Soon-To-Be College Grad -- Help??

**snafu** · 12-25-2011, 09:36 PM

Congratulations for completing your program and being smart enough to know you need a plan. You've not offered much information other than you've gotten by without amassing a mountain of debt which is wonderful. Are you working? Are you living at home? What are your goals? I suggest you read some threads to understand a few basics smart and not so smart money management. Basic 1st step: divide income into 3 categories 1. 20% savings, 2. 50% needs [rent, food, transportation, 3. 30% wants [consumer stuff].

**Kooshiball** · 12-25-2011, 10:11 PM

I agree with snafu about goal. Do you have a goal in mind? I would recommend thinking what you want. The reason I am saying this is because depending on what kind of goal you have, your strategy will be totally different.

As to the investment, before putting the any money in any assets, you should study about investment. Books or audio programs regarding to investment are available in any book store or online.

I also agree with snafu that you should explore the online forum like this. You can find many experience (both good and bad one) and you can learn from it by asking questions. There are many other online forums like this so you should explore some and join the forum.

That's my two sents.

Good luck!

**jteezie** · 12-25-2011, 11:39 PM

Wow. Such a clean slate. There's so much that can be said, but to focus on the save/invest question, it is quite straightforward - at a minimum invest enough to get your company's full ROTH 401K match. If a Roth 401K isn't available, then do the 401K (difference is in tax treatment, Roth is more beneficial for your age). Put in more if you have the income to spare and can maintain a cheaper college lifestyle for a while. The extra savings at your age works in your favor (look up compound interest - pretty much look at investment growth as geometric so the more time = larger returns).

In short:
Once you invest in the 401k, you need to pick an investment allocation. Your company will likely only offer a handful of broad options (less than 10). 2 really basic options are 1) put 100% into a target retirement fund like "target retirement 2055" or 2) pick 65% domestic equity (i.e. S&P500 or Russell 2000), 35% international investments (i.e. International Index). (this is a fairly ideal risk/reward ratio).

Longer answer:
Avg job search out of college is 8 months, so you'll have a lot of time to do your personal finance research. As an engineer, it might be shorter for you. However, you should focus on figuring out what you really want to do and where you want to live. These factors are more important than just earning a paycheck, though it may take longer to find a job.

Start developing your credit. It will be important later in life when and if you want to buy a house... even if you want to rent an apartment because most places do credit checks. You may have to ask your parents to add you to their card if you want a start building credit immediately. There are slower approaches, but Banks usually "invest" in college grads by giving them cards on the hopes of developing customer loyalty and longer term income from potentially higher income customers.

After setting up your 401k, consider also opening up a Roth IRA, which works the same way as a 401k except it's self managed which gives you more investment options and flexibility because it's not tied to your employer. With more flexibility can find mutual funds or ETF investments with lower expenses, which contributes to better returns in the long run.

Good luck.

**photo** · 12-26-2011, 03:12 PM

Retirement and general savings are your two large pots.

For retirement, very generally, there are probably two avenues for you at this time. First is a 401(k) plan if your future employer is a private company. Usually, whatever amount you have taken out of your paycheck will be matched by the employer, and of course, there are all kinds of variations and rules. Sometimes an employer will match 1/2 of what you pay. Sometimes the company will match your portion only after you've worked at the company for a year. For most career positions, either with the government or private industry, there will be some kind of retirement plan offered to you.

The second kind of retirement savings will be an IRA (Individual Retirement Account). At this time, you can contribute up to $5,000 a year to it. A traditional IRA may be tax-deductible. A Roth IRA is not tax-deductible; however, when you do eventually withdraw the money in retirement, the current tax laws states that you will not be taxed on the withdrawal or any of its earnings.

Your general savings is probably best begun in a bank or credit union savings account, which at this time, gives a very low return. However, it is safe, up to $250,000 in one location. You will always want at least 6 months' salary liquid at any time for all kinds of expenses that you never imagined. After your fund is built up, then you can begin to make longer-term investments, such as stocks or bonds. Where you make these investments is a subject of long debate, even among professionals! That's when you need to read a guide on the basics of investing.

**SeanH** · 12-26-2011, 08:24 PM

I think this was asked already, but I think your biggest goal is just to nail down a job that supports your needs and offers growth and experience. All of the above is gravy.

I'm essentially a biologist for an engineering firm, and when I helped do recruiting at an engineering career fair I was told there was the main pile and a priority pile. What goes in the priority pile I asked? People who've already interned/worked at an engineering firm/oil company/nuclear power plant/something awesome. I hope you've taken any summer opportunity that has come your way to build career experience. Additionally, whenever possible resumes should be specifically customized for the position.

Soon-To-Be College Grad -- Help??