What advice to give 21 year old?

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 10:38 am

ray333 wrote:
TomatoTomahto wrote:
RRAAYY3 wrote:21 year olds shouldn't even be thinking about bonds ... I'm 32 and every dollar I have is either invested in total us / Total int'l ... or a high yield savings account - "safely" growing while giving me the opportunity to pounce on the next buying opportunity with 2 clicks
Well, can't stop them from thinking about bonds, especially if they spent some time on the bond desk :D

In practice, do you think high yield savings accounts are very different from a bond fund?
High yield savings account balances never go down (aside from withdrawals, obv.) ... and if they start to, we have much bigger problems than asset allocation

aside from it seeming like a less than ideal bond environment ... I like the "safe" part of my assets to actually be safe.
I get that, but say you have 10% of your portfolio in bonds. In a bond rout, what would you be down, 1% or 2% of your portfolio? Not very unsafe, imo.

deltaneutral83
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Re: What advice to give 21 year old?

Post by deltaneutral83 » Sat Jul 15, 2017 10:43 am

College grad and coming out making that kind of coin, well I'd be 100% equities, probably VTI until I got $100k in assets which probably won't be too long (2 years?) and then I'd add some VXUS. Max out the 401k try to get MAGI down to $118k so you can do a Roth smoothly but it honestly doesn't matter. Rent don't buy for domicile. I'd probably be diversifying in the social department as well with that income at that age and those prospects. Preserving mobility is an intangible that will likely be worth his while the next 4-5 years.

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 11:10 am

TomatoTomahto wrote:
deltaneutral83 wrote:College grad and coming out making that kind of coin, well I'd be 100% equities, probably VTI until I got $100k in assets which probably won't be too long (2 years?) and then I'd add some VXUS.
i think my advice will be to leave some money aside, whether in bonds, checking/savings, but enough so that he doesn't have to sell equities if they're down; his temptation is to be 100% invested
Max out the 401k try to get MAGI down to $118k so you can do a Roth smoothly but it honestly doesn't matter.
Possible in 2018, unlikely thereafter.
Rent don't buy for domicile.
My advice, precisely.
I'd probably be diversifying in the social department as well with that income at that age and those prospects.
I'm not sure what that means, but he's smart about selecting his crowd.
Preserving mobility is an intangible that will likely be worth his while the next 4-5 years.
I want to thank everyone for their input. It's been very much appreciated, and has focused my thoughts.

SimplicityNow
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Re: What advice to give 21 year old?

Post by SimplicityNow » Sat Jul 15, 2017 11:51 am

TomatoTomahto wrote:
SimplicityNow wrote:I wish him the best of luck.
Thank you. I wish the same for your daughter. Isn't it a treat when they achieve liftoff?
Thanks. It is a treat I am looking forward to as she is still looking for a job. Despite the low pay it is a tough field to break into.

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 12:03 pm

SimplicityNow wrote:
TomatoTomahto wrote:
SimplicityNow wrote:I wish him the best of luck.
Thank you. I wish the same for your daughter. Isn't it a treat when they achieve liftoff?
Thanks. It is a treat I am looking forward to as she is still looking for a job. Despite the low pay it is a tough field to break into.
Good luck to her; perseverance pays off. My oldest, more than a decade older than the son discussed here, took a long time to find something that suited her (Youth at Risk work for an NGO). The pay is not what matters to her, and that's as it should be.

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reriodan
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Re: What advice to give 21 year old?

Post by reriodan » Sat Jul 15, 2017 12:37 pm

Advice for 21 yr old? 100% Total world market fund, never look back.

halfnine
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Re: What advice to give 21 year old?

Post by halfnine » Sat Jul 15, 2017 12:58 pm

If I recall correctly you have an 8 figure net worth and are looking at inheritances for you kids in 7 figure ranges. At this point we are talking about family money in one form or another, it is just a matter of when or how. So, I might consider recommending 100% global stock and self-insure his tail risk for a few years in lieu of of providing (or limiting) any age 20s type funds.

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 2:10 pm

halfnine wrote:If I recall correctly you have an 8 figure net worth and are looking at inheritances for you kids in 7 figure ranges. At this point we are talking about family money in one form or another, it is just a matter of when or how. So, I might consider recommending 100% global stock and self-insure his tail risk for a few years in lieu of of providing (or limiting) any age 20s type funds.
He would not be happy making decisions with an inheritance in mind. He has seen what that does to kids; he has many classmates who have been adversely affected by their trusts, and fewer who have benefited from them. We tell him that he knows he has a safety net, so go for the gusto.

How much inheritance the kids will get is a discussion in progress with my wife. The kids know enough not to count on it.

Miriam2
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Re: What advice to give 21 year old?

Post by Miriam2 » Sat Jul 15, 2017 2:24 pm

Here is some great reading on investing for young people, maybe over time he'll read them :happy

"If You Can: How Millennials Can Get Rich Slowly" by Bill Bernstein [Boglehead Bill Bernstein]
http://www.etf.com/docs/IfYouCan

"If I Knew Then What I Know Now" by Michael LeBoeuf [Boglehead mlebuf]
www.bogleheads.org/forum/viewtopic.php?f=2&t=161092

"How to Build and Maintain Wealth" by Boglehead Gekko
www.bogleheads.org/forum/viewtopic.php?p588776#p588776

reformatted in www.bogleheads.org/forum/viewtopic.php? ... 0#p2463100

"Single best piece of personal financial advice ever received"
www.bogleheads.org/forum/viewtopic.php?f=2&t=164011

Doom&Gloom
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Re: What advice to give 21 year old?

Post by Doom&Gloom » Sat Jul 15, 2017 4:33 pm

TomatoTomahto wrote:@chinto: too late! He's given his heart away, and the families (his and hers) hope that they can figure out the two-body problem. Thanks for the wonderful poem.

That raises a topic that's more often discussed at home than AA: how to deal with income disparity in the cohort. His GF, for example, is a wonderful young woman, smart and earnest, and would be as happy with him in graduate school (poor-ish) as in tech (rich-ish); she knows who he is. Some acquaintances have become overly friendly, having found out that he's interning at what they refer to as "the God tier." It is disconcerting to him. As he puts it, one good side effect of LBYM is that people won't know your means, but he often discusses how far you should go in hiding it; at what point does it go from modesty to deceit?
If he is as good a poker player as you think, he will figure that out rather quickly--but it may take a "bad beat" or two. Unless he is solely an online player, in which case he will have to develop that set of "people skills" as the rest of us have--by trial and error.

Most of the good, young poker players I have known are very aggressive and overestimate their abilities in all areas of finance. After re-reading your OP, it doesn't sounds as if that is the case at all here. The fact that he is asking your advice at all speaks volumes to the job you have done. I would have a beer and watch a ballgame :beer

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Re: What advice to give 21 year old?

Post by Helo80 » Sat Jul 15, 2017 4:34 pm

TomatoTomahto wrote:
halfnine wrote:If I recall correctly you have an 8 figure net worth and are looking at inheritances for you kids in 7 figure ranges. At this point we are talking about family money in one form or another, it is just a matter of when or how. So, I might consider recommending 100% global stock and self-insure his tail risk for a few years in lieu of of providing (or limiting) any age 20s type funds.
He would not be happy making decisions with an inheritance in mind. He has seen what that does to kids; he has many classmates who have been adversely affected by their trusts, and fewer who have benefited from them. We tell him that he knows he has a safety net, so go for the gusto.

How much inheritance the kids will get is a discussion in progress with my wife. The kids know enough not to count on it.

Story time!!!

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 5:30 pm

Doom&Gloom wrote:If he is as good a poker player as you think, he will figure that out rather quickly--but it may take a "bad beat" or two. Unless he is solely an online player, in which case he will have to develop that set of "people skills" as the rest of us have--by trial and error.

Most of the good, young poker players I have known are very aggressive and overestimate their abilities in all areas of finance. After re-reading your OP, it doesn't sounds as if that is the case at all here. The fact that he is asking your advice at all speaks volumes to the job you have done. I would have a beer and watch a ballgame :beer
I am surprised that he's a good poker player, but that's what I've heard. I was a good bridge player, but made a deal with my poker friends (commodity traders) that I'd just send them a check and save some time. He plays solely in person, for low stakes, because he started doing it for the social aspects. He seems to win, pretty much consistently. I had no doubt that he would figure out the odds instantly, but am surprised that he can read the other players, seems not to have tells that college players pick up on, and am even more surprised that he can do the discovery via table talk thing. He's no Daniel Negranu, but he's known at school as a winning player.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 5:34 pm

Helo80 wrote: Story time!!!
I wish that I could, but I would literally be talking out of school. Let me say that for every kid who has benefitted from a trust fund, there are many more who are cautionary tales. It's an old story though.

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Re: What advice to give 21 year old?

Post by Helo80 » Sat Jul 15, 2017 5:54 pm

TomatoTomahto wrote:
Helo80 wrote: Story time!!!
I wish that I could, but I would literally be talking out of school. Let me say that for every kid who has benefitted from a trust fund, there are many more who are cautionary tales. It's an old story though.

Oh I bet. Unfortunately, it's probably the same pitfalls that so many professional athletes and entertainers fall into. The money comes easily and quickly for a while, but not all will have sustaining careers.

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Re: What advice to give 21 year old?

Post by 4nwestsaylng » Sat Jul 15, 2017 5:59 pm

WildBill wrote:
Engineer250 wrote:
WildBill wrote: Just as a side note, one of the posters asked about earning potential for a fresh graduate - there are select summer internships for CS and mathematics students that pay in excess of $15k per month, usually with room and board provided. A "routine" internship can easily pay over 8k per month, again with room and board provided.

A new software engineer at a technology company will easily make in excess of $150K per year, not counting benefits and retirement plan contributions and matching, which will, add another $20 k or more.
What? Where is this, the bay area?

New software engineers in my neck of the woods (and I am still in California) make $60-$80k.

I'm not sure if I'm missing something, or ya'll have no actual evidence of this yet (your kids haven't graduated, you are just assuming future salaries). Sure if your kid created his own app and business while he's still in college he might command more, but I'm not sure where you're getting these numbers from.
Howdy

Somebody may be out of touch with the situation, but I do not think it is me.

The figures I am quoting are from offer letters I have seen with my own eyes. You can also check Glassdoor or other employment sites.

One example:

Software development engineer for Gxxxx: Starting salary $115,000, signing bonus $25000, annual bonus (essentially guaranteed) $20,000, retirement contributions $12000.

Happy coding

W B

And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.

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Re: What advice to give 21 year old?

Post by WildBill » Sat Jul 15, 2017 6:46 pm

4nwestsaylng wrote:
WildBill wrote:
Engineer250 wrote:
WildBill wrote: Just as a side note, one of the posters asked about earning potential for a fresh graduate - there are select summer internships for CS and mathematics students that pay in excess of $15k per month, usually with room and board provided. A "routine" internship can easily pay over 8k per month, again with room and board provided.

A new software engineer at a technology company will easily make in excess of $150K per year, not counting benefits and retirement plan contributions and matching, which will, add another $20 k or more.
What? Where is this, the bay area?

New software engineers in my neck of the woods (and I am still in California) make $60-$80k.

I'm not sure if I'm missing something, or ya'll have no actual evidence of this yet (your kids haven't graduated, you are just assuming future salaries). Sure if your kid created his own app and business while he's still in college he might command more, but I'm not sure where you're getting these numbers from.
Howdy

Somebody may be out of touch with the situation, but I do not think it is me.

The figures I am quoting are from offer letters I have seen with my own eyes. You can also check Glassdoor or other employment sites.

One example:

Software development engineer for Gxxxx: Starting salary $115,000, signing bonus $25000, annual bonus (essentially guaranteed) $20,000, retirement contributions $12000.

Happy coding

W B

And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
Howdy

That is a sound observation. However, it is also true that engineering/technology jobs can be unstable. Four years ago Petroleum Engineers and Petrophysicists were highly sought and new graduates very highly compensated (I know, because I was hiring them :D ). Now, not so much.

I know 2 unemployed doctors. In both cases it is by their own choice. Lot to be said for stability of employment.

Happy hiring

WB
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sat Jul 15, 2017 7:33 pm

4nwestsaying wrote:And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
Swings and roundabouts. For many generations, doctors did better financially than many "equally smart kids." They still do better than most artists, most NGO workers, most accountants, even most computer types.

Is the world wise to be throwing money at software developers in quantities that it previously threw at doctors? The question is above my pay grade. I will say that, in my experience within my family, half of the doctors went into it for the money, the other half (mostly in Europe) felt drawn to it as a calling. I know which half I'd want to see as a patient.

Re "equally or even brighter students going to med school": I'm not sure that there is a single dimension along which you can place the intelligence of med students, artists, mathematicians, etc.

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Re: What advice to give 21 year old?

Post by MoonOrb » Sun Jul 16, 2017 11:37 am

On the topic of poker players: I've yet to meet a person who considered themselves poker player who didn't also consider themselves a good poker player. The poker playing world is like Lake Woebegone, where everyone is better than average (which, it sort of should be, since if you find yourself consistently in the red, maybe poker isn't for you).

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sun Jul 16, 2017 12:08 pm

MoonOrb wrote:On the topic of poker players: I've yet to meet a person who considered themselves poker player who didn't also consider themselves a good poker player. The poker playing world is like Lake Woebegone, where everyone is better than average (which, it sort of should be, since if you find yourself consistently in the red, maybe poker isn't for you).
Yeah, I know. Apparently, some kids are reluctant to play with him, which goes against his desire for a congenial, social game, but he's kept the stakes intentionally low. Some kids wanted to stake him to tournament play, but he laughed and told them to save their money.

My old bridge partner used to make money from poker playing, especially against dentists who would take a hit of nitrous during the game :D Long time ago.

ETA: Re Lake Woebegone: I knew right away that bridge is my game, and poker not.

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Re: What advice to give 21 year old?

Post by itstoomuch » Sun Jul 16, 2017 12:28 pm

What I told out Only:
Read some Bogle, Bernstein (Peter and William), A book on options.
Actionable: Go out and buy some Life Insurance (term), Keep some money in reserve as Go money, Begin fund for Housing, Invest for retirement, and take care of Mom and Dad :annoyed :oops: :oops:
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Re: What advice to give 21 year old?

Post by stoptothink » Sun Jul 16, 2017 12:56 pm

4nwestsaylng wrote:
And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
ALL will finish medical school and start at $120-225k, Tomato's son is in the 99th percentile when it comes to kids just getting into his field. At my wife's data security company (she's in enterprise sales) there is nobody on the technical side - regardless of their experience or expertise in development, ethical hacking, what have you - making what Tomato is suggesting his son will make to start. Shoot, the CTO at her ~400 employee data security firm (a very close family friend), makes less than what Tomato is saying his son may make to start (the Silicone Slopes are not the Bay Area or NYC when it comes to salary, but still). I have no reason to believe he isn't telling the truth, but the huge majority of kids coming out of school and getting into these fields make a fraction of what is being discussed here, and probably zero of them are outside of NYC and the Bay Area. Physicians in this country make a darn good living; wherever, whenever.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sun Jul 16, 2017 1:15 pm

stoptothink wrote:ALL will finish medical school and start at $180-225k, Tomato's son is in the 99th percentile when it comes to kids just getting into his field. At my wife's data security company (she's in enterprise sales) there is nobody on the technical side - regardless of their experience or expertise in development, ethical hacking, what have you - making what Tomato is suggesting his son will make to start. Shoot, the CTO at her ~400 employee data security firm (a very close family friend), makes less than what Tomato is saying his son may make to start (the Silicone Slopes are not the Bay Area or NYC when it comes to salary, but still). I have no reason to believe he is lying, but the huge majority of kids coming out of school and getting into these fields make a fraction of what is being discussed here. Physicians in this country make a darn good living.
Yes, I am not suggesting that he is anything but in the top 5% or better of CS graduates, although I can't argue if stoptothink considers it top 1%. There are reasons for this, and chief among them is that he's not just a code monkey (and I say that as a retired code monkey myself, nothing derogatory), but that he has a quick mind for financial engineering and the math involved. Additionally, in a field full of bright but sometimes awkward people, he's a pretty personable guy, someone the interviewers are likely to say yes to "Would you like to work with this person? or "Would this person fit in?"

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Re: What advice to give 21 year old?

Post by 4nwestsaylng » Sun Jul 16, 2017 3:15 pm

stoptothink wrote:
4nwestsaylng wrote:
And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
ALL will finish medical school and start at $120-225k, Tomato's son is in the 99th percentile when it comes to kids just getting into his field. At my wife's data security company (she's in enterprise sales) there is nobody on the technical side - regardless of their experience or expertise in development, ethical hacking, what have you - making what Tomato is suggesting his son will make to start. Shoot, the CTO at her ~400 employee data security firm (a very close family friend), makes less than what Tomato is saying his son may make to start (the Silicone Slopes are not the Bay Area or NYC when it comes to salary, but still). I have no reason to believe he isn't telling the truth, but the huge majority of kids coming out of school and getting into these fields make a fraction of what is being discussed here, and probably zero of them are outside of NYC and the Bay Area. Physicians in this country make a darn good living; wherever, whenever.


Clearly you know nothing about a medical education. First, these people are at least as high achieving as those in law school or in the Ivy League MBA schools. What you don't seem to get is the time investment.

You don't "finish medical school" and go out to work. When you finish medical school, you are eight years into your education. Then, you go on to something called an internship (80 hour weeks) for a year, then you do another four to six years of residency training before you get to go out and practice. So we are talking 13-15 years of training post high school before you go in practice. We are talking loans of 250-300K during that process, plus loss of those years for earning any income or starting a 401k, and with the loans to pay off, that accumulation is years away.

But then they get to make that "darn good living" of $120-225K pre tax.

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TomatoTomahto
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sun Jul 16, 2017 3:30 pm

4nwestsaylng wrote: You don't "finish medical school" and go out to work. When you finish medical school, you are eight years into your education. Then, you go on to something called an internship (80 hour weeks) for a year, then you do another four to six years of residency training before you get to go out and practice. So we are talking 13-15 years of training post high school before you go in practice. We are talking loans of 250-300K during that process, plus loss of those years for earning any income or starting a 401k, and with the loans to pay off, that accumulation is years away.

But then they get to make that "darn good living" of $120-225K pre tax.
And yet, for all that, there is no shortage of applicants, with roughly 40% gaining admission to medical school. Maybe it's a calling, after all.

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Re: What advice to give 21 year old?

Post by stoptothink » Sun Jul 16, 2017 4:23 pm

4nwestsaylng wrote:
stoptothink wrote:
4nwestsaylng wrote:
And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
ALL will finish medical school and start at $120-225k, Tomato's son is in the 99th percentile when it comes to kids just getting into his field. At my wife's data security company (she's in enterprise sales) there is nobody on the technical side - regardless of their experience or expertise in development, ethical hacking, what have you - making what Tomato is suggesting his son will make to start. Shoot, the CTO at her ~400 employee data security firm (a very close family friend), makes less than what Tomato is saying his son may make to start (the Silicone Slopes are not the Bay Area or NYC when it comes to salary, but still). I have no reason to believe he isn't telling the truth, but the huge majority of kids coming out of school and getting into these fields make a fraction of what is being discussed here, and probably zero of them are outside of NYC and the Bay Area. Physicians in this country make a darn good living; wherever, whenever.


Clearly you know nothing about a medical education. First, these people are at least as high achieving as those in law school or in the Ivy League MBA schools. What you don't seem to get is the time investment.

You don't "finish medical school" and go out to work. When you finish medical school, you are eight years into your education. Then, you go on to something called an internship (80 hour weeks) for a year, then you do another four to six years of residency training before you get to go out and practice. So we are talking 13-15 years of training post high school before you go in practice. We are talking loans of 250-300K during that process, plus loss of those years for earning any income or starting a 401k, and with the loans to pay off, that accumulation is years away.

But then they get to make that "darn good living" of $120-225K pre tax.
I have a PhD in a very related field, which required that I work directly in the medical space for 3.5yrs, and many of my employees (I am the chief health and exercise scientist for a health megacorp) go onto medical school. I work for a physician (our CMO) and there are also three physicians in my family. I have two current contract (former salaried) employees who are currently at Stanford and University of Texas Southwestern medical schools. I talk to them several times a week. It absolutely blew me away when they reached out to me regarding contract work, I assumed that their programs would not allow them to work, but apparently it is greatly encouraged.

I am in no way downplaying what they go through, as someone who spent 11yrs completing their own university education (with a fancy title at a megacorp, who may never make what most 1st year physicians do), I absolutely respect their level of determination, work ethic, and intellectual capacity. The bottom line is even the worst doctor will complete their training and have the opportunity to be financially comfortable quite early in their career if they don't immediately get into the McMansion and Mercedes - hey, they earned it. When talking about kids in CS or the like, only a very select few will start out in the same stratosphere compensation-wise. My post wasn't to denigrate physicians or their training at all, but if you think the financial opportunities in medicine aren't still appealing to the most brilliant recent undergrads, we simply live on different planets. The dollar figures being discussed in this thread simply aren't the norm.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sun Jul 16, 2017 5:22 pm

stoptothink wrote:When talking about kids in CS or the like, only a very select few will start out in the same stratosphere compensation-wise. My post wasn't to denigrate physicians or their training at all, but if you think the financial opportunities in medicine aren't still appealing to the most brilliant recent undergrads, we simply live on different planets. The dollar figures being discussed in this thread simply aren't the norm.
I don't think WildBill or I would suggest that an average CS graduate gets those numbers, but still, companies know that they have to open their checkbook to snag some of the cream. They also have to provide interesting problems, an interesting environment, perks like the ability to invest once you're an accredited investor, etc. A lot of these kids are not interested only in the money, although my son sees a great divide between those with student loans, and those without.

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Re: What advice to give 21 year old?

Post by itstoomuch » Sun Jul 16, 2017 6:28 pm

itstoomuch wrote:What I told out Only:
Read some Bogle, Bernstein (Peter and William), A book on options.
Actionable: Go out and buy some Life Insurance (term), Keep some money in reserve as Go money, Begin fund for Housing, Invest for retirement, and take care of Mom and Dad :annoyed :oops: :oops:
Buy a few stocks of companies with the intention of learning how risk works and making a killing in them and if not take a tax loss. :annoyed . He has done well since entering the workforce in 2009 in both his career ( CS related) and investments.
His cousin, same age @32, will be starting his MD career, this September, is behind in the retirement investing but probably ahead in the total investment realm- he bought a few hundreds AAPL, in high school and holding. :) :oops:
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Re: What advice to give 21 year old?

Post by WildBill » Sun Jul 16, 2017 10:59 pm

TomatoTomahto wrote:
stoptothink wrote:When talking about kids in CS or the like, only a very select few will start out in the same stratosphere compensation-wise. My post wasn't to denigrate physicians or their training at all, but if you think the financial opportunities in medicine aren't still appealing to the most brilliant recent undergrads, we simply live on different planets. The dollar figures being discussed in this thread simply aren't the norm.
I don't think WildBill or I would suggest that an average CS graduate gets those numbers, but still, companies know that they have to open their checkbook to snag some of the cream. They also have to provide interesting problems, an interesting environment, perks like the ability to invest once you're an accredited investor, etc. A lot of these kids are not interested only in the money, although my son sees a great divide between those with student loans, and those without.
Howdy

Interesting thread.

For a data point, below is a quote from my alma mater's web page on a national salary survey for starting graduates. Pretty clear there is a wide range. For full disclosure, my AM has an excellent engineering program, but not top 5 or 6 in CS. Average listed for CS grads from AM was 85k. Chemical engineering $95 k.

Job Title
Software Engineer
$55,166 - $117,384

The offer letters I have seen for the higher end of the scale for CS students have been from the large tech firms on the Pacific Coast and NE US, and trading and financial firms. They are all competing for a pool of students with degrees in CS, Applied Mathematics, Computational Biology and etc and backgrounds in AI, machine learning and the more esoteric areas of advanced algorithmic development and big data analysis.

This same pool of students are also sought by/ or forming their own startups in these areas, where they will get equity and minimal salary and work insanely hard for a chance at the brass ring.

Good luck to them

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

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Re: What advice to give 21 year old?

Post by understandingJH » Sun Jul 16, 2017 11:21 pm

A new software engineer at a technology company will easily make in excess of $150K per year, not counting benefits and retirement plan contributions and matching, which will, add another $20 k or more.
Only for HCOL areas I suppose. In fact, in my LCOL area, $130k seems to be attainable only for the top 5% of experienced software engineers. Nothing "easily" at all to get to $150k here. Above $150k and you'd likely need to have management responsibilities. Entry level grads typically make around $60-70k here.

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Re: What advice to give 21 year old?

Post by Watty » Sun Jul 16, 2017 11:55 pm

My situation was much different but a few things that worked well for me when I was a bit older then him were;

1) Once you start working commit to yourself to save half of any future raises. It does not have to be retirement savings since you will also have things like saving up for a house or paying cash for your next car. Not only does this allow you to save a lot but it also help prevent developing a more expensive lifestyle.

2) Open up a separate account and have a modest amount automatically deposited into it from each paycheck. Use this for things like travel and other extras. This will not only help you feel free to spend the money, but if the account starts to get large then it is a sign that you need to work of the "now" side of the "now vs later" choices.

3) I figured out that spending money on experiences gets you a lot more "bang for the buck" than buying "stuff"

4) Always take all your vacation time. Try to not take them a day or two at time but try to get out for at least a week at a time.

5) Class reunions are not that popular now but try to keep up to date on what is happening with people that were in your high school class. I did not go to my ten year class reunion but I heard about it and it was a bit a reality check when I found out that three people from my class had already died. I was not close to them but that helped me not take my time for granted.

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Re: What advice to give 21 year old?

Post by HomerJ » Mon Jul 17, 2017 12:04 am

The most important thing to tell him is to save a good chunk starting out, save half his raises, and control lifestyle creep.

Most of us build up to $150k-$250k over many years. Starting out that high, it will be tempting to start living an expensive lifestyle right away.

Sure, if he grows to $500k a year, then living a $200k lifestyle right away won't hurt him, but what if he doesn't?

If he gets a job making $150k, he should try living a $100k lifestyle. He's young, it's still a ton of money. If he gets a raise to $200k, he should save half of that... Increase his lifestyle to $125k (that's $2000 a month more, every month, that he can spend!), and at the same time he will jump his savings up to $75k a year! No pain increasing your savings that way.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Mon Jul 17, 2017 1:27 am

Watty wrote:My situation was much different but a few things that worked well for me when I was a bit older then him were;

1) Once you start working commit to yourself to save half of any future raises. It does not have to be retirement savings since you will also have things like saving up for a house or paying cash for your next car. Not only does this allow you to save a lot but it also help prevent developing a more expensive lifestyle.

2) Open up a separate account and have a modest amount automatically deposited into it from each paycheck. Use this for things like travel and other extras. This will not only help you feel free to spend the money, but if the account starts to get large then it is a sign that you need to work of the "now" side of the "now vs later" choices.

3) I figured out that spending money on experiences gets you a lot more "bang for the buck" than buying "stuff"

4) Always take all your vacation time. Try to not take them a day or two at time but try to get out for at least a week at a time.

5) Class reunions are not that popular now but try to keep up to date on what is happening with people that were in your high school class. I did not go to my ten year class reunion but I heard about it and it was a bit a reality check when I found out that three people from my class had already died. I was not close to them but that helped me not take my time for granted.
I hadn't thought of #2, but that's absolutely brilliant. A lot has been said about guarding against the hedonic treadmill, but his psychology makes him more susceptible to over-saving and under-living. He will respond to the idea of an account which, if it grows large, means you're deferring too much.

He's on the same page as you about the other items.

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Re: What advice to give 21 year old?

Post by stoptothink » Mon Jul 17, 2017 9:56 am

TomatoTomahto wrote:
stoptothink wrote:When talking about kids in CS or the like, only a very select few will start out in the same stratosphere compensation-wise. My post wasn't to denigrate physicians or their training at all, but if you think the financial opportunities in medicine aren't still appealing to the most brilliant recent undergrads, we simply live on different planets. The dollar figures being discussed in this thread simply aren't the norm.
I don't think WildBill or I would suggest that an average CS graduate gets those numbers, but still, companies know that they have to open their checkbook to snag some of the cream. They also have to provide interesting problems, an interesting environment, perks like the ability to invest once you're an accredited investor, etc. A lot of these kids are not interested only in the money, although my son sees a great divide between those with student loans, and those without.
I wasn't suggesting you were saying that, in fact I was saying the opposite. I was simply countering 4nwestsaylng comments that alluded to the medical profession not being appealing to the best and the brightest because they could make more going into tech straight out of undergrad. My impression is that you are very aware that your son is truly elite in his abilities and value to companies, and that these opportunities are only available in a few locales in the entire country.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Mon Jul 17, 2017 10:14 am

stoptothink wrote:
TomatoTomahto wrote:
stoptothink wrote:When talking about kids in CS or the like, only a very select few will start out in the same stratosphere compensation-wise. My post wasn't to denigrate physicians or their training at all, but if you think the financial opportunities in medicine aren't still appealing to the most brilliant recent undergrads, we simply live on different planets. The dollar figures being discussed in this thread simply aren't the norm.
I don't think WildBill or I would suggest that an average CS graduate gets those numbers, but still, companies know that they have to open their checkbook to snag some of the cream. They also have to provide interesting problems, an interesting environment, perks like the ability to invest once you're an accredited investor, etc. A lot of these kids are not interested only in the money, although my son sees a great divide between those with student loans, and those without.
I wasn't suggesting you were saying that, in fact I was saying the opposite. I was simply countering 4nwestsaylng comments that alluded to the medical profession not being appealing to the best and the brightest because they could make more going into tech straight out of undergrad. My impression is that you are very aware that your son is truly elite in his abilities and value to companies, and that these opportunities are only available in a few locales in the entire country.
We are on the same page. Sometimes, my quoting makes me appear to be countering a statement that I'm actually agreeing with, or elaborating on; I need to sign up for a course in remedial forum posting :D

I have 2 other kids who have some skills in a CSish area, but they don't have the focus that this 21-year old does, nor the particular skills that are in such high demand, and I'm well aware that their trajectories will be different. Would that it weren't so, but c'est la vie.

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Re: What advice to give 21 year old?

Post by RRAAYY3 » Mon Jul 17, 2017 10:25 am

TomatoTomahto wrote:
ray333 wrote:
TomatoTomahto wrote:
RRAAYY3 wrote:21 year olds shouldn't even be thinking about bonds ... I'm 32 and every dollar I have is either invested in total us / Total int'l ... or a high yield savings account - "safely" growing while giving me the opportunity to pounce on the next buying opportunity with 2 clicks
Well, can't stop them from thinking about bonds, especially if they spent some time on the bond desk :D

In practice, do you think high yield savings accounts are very different from a bond fund?
High yield savings account balances never go down (aside from withdrawals, obv.) ... and if they start to, we have much bigger problems than asset allocation

aside from it seeming like a less than ideal bond environment ... I like the "safe" part of my assets to actually be safe.
I get that, but say you have 10% of your portfolio in bonds. In a bond rout, what would you be down, 1% or 2% of your portfolio? Not very unsafe, imo.
not a big deal ... but why have the "safe" part of your assets in something that goes down ... near retirement I get the bond appeal ... as of today, makes no sense to me (I'm 32).

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Re: What advice to give 21 year old?

Post by wfaubert11 » Mon Jul 17, 2017 12:10 pm

I have an interesting perspective. I am under 30 and I work in tech. I got into my first tech job two years out of school, but similar to your son - I started making a healthy six-figure income starting at age 26.

The largest thing when thinking about what position and who to work for is really & truly not only career projectory.. but what companies are ready to take a holistic investment in your development early in your career. Like investing, tech really is a risk and reward world.

I joined a small, unknown software start-up (unknown here in the US, but had a healthy start in the EU). They paid me $50K per year with $5K bonus potential to travel and implement the software to their very small customer base. Good benefits package, decent pay for the Dallas area for a recent graduate. I was the 20th employee here in the States.

But the largest reason I joined was because of two reasons:

1) The product is absolutely phenomenal and I could feel the passion and drive towards it within my first interview with the company
2) The amount of attention, development & mentorship that I was to receive in the role from my manager at the time.

Within 6 months, my manager at the time saw my technical development and aptitude for customer service & our product, and invited me to become a sales rep (which was ultimately my goal - to go into enterprise software sales).

I have become one of the premier reps in the entire company since and have received countless opportunities internally to push my career forward. The companies I work with and the deals that I work.. if I was working for one of the more late stage, traditional software companies - I would not be able to be at this level until at least 10-15 years into my career. I receive an immense amount of support, both from a sales but also a personal development perspective from the highest levels of our management - including our board of directors and CEO.

I am now 6 years out from when I graduated, and this year I will very likely have my first $200,000.00 W2 this year, and this will be my 4th year of six-figure income. This does not include the overall lucrative benefits package that I also receive ($4,500.00 contributed to my 401K each year provided I max my contribution, fully paid for health care and $100/mo health care for my husband, $100/mo toward my cell phone bill - in addition to 4 full weeks of vacation each year). I, of course, could probably find a more lucrative (on paper) opportunity in the Silicon Valley or east coast, but I'll be honest.. I snap out of that very quickly once I pay my mortgage for our home ($888/mo). Try finding that there! :)

Never underestimate the opportunities presented in front of you, especially in tech!

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Re: What advice to give 21 year old?

Post by Watty » Mon Jul 17, 2017 12:19 pm

TomatoTomahto wrote:I have 2 other kids who have some skills in a CSish area, but they don't have the focus that this 21-year old does, nor the particular skills that are in such high demand, and I'm well aware that their trajectories will be different. Would that it weren't so, but c'est la vie.
You never know, it could be like the tortoise and the hare, where one of the other kids has a better long term career. In some circles computer people can be considered "old" at 35. That doesn't mean that there won't be plenty of good jobs when for him then, it is just that the stellar salaries of having the latest hot technical skill could be behind him when he is 40.

It sounds like he might be in Cyber Security. One of my sons friends does that and one downside of the position is that you are on call often 24/7 and that gets old after a while even though it pays very well.

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Re: What advice to give 21 year old?

Post by stoptothink » Mon Jul 17, 2017 1:24 pm

Watty wrote:
TomatoTomahto wrote:I have 2 other kids who have some skills in a CSish area, but they don't have the focus that this 21-year old does, nor the particular skills that are in such high demand, and I'm well aware that their trajectories will be different. Would that it weren't so, but c'est la vie.
You never know, it could be like the tortoise and the hare, where one of the other kids has a better long term career. In some circles computer people can be considered "old" at 35. That doesn't mean that there won't be plenty of good jobs when for him then, it is just that the stellar salaries of having the latest hot technical skill could be behind him when he is 40.

It sounds like he might be in Cyber Security. One of my sons friends does that and one downside of the position is that you are on call often 24/7 and that gets old after a while even though it pays very well.
A local school has a prestigious cyber security and penetration testing program, and one of the best cyber security competition teams in the country http://universe.byu.edu/2017/05/27/byu- ... petition1/. Almost all of the tech department at my wife's data security firm comes from this program, and these kids are making a good living, but all start off making quite a bit less than $100k/yr. Nobody around here in cyber security, at least the technical side, makes close to the numbers Tomato is talking about, then again, the "Silicon Slopes" are not Bay Area or NYC. I've got to believe he is doing something in finance, as was mentioned earlier a few times.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Mon Jul 17, 2017 1:30 pm

stoptothink wrote:I've got to believe he is doing something in finance, as was mentioned earlier a few times.
That is sufficiently generic that I'm allowed to say: his internships last summer and this summer have been with firms in finance.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Mon Jul 17, 2017 1:44 pm

understandingJH wrote:
A new software engineer at a technology company will easily make in excess of $150K per year, not counting benefits and retirement plan contributions and matching, which will, add another $20 k or more.
Only for HCOL areas I suppose. In fact, in my LCOL area, $130k seems to be attainable only for the top 5% of experienced software engineers. Nothing "easily" at all to get to $150k here. Above $150k and you'd likely need to have management responsibilities. Entry level grads typically make around $60-70k here.
My family (wife, me, son) have always been in HCOL areas for employment in tech, so what you say might very well be the case in Lower COL areas. Still, I'm just not sure that location matters as much any more; my wife has employees all over the world and US, some of them in lower COL areas, and they mostly make what the job is worth, regardless of location. I guess it does matter if their presence is mostly felt via teleconference rather than in person, or flying in for the week, but I don't think their pay is proportional to the COL difference.

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Re: What advice to give 21 year old?

Post by TomatoTomahto » Mon Jul 17, 2017 1:47 pm

wfaubert11 wrote:Never underestimate the opportunities presented in front of you, especially in tech!
Are you kidding? I made a very good living in tech; my first programs were on punch cards. I'm way dumber than my wife and kids, but I still managed to do well in the tech racket. Tech gets a lot of thanks from me; if I had been born much earlier, I don't know what I would have wound up as :oops:

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Re: What advice to give 21 year old?

Post by bigred77 » Mon Jul 17, 2017 1:48 pm

My advice is simply to make a career in the space where you get paid based on 2 and 20 and then invest your personal assets in a boglehead portfolio :D

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Re: What advice to give 21 year old?

Post by 4nwestsaylng » Mon Jul 17, 2017 3:47 pm

TomatoTomahto wrote:
4nwestsaylng wrote: You don't "finish medical school" and go out to work. When you finish medical school, you are eight years into your education. Then, you go on to something called an internship (80 hour weeks) for a year, then you do another four to six years of residency training before you get to go out and practice. So we are talking 13-15 years of training post high school before you go in practice. We are talking loans of 250-300K during that process, plus loss of those years for earning any income or starting a 401k, and with the loans to pay off, that accumulation is years away.

But then they get to make that "darn good living" of $120-225K pre tax.
And yet, for all that, there is no shortage of applicants, with roughly 40% gaining admission to medical school. Maybe it's a calling, after all.

It may be a "calling",maybe we should all chip in and forgive their loans:)

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Re: What advice to give 21 year old?

Post by triceratop » Mon Jul 17, 2017 5:32 pm

Hi TomatoTomahto,
I am slightly older than your son, but went the (Ivy+) grad school route instead of tech. I will say it is nice to know that one's salary potential is still quite lucrative and unimpinged, but that one can have friends without worrying about money or how wealthy other people think you are. I would encourage your son to find hobbies that have much less reliance on material possessions, as there the disparities in finances will be less apparent.

Sounds like a bright kid, I'm sure he would be interesting to know. I don't have many friends interested in personal finance, let alone finance proper. Congrats.
TomatoTomahto wrote:
4nwestsaying wrote:And with those opportunities, we still see equally or even brighter students going to med school, borrowing 250K, then doing 5-6 years residency, coming out at over age 30, no savings, to start at $180-225K for family practice or internal medicine, maybe 350K surgical. More and more they are noticing their peers from undergrad days moving on with their lives financially.

Fortunately for the rest of us, they don't notice until they are finishing their training and still renting an apartment. How long that will last, who knows.
It is a lot of years of debt and training to come out and work as employee docs for a hospital owned medical group and take their orders.
Swings and roundabouts. For many generations, doctors did better financially than many "equally smart kids." They still do better than most artists, most NGO workers, most accountants, even most computer types.

Is the world wise to be throwing money at software developers in quantities that it previously threw at doctors? The question is above my pay grade. I will say that, in my experience within my family, half of the doctors went into it for the money, the other half (mostly in Europe) felt drawn to it as a calling. I know which half I'd want to see as a patient.

Re "equally or even brighter students going to med school": I'm not sure that there is a single dimension along which you can place the intelligence of med students, artists, mathematicians, etc.
This last point about requiring multiple axes of intelligence is true. I may be a mathematician/computer science person (grad student slave, more like!), but I tried biology and was quite poor at visualizing the systems and understanding the concepts. And art, I would be a complete disaster. A person can be mediocre or worse in one field and standout in another.
And yet, for all that, there is no shortage of applicants, with roughly 40% gaining admission to medical school. Maybe it's a calling, after all.
It is also true that in some cultures there is a premium placed on being a professional such as a doctor or a lawyer, which can inflate the interest beyond what would appear rational based simply on investment in human capital vs. expected lifetime payout (salary). Speaking purely personally I can say that I have been looked down upon by parents of a close friend from a different culture because they say math/science research, proper, as less secure and otherwise less-than, compared to being a physician. I also knew several people in college who were in the 60%, and rather than pursue other career opportunities which may have had similar risk/reward, family pressures pushed them to keep trying until that path worked out. So, we may see a bit of that involved here.
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Re: What advice to give 21 year old?

Post by mikefixac » Mon Jul 17, 2017 9:13 pm

Your human capital so far exceeds your investment assets that a bond position would be decimal dust.
Now there's a man who believes in his son. Wonderful quote.

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Re: What advice to give 21 year old?

Post by benign_user » Sun Jul 23, 2017 10:27 am

I'm not sure how people are comparing doctors and software engineers incomes. One barely breaks 6 figures while the other (especially with dual income where most doctors marry their own) can break 7 figures.

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Re: What advice to give 21 year old?

Post by stoptothink » Sun Jul 23, 2017 10:56 am

benign_user wrote:I'm not sure how people are comparing doctors and software engineers incomes. One barely breaks 6 figures while the other (especially with dual income where most doctors marry their own) can break 7 figures.
Because OP's son is likely going into a specialized field, in a VHCOL area, and is a superstar and another poster suggested that medicine is losing its appeal to the best and brightest because it doesn't pay enough (when compared to software engineering/development). The numbers being discussed in this thread certainly aren't the norm, at least in my experience and my area.

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Re: What advice to give 21 year old?

Post by itstoomuch » Sun Jul 23, 2017 12:24 pm

Is it possible that he is just trying to "butter you up" :annoyed :oops:
I think ours does.
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Re: What advice to give 21 year old?

Post by TomatoTomahto » Sun Jul 23, 2017 1:13 pm

itstoomuch wrote:Is it possible that he is just trying to "butter you up" :annoyed :oops:
I think ours does.
Haha, yeah maybe just a little bit, but I don't think very much. :D

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Re: What advice to give 21 year old?

Post by itstoomuch » Mon Jul 24, 2017 11:48 am

From seeing the success of our son, and the failure of our careers;
Networking and building good relationships, early on, is more important than The job and Any financial strategies.
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