Pennstateclj1 wrote:How much are you stuffing in the 401k? What are your tax rates? How much money do you have to invest monthly? Could you max out your 401k contribution at $17,500 for next year and still live a little? You are in a great position to do it all right from the get go.
jimkinny wrote:Reading the Wiki might be of some help. Here is a link to the main page, see "Getting Started". Also consider buying the "Boglehead Guide to Investing" book via Amazon (see the link to Amazon on the forum page, upper right).
Here is a link to a discussion of a 3 fund portfolio:
On the Wiki make sure that you read about tax efficient fund placement. Spend a lot of time thinking about portfolio risk level which is generally thought of as how much equity vs bonds is in your portfolio. Here is an approach taken by a frequent poster/author/financial advisor Rick Ferri. The Wiki has some information on risk also.
Read about the advantages of I Bonds on the Wiki. For me, the most important aspect is that I do not have to pay taxes on interest earned or on the inflation adjustment, until I sell them, therefore I can keep them in a taxable account.
Take a few weeks to learn a bit about investing. You have plenty of time and you are already executing the most important aspect of an investment plan and that is saving.
I wish I would have been as informed and motivated as you are at your age.
fkampere wrote: I only make $35k a year right now I started putting in 5% my employer matches 7% so 12% all together for my 401k.
JW Nearly Retired wrote:fkampere wrote: I only make $35k a year right now I started putting in 5% my employer matches 7% so 12% all together for my 401k.
Have you verified employer is putting in 7%? Usually a 7% "match" would mean they would match what you put in up to 7%. If you only put in 5% they would only match that 5%.
We always advise to put in at least the amount of the employer match maximum.
nimo956 wrote:Is the $40k in your bank account for anything specific like a house downpayment? If not, you can "convert" this taxable money to tax-deferred by doing the following:
1. Change your paycheck deductions so that you contribute $17,500 to your 401k for 2013. This will make your paycheck really low. Also contribute $5,500 to a Roth IRA.
2. Use the $40k in your bank account to pay for everyday living expenses.
fkampere wrote:Pennstateclj1 wrote:How much are you stuffing in the 401k? What are your tax rates? How much money do you have to invest monthly? Could you max out your 401k contribution at $17,500 for next year and still live a little? You are in a great position to do it all right from the get go.
I only make $35k a year right now I started putting in 5% my employer matches 7% so 12% all together for my 401k. I've been putting about $1000 a month in savings account because I wanted to buy a house but I kind of changed my mind and I think renting might be what I end up doing still living at home with parents. I suggest you go to 10% (or at least 7+% ) in your 401k. This is the time when you have the best opportunity to get something into retirement savings which will have lots of time to hopefully increase a lot.
I don't want to put all of it in 401k because I kind of want the ability to access it if I need it for something. I like the idea of Roth IRA so that is why I opened one was I smart to go with the vanguard funds one or should I of went with the brokerage one so I could pick stocks?
Fill the Roth (5k for 2012, 5.5k for 2013, you have until April to finish 2012, but the sooner, the better). The amount you put in can be withdrawn in an emergency but of course you would prefer not to do that if possible.
Also I was looking at the Like Strategy Funds which one is the best though?
Life Strategy Moderate has 60% equities as does Star. Since you are young, you might consider Aggressive (80%) which has greater potential for more gain but with much more extreme variations.
You really need to do some reading in recommended books or at least the Wiki here so you are not just taking the recommendations of some anonymous internet people! (Having said that, we are not gaining anything from selling you funds, so I believe you are getting much better unbiased advice here , especially when several longer-time members agree with the advice.)