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Recent Grad looking for advice.
Old 07-29-2013, 08:14 PM   #1
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Recent Grad looking for advice.

Hello all, if you have not read my intro thread in another area i'll give a short one here. A recent UW - Madison grad with a 38k/year income. I want to get on the right path so I am immersing myself with financial advice books...''five lessons from a millionaire''....''the millionaire next door''... the main thing I am taking from all the literature that I am reading is that I need to increase my not realized income and decrease my realized income. How does someone my age, with my income begin to do so? I opened up an Ally savings account with roughly 4k in it and a checking account.
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Old 07-29-2013, 08:48 PM   #2
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Hi Chris:

Welcome to the forum. I'm not exactly sure what type of advice you are looking for. In general, the participants in this forum would encourage you to live below your means, save as much as possible, invest in a combination of equities and (maybe) bonds, most likely index funds or other low cost funds, and let the power of time help you to accumulate wealth. Because you are still quite young, you have many years to allow your savings to build wealth for you. Even a small contribution to your 401K each month will yield significant results in 30-40 years.

Other than that, if you have any specific questions, please post them and I'm sure the members will be glad to chime in and respond.
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Old 07-29-2013, 09:16 PM   #3
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While it's certainly not popular, if you can manage to scrimp and save for even just 5 years, EVERY dollar you free up for investing will pay off many times down the road. The difference between saving $3,000/year for the first 5 years and $7,000 (or more) per year is huge down the road. It's not easy, but if you truly want to make a huge difference, you'll be thanking yourself for it when you're 40, and that extra $4,000/year you saved up at age 24-28 is (at age 40) adding hundreds of additional dollars per year in growth to your portfolio. Which then continues to snowball even more in later years.

Stick with index funds @ Vanguard. Seek out ways to lower your costs as much as possible, and raise your income by getting as much varied experience. Make people want your skill set, and be able to stand apart from your competition. Eventually you'll come across a good employer who will value your services and pay you for it.

Saving $1 here and $.50 there may not be much (and it's not in and of itself), but if you were able to shave 10% off of all of your expenses, that's another $3,000/year you can add to savings.
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Old 07-29-2013, 10:19 PM   #4
Confused about dryer sheets
 
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Quote:
Originally Posted by MooreBonds View Post
While it's certainly not popular, if you can manage to scrimp and save for even just 5 years, EVERY dollar you free up for investing will pay off many times down the road. The difference between saving $3,000/year for the first 5 years and $7,000 (or more) per year is huge down the road. It's not easy, but if you truly want to make a huge difference, you'll be thanking yourself for it when you're 40, and that extra $4,000/year you saved up at age 24-28 is (at age 40) adding hundreds of additional dollars per year in growth to your portfolio. Which then continues to snowball even more in later years.

Stick with index funds @ Vanguard. Seek out ways to lower your costs as much as possible, and raise your income by getting as much varied experience. Make people want your skill set, and be able to stand apart from your competition. Eventually you'll come across a good employer who will value your services and pay you for it.

Saving $1 here and $.50 there may not be much (and it's not in and of itself), but if you were able to shave 10% off of all of your expenses, that's another $3,000/year you can add to savings.
Could you give me a little background on index funds at vanguard? just something brief.
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Old 07-29-2013, 10:58 PM   #5
Confused about dryer sheets
 
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I second that request, more info would be much appreciated!
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Old 07-30-2013, 09:05 AM   #6
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If I had it to do all over again I would spend more time at an early age learning how to value individual companies and buying their stock when it's cheap. I fear we may be in for a long period of low overall market returns, but if you learn how to ferret out good opportunities you might be able to beat the market, and possibly by a large margin.

For example, from 2000 to today the S&P has been almost totally flat, compared to Berkshire Hathaway which has returned 200%. In case you think cherry picking time frames if you compare from 1990 to 2000 (a pretty good time period for the overall market) the S&P was up about 250% vs Berkshire's 800%.

The key IMO is finding and reeeealy understanding a few miss priced companies and putting your eggs in that basket, and then watch that basket like a hawk. This approach is not for everyone, and it could be riskier if you don't do a good job picking the right company, but the rewards can be substantial.
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