401k and investments

It is good to see other people around my age considering their futures, financially speaking. Honestly, I am not expecting any kind of government help when I get to retirement age, which I am sure the minimum average will increase a few by a years, and you should not either. Period. I personally do not have a 401K or any investments, but I am leaning towards investing in stocks.

Either way, 401K savings or not, a percentage of each paycheck should be put into a savings account. I have a problem burning holes in my pockets, but I have gotten better about it.

Also another great thing to start doing is building your credit. I have had a credit card since I was 18 and now my credit score is ballin as shit. The key is making small purchases on it, maybe once or twice a month, and paying the balance in FULL every time. If you do not and you keep spending, interest will catch up with you and put you in a world of hurt.

 

Going through a divorce right now (no kids involved). I made sure I keep my investment accounts (401k, R-IRA, after tax) in the process since I was the one maxing them out and/or building them up year over year and handled all the financial.

Gonna give her $50k out of home equity, car and the furniture. I'm moving to a cheaper area so I can buy the same house for 50k less, car loses value every mile, furniture was not much anyway.

Sorry had to vent still taking a hit in net worth, but overall my cost of living will be significant lower going forward...will close that gap in ~3 years

 

C'mon stock market. Enough of the losses already. Why u no go up?

 

You had me and then you lost me. It seemed like you were displaying the benefit of using a traditional 401k for the tax benefits as opposed to a roth 401k, then said you used a roth 401k for the benefits? Can you explain this to me? I have much research to do which will take place at a much later date (Classes ) but I really want to take advantage of my low age and high assets.

I know, I'm losing everything.

 

Invest in Blackberry. Mark my words, their stocks prices will at least double before Christmas holidays.

I'm also thinking about investing in some penny stocks, specifically the medical marijuana stocks.

 

What gives you such confidence in Blackberry, if you don't mind?

 

New hardware and software. Apple has some pretty serious security risks (I own several Apple products. DO NOT TURN THIS INTO A APPLE HATE THREAD).

The new Passport phone (set to be released at the end of the year I believe) they have developed is pretty cool. Blackberry has designed its own security software that is supposed to be the best on the market. Several people carry 2 cell phones, one for work and a personal one, and the Passport allows the phone to have 2 separate numbers on the same phone. The accounts are billed separately if that is how you want it set up, or billed together. The opted to use the Amazon marketplace instead of the Google Play store.

Blackberry is going to target the corporate and government institutions, as usual.

 

Okay, let me watch them for a few days, and why not, I'll bite. I have a little to gamble with.

 

I've been tracking Blackberry for a while...and while I agree with your analysis, unfortunately the market isn't working that way right now. The problem with the current stock market is that everyone is trading on fear and speculation, so good companies with solid financials who are making positive decisions are getting punished by speculative traders.

Also, to speak to the Traditional/Roth debate. Generally, young people should invest in a Roth (in addition to traditional tax-deferred retirement accounts). Do you lose some in taxes now? Yes. BUT - both your contributions AND your earnings are entirely tax free in the future. In the example quoted above, if you do the math, the numbers end up being exactly the same pre and post tax ($1,027,000 in final balance assuming a 10% return) because there is an assumption of no increase in income, contribution, or tax rate. Obviously if you don't change any of those assumptions, you're simply moving numbers around, but you end up at the same spot. However, we all know that never happens in finance.

But, I would think that most of us would expect that our salaries would rise as we age. As that happens, our tax rate also rises. Additionally, do we really think tax rates are going to decline in the future? I don't. As a result, taking your tax hit now at a (most likely) lower rate is a very smart move. And, you shelter your entire earnings base from any taxes. Obviously everyone's situation is different, but IN GENERAL, young people should be investing in after-tax retirement plans for at least a portion of their retirement savings.

 

Are we allowed to disclose personal information such as income/status/situation here or is it frowned upon/against rules?

 

I don't see how anyone can keep you from releasing your own information, if you do so willingly. Are you wanting advice based on your income and age?

 

Everyone trades on fear and/or speculation whether they want to admit that or not. Investments in general are a risk, but obviously the risk factors are not valued the same but that's another story.

People who blindly trade either have brokers that are moving their money around for them, or have no idea what they are actually doing, hinting, in my opinion, why the current numbers look skewed. There is plenty of information about companies, especially the public ones because they are required by law to report more financial filings to the SEC than a private company. Private companies are valued at a standard discounted rate of 25% because of the increased risk factor. It is up to the consumer to do their own research, and sadly most people no longer want to educate themselves.

This does not apply to personal retirement accounts, but like you said taking on debt is a great tax shield. It allows you to invest more money back into the company and you pay less taxes.

 

Don't disagree with anything you said, which is why I generally choose to invest in funds which focus on a particular sector, cap size, or the like. I'm not good enough at psychology to pick individual stocks generally. I do have some play money to speculate with, but I don't trust my financial wealth with those decisions.

 

Yes I am

Where was debt mentioned? I couldn't find it in what you quoted.

 

Speculation, its all speculation up in this hizzy.

 

I think he was assuming that I was talking about companies taking on debt when I said "making positive decisions" or something like that, which would be a correct assumption. We are in an economy where a smart business is trying to lock in cheap, long-term financing due to the interest rate environment, before market rates go up. Debt is a GREAT tool if you know how to use it.

If you're nervous about it, you can give us your age and a general, rounded salary. I'm sure it will hold true. That being said, I will try and give you my perspective, but I AM NOT A CERTIFIED FINANCIAL PLANNER and nothing I or anyone else tells you on the internet should be taken as gold. Use the information to do your own research sure, but never just run with what anyone tells you. That being said, I'd be happy to help where I can.

 

I'm not nervous at all! I just don't want to draw a mod's negative attention. I understand no one here is my financial planner and I won't be suing anybody if my investments go south from advice.

Okay, so I have a pretty specific situation, and I just want to get some advice from experienced people and get a head start while I'm young.

First of all, I'm in a great situation. I'm 19, (Almost 20, guess I'm not that young anymore) have a full ride scholarship to a good engineering school and I'm majoring in Mechanical Engineering. Each semester I receive $1200 for supplies (twice/year and 90% of it goes in my pocket) and each summer I work an internship with chemical companies. The amount of money I earn each summer varies. I consider myself very well disciplined with money and I have no problem not blowing it.

Summer 2014: Made around $12,000 before taxes
Summer 2015 & 2016: Will make anywhere from $12,000-$18,000 depending on which offers I get

After graduation: Should start at around $70,000-$90,000/year.

I also had $5,000 in extraneous scholarships that went straight to an Edward Jones account. That was a mistake and as soon as I recover my investment fees I'm withdrawing and investing with other low fee companies.

I could contribute $5,500/year to an IRA roth to reach the cap, but that wouldn't leave a lot of room for other investments/savings since I only work in the summer. I currently have $8500(+100/month) in my EJ account, and $2400 in my scottrade. Both are now less than I started with, but I haven't sold them so the loss is not realized.

So what would you all do if you were in my situation? Start up a Roth? 401k? Invest privately? A mixture of the three? I don't have a problem saving most of what I make, although I only have 69% of my paycheck to do what I please. So I could save/invest around 55%-60% of my earnings, leaving the other 9% for utilities and discretionary spending.

Thanks for reading and I appreciate all of your advice thus far.

 

It is hard. I've been following a few different companies. For people wanting to learn more about stocks, I suggest creating an account on Seeking Alpha. That is a great jumping off point. I wish I had some money to throw at stocks, but I use my spare cash on my 4Runner

I was assuming that you were talking about companies since you talked a little about tax shelters. Debt is a small companies best friend, but a sinking fund should be created as well along with a few other things. It is pretty risky, but if you know how to manage cash then debit is awesome.

 

Back to BlackBerry, here is their cash flow statement for the past 3 years. Notice the amount of money that has been invested in research and development in these years. They have taken on a lot of debt, but that is because they are using the loans they receive to invest them back into the company.

http://finance.yahoo.com/q/cf?s=BBRY+Cash+Flow&annual

 

Hey Devin, just my opinion...

I would first save up 6 months salary as a cushion.

Do you work? If so, do they match 401(k)? If so, I would contribute the max they will match.

Then I would do the $5,500/year to a Roth IRA.

Then, I would save for a house down payment.

If anything left over, either contribute more to your 401(k), a different type of investment, more cash, or other physical assets such as PM.