My own Investing Situation

[nannerb]

Hi,

I’ve just recently registered here but I have lurked for awhile soaking up information from what looks to be very informed opinions around here. I know there are other topics started regarding beginning investing but I wanted to receive input on my specific situation.

I will try to give as much relevant information as I can think of. I am 20 years old. I live at home with my parents because I am going to a local community college right now. Next fall I will be going to Washington State University planning to get my bachelor’s degree in accounting. I have earned about 10K from my job up until this point this year for about 700-800 per month. Next year I plan on getting a work study job and at this point I don’t know how much I will be earning from that.

My current expenses are each month about $100 for insurance, 25 for internet, about 30 for gas, and 100 for entertainment/food/other. No credit card as well as I don't see a need to purchase something unless I have the money to do so. I don’t pay rent to my parents even though I probably should. My family received an inheritance from my grandmother that will help pay for my 2 years at WSU, so I don’t think I will have to take out any loans and I’ll try to get some scholarships.

I want to start up a ROTH IRA since I believe I will be in a higher tax bracket later in life. I highly doubt I will be making more than the max allowed to contribute to a ROTH when I am at my money making peak. As far as investing, I don’t want to have to keep a close eye on everything at this point in my life. When I get older I may want to get more in depth with my investment. I think I would check on my investment each month or so. I would be able to put 100 to 150 into my account now easily and possibly more. I have been eyeing the target retirement 2050 fund at Vanguard even though I will be retiring closer to 2055, so I believe I will shift my investment over to the 2055 fund when that comes out to increase the asset allocation towards stocks.

I have 16k in an online savings account at HSBC and 5500 at Wells Fargo which I’m moving to a local credit union at the start of the year since they have a really good checking account rate as opposed to the measly WF rate. From doing questionnaires I’ve found my asset allocation to be in the ballpark of 80-20 to 90-10 stocks to bonds.

So finally my question would be would a target fund be good for me since I don’t want to track multiple funds at once and try to come up with a fund mix at this point in my life.

Thank you in advance for reading this.

[maat55]

Yes, a target funds is a good place to start until you are more informed.

[Goldy1]

I am in my 30's and feel more secure with my the target retirement date fund myself.

[jIM_Ohio]

First, your education is a better investment than the Roth now.

The Roth limit is 160k now- you think your field does not offer that salary now?

I believe I will be in a higher tax bracket later in life. I highly doubt I will be making more than the max allowed to contribute to a ROTH when I am at my money making peak.

You are 10 or 15 percent tax bracket now... if you don't think 160k is the cards for you income wise, plan for 15-20 percent for retirement.

Can you find a target fund at 80-20 now? How long will it stay 80-20?

You could do 80-20 with 3 mutual funds (total US market, total foreign market and total bond market). I doubt many target funds are 80-20 for 40+ years to retirement.

[minnie1928]

I think a target fund would be a great idea.

On a slightly related note, I also have a bachelor's degree in Accounting. If you can, try and get a related minor (mine is Finance & Banking). When I got mine I only needed one extra course outside of my required classes. I think that helps distinguish you from the rest of the applicants when you list that on your resume. Even better would be a masters, but that's obviously more time and money. The minor was pretty much a no brainer for me. Also, anything you can get experience with regarding Sarbanes Oxley will make you very valuable in the workforce.

Good luck and congrats! You sound like you have a great plan already started!

[aurielle]

never mind

[Goldy1]

This is what happened to me. I have read dozens of finance books, and had some pages open to sections on assett allocation. I was sitting online in front mf my husband's 401K page. I was trying to mimick a suggested allocation for his risk tolerance and his age group.
I was looking at the funds his plan offered and picking percentages of the account to invest them in. I was confused b/c I could spew off what a 37 y/o moderate risk guy should have but I couldn't tell what funds were mid / small cap etc. in some cases. It as unclear.

I went with target date fund so they can do it.

[maat55]

I think a target fund would be a great idea.

On a slightly related note, I also have a bachelor's degree in Accounting. If you can, try and get a related minor (mine is Finance & Banking). When I got mine I only needed one extra course outside of my required classes. I think that helps distinguish you from the rest of the applicants when you list that on your resume. Even better would be a masters, but that's obviously more time and money. The minor was pretty much a no brainer for me. Also, anything you can get experience with regarding Sarbanes Oxley will make you very valuable in the workforce.

Good luck and congrats! You sound like you have a great plan already started!

My son-in-law will finish his bachelor in Finance this May, he will only have to take two classes to get a minor in Accounting also. A little more goes a long way.