Author Topic: One year in and still no idea what I am doing!  (Read 2411 times)

ffaras

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One year in and still no idea what I am doing!
« on: September 06, 2012, 11:03:47 AM »
Hi all,

So it's been a year since graduation (grad-school on the east coast) and I have been working happily since last summer in the Pacific Northwest.

My only debt at the moment is the loan I took out for grad school from my dad which I have been paying off steadily since graduation and should be finished by mid-next year. The only major expense, at this moment, is the rent/internet/electricity which is about 15% of my after-taxes pay (living with a housemate helps). 35% goes to my loans, 35% to savings and the rest for other monthly expenses.

The problem is that I have absolutely *no idea* as to what to do with my savings, which are currently just sitting around in my bank account. The situation has gotten so bad that I have ~22K(savings) from this past year with another 10K in stocks which were part of my joining bonus. With an added bonus of 10K for performance and a 11% raise coming in this month I feel like I have never been at more of a loss with regards to what to do. Someone suggested opening a 401K and having my employer match(50%) my contributions but I am not a US citizen and don't plan to stick around(as of now) for long enough to warrant a green card/citizenship so I am not sure if that is the right way to go.

I know this question is rather broad in scope but every little bit of advice helps. Let me know if you need any further information!

Thanks.

velocistar237

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Re: One year in and still no idea what I am doing!
« Reply #1 on: September 06, 2012, 11:30:55 AM »
Do the match. You put in 10, they put in 5, you pay 1.5 in penalty for early withdrawal (10%), and it's still 3.5 of free money.

Sounds like you need to go read an MMM-recommended investment book.

manchops

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Re: One year in and still no idea what I am doing!
« Reply #2 on: September 06, 2012, 02:26:31 PM »
I would personally pay off the loan from the parents. I'm assuming he's not charging you interest (good for you, bad for him), so he's effectively taking opportunity cost equal to whatever he'd be investing it in ie: he's clearly losing money on the deal.

Beyond that, I'd vote for contribute max to your 401k (as much as they'll match), as velocistar237 suggests. The rest goes into an after tax investment account (Vanguard, for me) in which you purchase based on your preferred asset allocation. Mine is 80/20 stocks/bonds.

Assuming 20,000USD to invest:


VBINX (60/40 stocks/bonds): 10000
VTSMX (100% stocks): 10000

Works out to:

10000 * .6 + 10000 = 16000 stocks
10000 * .4 = 4000 bonds

which is right at 80/20. VBINX also auto-balances for you, so you have less to worry about on a day-to-day basis.

starbuck

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Re: One year in and still no idea what I am doing!
« Reply #3 on: September 06, 2012, 04:08:39 PM »

Assuming 20,000USD to invest:


VBINX (60/40 stocks/bonds): 10000
VTSMX (100% stocks): 10000

Works out to:

10000 * .6 + 10000 = 16000 stocks
10000 * .4 = 4000 bonds

which is right at 80/20. VBINX also auto-balances for you, so you have less to worry about on a day-to-day basis.


Vanguard also has what they call a LifeStrategy Growth Fund (VASGX) that has an automatic allocation of 80% stocks/20% bonds if you're looking for the simplest option.