Newbie

[geeman]

Hello all,

I just wanted to say hello and give some background on my finances. I am 22 years old and I graduated from college in January. I do computer work and I make $45,000 per/yr.

Here are my assets so far...

T Rowe Price:
I have Mid-Cap Value $1045 - invest $100 a month
New Asia $465 - invest $100 a month
Retirement 2040 $900 - invest $200
Real Estate $1030. - invest $100 a month

Vanguard (Roth IRA):
Vanguard 500 Index Fund Investor Shares ($4000) - Invest $85 a week

Capital One Money Market 3.15% (4,000) - save $500 a month

Sharebuilder:
Sirius Sat Radio = 15 shares = ($90)
Busweiser = 5 shares = ($230)



BTW: I just got Quicken 2005 Premier to help with my early retirement

No debt, no car payments and no rent...

What do you guys think?

 

[uncledrz]

I think you are starting at just the right time. There are many on this board who are very experienced, successful, and interestingly enough, have very different investment methods.

My suggestion is to read some of the basic books, i.e. Bernstien's, The Four Pillars, and then take your time to set up an investment outline. Write it down. Stick to it. Aviod the stock/investment/discussion idea of the day. Think long term goal.

Good luck.

Uncledrz

 

[justin]

I second the four pillars by bernstein. He also has another good one, Intelligent Asset Allocator. I mentioned elsewhere, The millionaire next door. Also, Bogle's Common Sense on Mutual Funds.

Draw up a plan of what you want to do financially in the future. For example, buy a house in 2 years, new (used) car in 3 years, early retirement in 20 years, etc. I noticed you are accumulating a large cash position. It is usually advisable to keep 3-8 months of living expenses in cash or a cash-like investment. It looks like your expenses are very low right now, so $4000 in your MMA may cover your cash needs.

I would divert the $500 monthly MMA contribution (or a big part of it) to the SP500 index if you don't plan on doing anything big with the money in the next few years (house, car, wife kids, etc). After you get your portfolio allocation plan figured out, you can rebalance out of the S&P500 into something else if that is what your plan calls for. Do you have a 401k or similar plan at work? Add money to this.

 

[geeman]

I have a 401k but I don't contribute. They only match 1% and then I get charged 1.5% to maintain the 401K. Kinda sucks. So if I contribute $5000 I'll get $50 from my emplyer and then get charged $75. Do you think it is still worth it for tax reasons?

 

[JPatrick]

[quote

Sharebuilder:
Sirius Sat Radio = 15 shares = ($90)
Busweiser = 5 shares = ($230)





What do you guys think?

BUD Young man you go straight to your rent free room!

 

[greg]

As Laurence Welk might say: "Wunnerful, Wunnerful" You may get to that big pile in the sky (the money needed before making the decision about retirement time) very quickly. Good luck and smooth sailing.

 

[geeman]

Haha, hey, I'm legal...

 

[JPatrick]

I have a 401k but I don't contribute.  They only match 1% and then I get charged 1.5% to maintain the 401K.   Kinda sucks.  So if I contribute $5000 I'll get $50 from my emplyer and then get charged $75.  Do you think it is still worth it for tax reasons?

If the total cost is 1.5% and your plan offers some decent choices, then it's probably worthwhile.
Chances are though, there are even more charges.  Stubby pencil time.

 

[justin]

My guess would be the employer would match up to 1% of your gross income. In your case, you could contribute 1% of $45,000, or $450 per year, and your employer will match that $450. Everything you add above $450 won't be matched. This is the matching structure of almost all employers out there. Check with your HR department, coworkers who are in the know or your 401k plan administrator to make sure. If your employer is giving away $450 each year in exchange for you contributing $450, that is 100% return on your investment.

The 1.5% maintenance fee each year? Dunno about that one. If you have access in your 401k to low cost funds, actively managed or indexed, it might still be a good deal to add more than $450/yr for the tax savings.

Also, if you change employers, you can always rollover that 401k $$ into an IRA of your choice with the investment options of your choice.

 

[wildcat]

Sirius....hang on a second....yak excuse me

 

[geeman]

I have my 401K information infront of me now. It says...

*an annual variable asset charge of 1.20% is calculated and deducted daily as a part of the unit value of each of my variable investment options.

* your employer matches 1% of your contribution. The employer matching contributuion does not apply to applicable contributions that exceed $1,000.

* In 2005 the before tax contribution amount is 100%, with a minimum of 1%, of your compensation or $14,000 whichever is less. The max contribution amount will increase by $1,000 each year through 2006 to $15,000 then it will be indexed in $500 increments.

* There is a benefit disbursement fee of $50.00

Then I have a list of investment options...

 

[comixfan]

I have my 401K information infront of me now.  It says...

*an annual variable asset charge of 1.20% is calculated and deducted daily as a part of the unit value of each of my variable investment options.

* your employer matches 1% of your contribution.  The employer matching contributuion does not apply to applicable contributions that exceed $1,000.

* In 2005 the before tax contribution amount is 100%, with a minimum of 1%, of your compensation or $14,000 whichever is less.  The max contribution  amount will increase by $1,000 each year through 2006 to $15,000 then it will be indexed in $500 increments.

*  There is a benefit disbursement fee of $50.00

Then I have a list of investment options...

The 1.2% is probably based on the total value of your 401k portfolio.  For instance if you have $4,000 in your 401k then the asset management fee of 1.2% would be $48.

So contributing $450 and then getting $450 free from your employer leaves you $400 in the black, at least for the 1st year.