph]

Save 15% or more of your gross income.

Invest that money in your 401k with company match, if available, at least enough to get the full match.

Consider funding a Roth IRA with the maximum contribution while you can. Hopefully you will soon be making enough that you won't be allowed to contribute to the Roth IRA, so get in while you can. You can withdraw your contributions if you have to, so you can strain your finances a bit to contribute.

Invest some in normal taxable accounts, such as mutual funds at Fidelity or Vanguard. This can be your "emergency" savings. Add some extra savings here for house down payments and to pay cash for your cars unless you can get a subsidized 3% car loan.

Starting out, invest primarily in stocks as opposed to bonds and via mutual funds instead of individual stocks. Diversify into many asset classes. You never know which one will be the best. My recommended portfolio would be something very similar to those at FundAdvice.com - Home . I recommend that site as a start. Morningstar is also good, but less focused.

I still prefer actively managed funds. If you go that route, look at 10 year or longer performance, not the last 3 years. Look for total return data, not just NAV or share price (it's surprisingly hard to find - Yahoo charts are lying to you!). Starting out, exact fund selection is less important than just being invested in the first place.

Live below your means, and if you are saving even just 15% you probably won't be keeping up with the spending of your peers. This helps in two ways. First, you are saving and investing what you aren't spending. Second, and just as important, you will require less net worth to maintain your same standard of living throughout retirement.

I'm a 53 year old electrical engineer, and I just retired this year, right on plan. You might want to plan on retiring between 50 and 60 as your experience becomes a little outdated and your mind doesn't quite function as efficiently as it used to! Your mileage may vary, but the pace of change is likely to be faster in the future.

Good luck,
Dan

[Dawg52]

Make wise investment choices. Swinging for the home run might be exciting but rarely pays off. I would recommend simply investing in index funds. And if you do have the itch to invest in individual stocks, as many of us do here, keep it to a small % of your overall investments.

[unclemick]

The short Curmudgeon version:

1. Buy the lifecyle fund close to your age(like Duh Vanguard Target Retirement Series) as early, as often as you can - preferibly tax deferred but don't limit yourself if you have extra money.

2. After 20 - 30 years of dollar cost averaging - if you get bored of working - retire.

Successful investing is a matter of time and faith - preferibly a reasonibly diversified and low expense mutual fund.

And for heavens sake - don't read books, do a lot of market watching, or confuse intelligence with investing.

Or course there is the hormone factor - which is another story. The disease can be managed if you can't find a way to avoid it.

heh heh heh -

[kcowan]

One other thing. Investigate your career options carefully. When I graduated, a number of fellow engineers took jobs at utility companies where they became glorified technicians. They had nice pensions and benefits but really squandered their most important asset - time.

Pursue a career where you put your ego on the line every day and you will make twice as much money as a regular employee. Combine that with LBYM and you will be able to retire at a young age. (Provided that you follow the good advice above.)

[Alan]

BKOGUY,

All excellent advice in the answers above. I think it is extremely positive that you are already planning your long term future.

I won't add much to the advice above except to stress that for now you need to continue to invest in yourself, and get that degree. Remember that the degree is only the end of the first stage of your education. Continue to invest in yourself and seek to keep yourself fresh.

I graduated with a BS in EE in 1973 along with my wife and even though we suddenly had tremendous purchasing power we bought a house with a traditional mortgage we could afford easily, never borrowed money to buy anything, including cars (had a couple of bone-shakers in the early years after graduating, never owned a car while at college) and were able to have children at an early age with the luxury of DW putting her career on hold until both kids were at school full time.

So, LBYM, but have some fun as well. Time is on your side, save plenty while you can and look forward to an early retirement.

I plan to comfortably RE in 2 years at 55 (DW RE'd 4 years back)

[bkoguy07]

Wow definitely a lot of information, thanks for all the contributions... Man I got a lot of work do to... haha Thanks guys