Where Do I Begin?

[AMartin086]

Hello,

I am 31 years old and am just (finally!!) seeing how foolish I have been in preparing for retirement. (I haven't.)

I have about $12,000 saved, but I have done nothing to make it work for me and am preparing to return to school in order to pursue a graduate degree. After graduate school I will (most likely) have a debt of $30,000. During my four years in school I will not be working many hours. I hope to work enough to cover my personal living expenses and some school expenses.

Before I begin school I would like to invest (at least) $3,000 of my current $12,000. I do have a 401K that was started eight years ago, but I have not added any other money to it because I haven't known what to do or who to call. (I think my 401K has about $450 at present.)

I am just now beginning to look into resources, etc, but where do I begin? And, where should I invest? Roth IRA? Some type of stock? Who can I call? (Who won't charge me too much?) Do I have any hopes of retiring?!?!! And, what if I don't (and won't) have enough money to invest? As my subject line asks: Where do I begin?

I fully admit my ignorance and look forward to any advice people are willing to give!

Thank you,
AMartin

[PFInterest]

sounds like you will need that money to live, so wouldnt do anything yet.

[WoodSpinner]

OP,

Take a moment, relax and breath. Many folks don't arrive at your conclusion until much later in life. There is plenty of time to after you graduate to focus on investments, debts and your financial future

I would take a look at a Vanguard Target Date Fund for your initial investment.

Good luck

[mega317]

I agree with the other posters. You should be congratulated for reaching the point you have reached. You must have done a lot of learning. Also 30k doesn't sound too bad for student loan debt so you'll be starting in a better place than many. I assume after graduate school you'll be making a reasonable wage and so the reality is that it doesn't matter what you do with 3k now. If you have fantastic returns on 3k, you'll have after graduate school 4 or 5k? You'll likely be able to save significantly more than that every year going forward. So I'd just keep it in cash as an emergency fund.

[Phineas J. Whoopee]

Hi AMartin086, and welcome to the forum.

Don't panic. The first step is to learn. The second is to plan, the third is to evaluate options, and the last is to invest.

Continue to save, without worrying so much about where to put it for now. At your stage in your investing lifetime portfolio growth will be driven much more by new savings than by investment returns for a decade or two.

One good place to get started is in our wiki article: Getting started. It will guide you to other materials.

Another is to download (for free, the author makes it available at no charge) William Bernstein's 16-page pamphlet If You Can. It too refers you to other, more detailed works.

I agree that if you're going to grad school the first order of business is to make sure you have it adequately funded.

PJW

[aristotelian]

Top priority is always an emergency fund in case you have a large unexpected expense (health issue, dead car, etc). $12,000 is probably a good amount for that. Anything above that you can use to keep debt under control. Next highest priority would be 401K up to your employer match (if you have one), and after that would be contributing to a Roth IRA.

[Tyler Aspect]

Welcome to Bogleheads.

I can recommend a personal finance book "The Index Card" by Helaine Olen and Harold Pollack. It explains why personal finance doesn't have to be complicated. It has recommendations and best practices in line with Bogleheads' philosophies.

I think for now you can hold your emergency cash in an online high interest savings account. If you had employment income this year then you can open a Roth IRA account. Vanguard will waive account maintenance fee if you sign up for e-delivery of statements. To get started you can put $1000 in each of the following ticker symbols: VTI (US stock), VT (global stock), and BND (US bond).

Feel free to ask any follow-up questions if you have any.