Investing and retirement advice for a fairly recent college graduate

[ashaw]

Hello all, I am new to this forum, so I apologize if this should be in the Case Study section, however I didn't feel I have a super long story to summarize. I am seeking advice on investing and how to start out. I will get into that more below. But first...

Background:
I am a fairly recent college graduate (BA, September 2018). I am 24 years old. I have been working full time at law firms just to see if the legal field is right for me. Almost a year into working full time now, I've decided to pursue another route and much stronger passion/interests. That means I'll be leaving to a different city soon across the country and won't be living at home anymore (I've been living at home for about 4 months, the other months I stayed near my collegetown for a little while working). By the time I move out in a few months from now, I'll have saved close to approximately 8k. My future potential job will have a salary of approximately 45k, maybe more but that's highly unlikely.

Investing inquiry:
I have read a bit of The Intelligent Investor by Benjamin Graham (quite dry so it'll take a while!) and may buy A Random Walk On Wall Street as well to get more insight. I've also researched online and asked my brother for advice/questions (he's a finance guy). I'm currently investing a few hundred in one stock right now (that my brother advised me of) but want to really start getting into it. By that I mean I think I want to start putting money into an index like VTI, or S&P 500 (but that's very expensive right now for my income). My idea behind this is that it's a good route for a beginner to get his/her foot in the door, sorta speak while I continue research/learning over the next year or so. What do you think about this? If it's a good idea, which one should I start building in and why? After this year I want to invest more elsewhere, like in ETFs. 
I haven't started a 401k through my work yet as I feel I don't make enough right now to make it worth it to put towards that, plus I'll be leaving jobs shortly. With that, another question I have is when should I start a Roth IRA and/or Roth 401k? How much should I put into retirement account/s if my salary will be between 42k to roughly 60k over the next two or three years? Retirement planning regarding 401k and similar things is more new to me than investing so any advice here is very much appreciated.

Overall, my main goal right now is to get a solid plan for my financial future and to start investing.

That's all for now but I will likely have more questions.

Thanks,

- Allan

[frugaldrummer]

Yes yes yes on the Roth. Since that money grows and can be taken out tax free, and since you are in a low tax bracket now and for the near future, this is the ideal time of life  to fund a Roth.

[dougstash]

I highly recommend reading “the simple path to wealth” by JL Collins. It’s a very informative book that will not bore you to death and teaches everything you need to know about how to invest and what kind of account you should be using.   I’m sure many people here will second that.

You should start 401k contributions.  Many people around our age have a misconception about them. They think “I’m only going to work here for x amount of time so I’ll just wait. The truth is you should contribute anyway. The money you contribute is not stuck with that job or employer and when you leave you can easily through a few clicks or a phone call roll over all that money (plus any matches) into an IRA without any penalty or taxes owed. Contributions also will lower your taxes due. Even if you feel you earn too little to put money in, you should at least contribute enough to get the full match.   As far as how much you “should” save that depends. Most “experts” advise to save 10-15% to retire comfortably by the age of 65 when starting at your age. If you save more than you will have reduced your needs as well as creating more money to invest... kickstarting the power of compounding. 

In short.

1. The more you save: the wealthier you become. And faster
2. Contribute to your 401k regardless of how perminant your job is. You will thank yourself greatly later
3. Choose index funds in those accounts. Most will offer at least an s&p500 fund.

As far as Roth vs traditional that’s up to you. If you choose the Roth you will get no tax break for contributions but you will get tax free growth and withdrawals. If you choose the traditional than you can deduct that from your taxes now, get tax free growth but taxes will be owed on withdrawals.   Your pick

[chemistk]

Have you read this sticky post yet? No? Read it! Yes? read it again!

https://forum.mrmoneymustache.com/investor-alley/investment-order/

MDM does an absurdly excellent job of keeping everything in his resources up to date. After you read this, and consider it for a while, then definitely also recomment JLCollins (read the whole blog if you can!).

Just remember, every day that passes (especially when you're young/early in the workforce) your money works just a fraction less hard for you than the previous day.