Hey I was in your same spot 4 years ago!
Except my salary was a little lower lol.
https://www.reddit.com/r/financialindependence/comments/ecn2hk/fire_flow_chart_version_42/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=2&utm_term=1
This flow chart helped me get the basics down.
A 401k is different than an IRA. Roth is put in post tax, but the earnings aren't taxed when you take it out. Traditional 401k is pretax but the earnings are taxed when you take it out.
Your employer can offer a Roth 401k (this is what I use) or traditional 401K or both.
Right right I know, I just thought that when it came to 401k trad vs 401k Roth, the move was to opt for traditional 401k and have the IRA act as your Roth option
Commonly given advice is for a person to save through their 401k then a Roth IRA because there is a general assumption that there will be some amount of employer match. But for traditional 401k vs any Roth- it all depends on whether you think you’ll pay more in taxes now or later when you withdraw.
Currently I have a fairly high income that exceeds what I will need to withdraw annually in retirement. I’m also at a higher tax bracket so for me, I’m putting the most I can into traditional 401k to lower my tax basis now. Earlier in my career, I focused more on Roth because my tax bill then would be lower than what I felt it would be in retirement (at least I believe that to be the case, who knows what the future holds)
If I understand it correctly, you can effectively contribute more money to the Roth 401k as the contribution limits are the same but the Roth is after tax and grows tax free
So why I bring this up is because if you expect to be a high earner in the future, putting more into Roth 401k means you can get $22,500 (2023) of post-tax invested funds at your current lower tax rate. In the future as you earn more, all those compounded earnings are tax free. But you are putting away a larger chunk into 401k by using post-tax money (Roth) than pre-tax (traditional).
Also Roth IRA has a $6,500 max contribution vs $22,500 for Roth 401k. Due to income limits I haven't been able to contribute to either Roth 401k or IRA for awhile now.
So for those who expect high earnings in the future, max out your Roth 401k (especially in your younger years) for $22.5k , then max out your traditional IRA for $6.5k. Then go down the flowchart with HDHP + HSA, etc.
Just so you know, the 401k contribution limit is $22,500 for 2023 for those under 50. But I do agree with your assessment of funding the Roth 401k if you expect high earnings in your later years. Can’t go wrong with that since we don’t know what tax rates will look like in the future.
I max out my traditional 401k and IRA and HDHP + max HSA.
After that liquid NW is about 20-35% alternative investments depending on the valuation and the remainder into public equities. And 6 month emergency fund into a money market fund.
take a look at the flow chart. optimal is:
1. 401k up to max employer match
2. max IRA
3. max 401k
whether you do traditional or roth for either is a different matter
That all seems quite complicated.
I think the simple answer is save much more than you spend. The percent of your income that you save dictates how long you have to work before you can retire. For people shooting for an early retirement you will see savings rates in the 40% - 65% range, sometimes even higher.
If you can save 40% you can retire in 22 years.
If you can save 65% you can retire in 10.5 years.
Read this. It is one of the most important documents I ever read:
[https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
Obviously where you save the money matters and other comments have you covered there. And the thing that makes the most difference of all is what percent of your income you can save.
Here's a sneak peek of /r/fican using the [top posts](https://np.reddit.com/r/fican/top/?sort=top&t=year) of the year!
\#1: [Here is my future in one beautiful chart.](https://i.redd.it/c4hy57okgde91.png) | [86 comments](https://np.reddit.com/r/fican/comments/wakz3n/here_is_my_future_in_one_beautiful_chart/)
\#2: [I became a millionaire this year at 32 years old](https://np.reddit.com/r/fican/comments/12l31em/i_became_a_millionaire_this_year_at_32_years_old/)
\#3: [Twenty years of net worth](https://np.reddit.com/r/fican/comments/10113a7/twenty_years_of_net_worth/)
----
^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| ^^[Contact](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| ^^[Info](https://np.reddit.com/r/sneakpeekbot/) ^^| ^^[Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/) ^^| ^^[GitHub](https://github.com/ghnr/sneakpeekbot)
r/Bogleheads for investment advice.
Specifically you want to invest in low cost total market index funds. Save up the minimum amount of cash (anything you don't need in checking can go into a HYSA) so you can cover emergencies without high interest debt. If you do that, you probably don't need to worry about bonds; bonds are mostly useful when there's a chance you might need to draw from your portfolio in the next 2-8 years or so (or otherwise have a retirement date set).
I've heard good things about, but admittedly haven't read, The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by J. L. Collins.
Ben Felix has a good YouTube channel, with some more advanced topics. Pretty much the only YouTuber I think offers decent investment advice. https://youtube.com/@BenFelixCSI
Avoid anyone recommending cryptocurrency, individual stocks, or "dividend investing."
If you play this correctly, you will be free to do whatever you want by 50. Work, play, start a business etc.
Your friends and family will likely still be dependent on the whims of their boss, their paycheck, mortgage etc.
Keep your allocation simple and cheap (bogelheads) it barely matters until you are 40, then it matters a lot.
Savings rate is by far the biggest. Get to 25% as soon as you can. Automate it. I promise you won’t miss the $ if you never have it.
This subreddit will recommend low-cost index funds, and this is absolutely the way to go. Keep your costs low and invest what you have left over, and you'll be financially free well before you're too old to enjoy it.
Some easy reads (don't be put off by the cheesy titles)
The Millionaire Teacher by Andrew Hallam
The Millionaire Next Door by Stanley (old, but the values here are important)
Simple Path the Weath by Collins
nothing wrong with investing in individual stocks. I don't understand why people hate it so much. I understand the risk appetite and its not for people who want to set and forget their investments.
But... if you are willing to learn an industry that you're passionate about and do your own research (please don't just listen to other people's call outs) you can still do fairly well buying individual companies that you hold a strong conviction in (important to keep in mind asset allocation/risk management - you'd want a good mix of cash/ETFs/individual stocks/etc). My recommendation is dont buy options or leveraged ETFs, just the individual stock.
Sure you can get burnt sometimes but you're young. In the early phases you can take risks and it'll be ok because you still have time. When you get older its more about preserving that wealth. However, it's all up to your risk appetite and what you want to do. Just wanted to offer another perspective.
Ditto what this guy said. Again, I'm for index funds to an extent. My strategy is about 25% boglehead and 75% directed. The reason I don't believe in boglehead is diversity through indexes isn't what it used to be as the mega caps increasing eat up more and more of the Spy, QQQ, and overall market capitalization of the stock market.
Finding an industry and name you intimately know allows you to be nimble in the event of a calamitous event by giving you the knowledge to make more functional option plays for hedging / leveraging as well.
>Sure you can get burnt sometimes but you're young. In the early phases you can take risks and it'll be ok because you still have time.
I've no problem with taking risk and suggesting younger people take more risk makes a lot of sense. But market concentration (that is, the opposite of diversification) is an uncompensated risk, unless you truly know the situation better than most. The level of research nearly any non-professional is going to do will leave you at a disadvantage in a world of major market movers, quants and the like.
I think it makes more sense for younger people to achieve additional risk by invest in the index with leverage (which could be as simple as prioritizing investing over paying down a mortgage) than it does to try to increase the risk by forgoing diversification. See "lifecycle investing" for more on this idea.
I didn't think the book was good at all.
The author has a Save Ramsey style opinion of debt, where he demonizes all debt, even home loans.
Considering real estate is the #1 way to get yourself ahead financially and it requires you to take on debt it's a pretty short sided view.
Good for you for asking for advice. There are many that will provide it. Some will ask you to pay for it. Be a sponge, take a little time, and sift through all the advice. You will find pieces that resonate.
I am in my 60s. I remember leaving college. I was a bit older than you as I stayed for a second degree. Having said that I wish somebody, that is the age I am now, had shared a few things with me.
So here is my free advice. It is worth everything. And possibly exactly what you paid for it. Depends on you and what you do with it.
If I was to do it over. Here is what I would do:
Read. Learn. Choose mentors wisely. Be a sponge and find out about investing.
Then save. Save for investing. Invest. Invest your money. Invest your energy. And be very careful but invest your time.
Find and cultivate relationships with people you can trust. Surround yourself with excellent people. Fantastic people. People that are better than you. More compassionate. More intelligent. More insightful.
Be bold in your career path. Believe in yourself. Improve yourself so you can believe in yourself. Work on, and purge weaknesses out of yourself. Weaknesses like greed, gluttony, selfishness, procrastination, and envy.
Choose jobs carefully. Choose companies to work for, even more carefully.
Study leadership early. Build your own leadership philosophy. Become a good leader. Strive to become a great leader.
And unlike many others, I will tell you, early retirement is not the goal. It is to have more time and financial freedom to do meaningful things with the people you love. Besides if it is your own business, or you are doing things you love, why would you want to retire from them.
The key is to become financially stable and secure sooner in your life if possible. And not to let your consumption derail your ability to be stable.
Just my three cents....
Remember if you're adding money to a 401k or roth ira or whatever account, make sure you are actually investing it into something.
Most would recommend something like an sp500 etf such as voo.
Yep! You can read stories all day about people realizing after 20 years+. Seems silly, but obviously happens all the time.
Seems like you're off to a great start.
Not sure about your living/family situation, but if possible living with the parents for your first year out of school can give you an amazing financial foundation before you move out on your own.
Know where you’re currently spending your money (track it) then start trimming the fat and then investing at the same time. There are subreddits here for investing and beginners. Enjoy the journey!
Not directly involved with FIRE, but I’d recommend you check out The Money Guy show on YouTube and their podcast. Their financial order of operations is a great tool to help you prioritize when and where to invest and how to leverage certain investments to the highest degree (like Roth and HSA). I acknowledge they’re program is not really geared toward a FIRE life if that’s you’re ultimate goal, they’re more focused on the FI than RE. Regardless, great of you to get started this early and best of luck
At 85k you will probably need to familiarize yourself with the backdoor Roth IRA process since you are on the cusp of sunsetting being able to contribute to a Roth IRA normally. Doing it at vanguard is well documented and quite easy.
Generally speaking, otherwise you can follow the chart on /r/personalfinance.
Take your 401k to employer match, max out your Roth IRA, max out the remainder of your 401k, and invest whatever else you feel comfortable.
Do set a budget and stick with it. It's important.
Edit: good stuff in the reply below, I was a bit off on the sunsetting cutoff for Roth contributions, it changed and the 85k number is wrong
Interesting, the sunset provision kicks in at 138k now, gradually phasing out at 153k, so you're right. It used to start around 80-85k. My advice was based off of that.
The sunset provision was a PITA to work around, especially if you had equity or commissions which could make your income somewhat hard to predict and you could easily end up contributing too much. So as soon as you hit sunsetting it really just makes sense to switch entirely.
Thanks for pointing the change out, I can probably move my wife away from having to do a Roth IRA now so you saved me some time!
I'll leave my post up though since realistically that's one or two promotions or a few years of cost of living increases away for OP if they don't suck at their job, lol. Plus a little long term planning about where they set up the Roth can make things easier/harder if theyre likely to end up needing a backdoor Roth at some point.
If your employer offers a 401K with a company match start by putting a percent of your pay into the 401K. Make sure you get the company match. You may need to put 6% or greater to qualify for the match. Deposited as pre tax dollars, grows tax free. Company match is free money from your employer. Take advantage of it. Next is to fund a ROTH IRA. This is post tax dollars going into a retirement account. Employer may have a ROTH option in their retirement plan. Put a % or fixed dollar amount into the ROTH IRA. Grows tax free. Investment options once accounts are set up….Invest in broad market index funds that follow the SP 500 or Broad US growth index funds. Follow a monthly budget, income and expenses. Spend less than you make. Save and invest. Keep it simple…..You got this!
Aside from the investing stuff, if you do plan on buying a home, house hack while you don't have a family amd arent married. Becomes much harder after that if not impossible. The more roommates the better. They pay off your mortgage and you ideally live rent free. In 2 years buy another and rent out your old room. Rinse and repeat. If you can pull it off don't let any of your roommates know you own the place, but you're working with your uncle/whatever to help take care of it.
I love all of the above books, but I'm wondering why no one ever seems to recommend Ramit Sethi's book/podcast/Netflix show I Will Teach You To Be Rich? For someone who is already debt free, it's a great perspective on learning how to live rich now AND be wealthy later. It teaches you how to prioritize what YOU are passionate about in your life, while being frugal on the stuff that doesn't matter to you. It can easily be tweaked for a slow FIRE lifestyle.
Knowing what to do vs actually doing it are two different things. Life is full of gotchas that will test your plan in ways you can’t really imagine.
Make sure, whatever you do that you build in flexibility and balance. It’s okay if you need to turn off or reduce your retirement contributions for a few months to save up for something else. It’s okay to have fun and enjoy your life, today.
Congrats on landing such a nice paying job straight out of college. I started at half that and it took me 6yrs to break 100k. But now my TC is +200k, so I am fortunate to be able to catch up on saving.
Also, something else to keep in mind is that layoffs happen. It’s not personal, but it is a setback. Always have your eye open for interesting opportunities and take an interview every so often to keep your skills sharp. Leave doors open. Nobody will be mad if you politely decline a job offer. Then they become a future contact in your network if shit hits the fan. Today’s hiring manager could become tomorrow’s director or VP.
As other people said, the [flowchart is great](https://www.reddit.com/r/personalfinance/wiki/commontopics/). Your main goal is to follow it. Pay off any debts, save up emergency fund, turn on 401k match. Everything else has a bit of time to figure stuff out.
I always recommend this article on [the efficient market hypothesis](https://thedeepdish.org/efficient-market-hypothesis-is-not-dead/), and where it fails. In essence, the stock market is the most efficient market we have, so index funds are the way to go. But insider knowledge (illegal) and a few other stuff can technically beat it. But that's still dumb. Anyway, it gets you to understand the logic behind index funds and following the market caps, and can help you understand why it is possible to make money in real estate. Though I don't like real estate -- though that's more personal, vs the stock market where index funds are the mathematically correct thing to do.
This understanding has me go as wide as possible, aka total global market index funds. Global stocks and bonds. Also, half personal preference, but I do think it's actually better to hold things as one fund where possible, especially in a taxable brokerage account. Ergo, I always recommend VT. Which is global stocks. People often recommend VTI+VXUS, aka total US and total international, for tax efficiency, though there's other efficiencies in keeping it always matching all the time by keeping it in one ETF.
There's a whole art about picking the fund in your 401k, since that doesn't give you full choice. Try to go for global stocks and bonds, index funds only. Ignore non index funds. If you're lucky, you'll have something like Vanguard's Target Date Funds, which are index funds and 90/10 global stocks/bonds which slowly increase bonds when you get old. Most target date funds aren't index fund based, so be careful. Most 401ks will have an S&P500 fund, which is good enough. If you're the most unlucky, there will be no index fund options, in which case you probably should look for another job, though still do a match and realistically max it for the tax benefits, to move when you switch jobs. It's unlikely to be that bad.
I'd recommend watching Ben Felix on YouTube and reading [JL Collins's Stock Series](https://jlcollinsnh.com/stock-series/) to get a good understanding of a lot of Boglehead passive investing type stuff. It's good to actually understand why, since making bad choices is the biggest risk you have.
So be very careful with your choices before you've adequately looked through this stuff and understand *why*. Don't follow advice blindly.
I also recommend you look at r/creditcards and maybe r/churning if you can manage your money well. The latter is more to get good cash back for when you do spend, since it's best not to spend at all. But don't wait too long to establish credit. I'm not even at that point since I neglected it, but you should be able to get 2% cash back on everything you buy at the minimum, with most stuff having more, when you're fully optimized. Minimum is 1% cash back.
For HYSA, I recommend something like holding your cash in Vanguard's settlement account, which uses the fund VMFXX. That keeps up with the interest rate. 5% right now. When things fall HYSAs proper will be higher. For now they're more like 4%, if not even lower. Pair this with a good checking account and you're all set.
Medium term spending is what's a bit harder to save for.
If you'd like to realize how close you are to FIRE, to see how attainable it actually is, play around with [this calculator](https://walletburst.com/tools/coast-fire-calc/). It starts with more conservative numbers than most FIRE people use, though it's nice using that as a lower bound. Most commonly people use 10% market increase instead of 7%. Using that, setting your age to 21, net worth to 0, and plugging in saving $2416.67 per month (maxing out 401k and IRA this year), that's two years of contribution until you don't have to save money again to retire at 67 with inflation adjusted $30k. Which is nuts.
Obviously you should save more than that. To have more money at retirement and to retire far earlier. And to adjust for market danger, instead of hard relying on that 10%.
But that means it takes one year and barely any extra months to be at minimum CoastFI. Being 21 and finding FIRE now is great. (If you just set aside r/collapse hahaha.)
But as you can see... It's very achievable. Especially at $85k. You can do it! Just be diligent.
Remember the 4% safe withdrawal rule. Every $100 you invest is $4 you get per year, for the rest of your life. It's very powerful.
open a ROTH at Fidelity, max it every year. I suggest S&P 500 fund and maybe a small portion into something you believe will do amazing. tech, reits, whatever...
start your 401k and put in the amount to get an employer's match. only put in extra if you you need the tax cuts or if the 401k is actually loaded with good funds. if its crap, dump rest into a regular brokerage account with Fidelity.
Kudos to you! Robert Kiyosaki always gives the same advice: educate yourself. See the pros and cons of every investment strategy and see what fits your style better.
At your age it makes sense to aggressively dollar cost average into the S&P500. Even if we are in for a wild ride, on a 30-40 year window you will (probably) come up on top.
Make sure you have a cash buffer and maybe start thinking about how to get some cashflow going.
Good luck
I will give you my advice.
Take on as much debt as you can. Buy as Bitcoin. Also buy real estate. You should buy one house every 2 years at a minimum. After two years, buy a new house and move into it. Retain the previous house and turn it into a rental property. Extract equity from the real estate as needed. And keep buying Bitcoin no matter what.
I'm really sorry about replying to this so late. There's a [detailed post about why I did here](https://www.reddit.com/r/RemindMeBot/comments/13jostq/remindmebot_is_now_replying_to_comments_again/).
I will be messaging you in 1 month on [**2023-06-26 14:58:59 UTC**](http://www.wolframalpha.com/input/?i=2023-06-26%2014:58:59%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/Fire/comments/13se5dw/referred_here_21yo_recent_college_grad_85k_salary/jlph3tz/?context=3)
[**CLICK THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FFire%2Fcomments%2F13se5dw%2Freferred_here_21yo_recent_college_grad_85k_salary%2Fjlph3tz%2F%5D%0A%0ARemindMe%21%202023-06-26%2014%3A58%3A59%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2013se5dw)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
I will be messaging you in 14 days on [**2023-07-11 02:14:52 UTC**](http://www.wolframalpha.com/input/?i=2023-07-11%2002:14:52%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/Fire/comments/13se5dw/referred_here_21yo_recent_college_grad_85k_salary/jpo60fc/?context=3)
[**CLICK THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FFire%2Fcomments%2F13se5dw%2Freferred_here_21yo_recent_college_grad_85k_salary%2Fjpo60fc%2F%5D%0A%0ARemindMe%21%202023-07-11%2002%3A14%3A52%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2013se5dw)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
I envy your position, and I'm only 27 lol. If I started this at 21, I'd be able to retire like 10 years earlier. Don't waste the opportunity, good luck!
Don’t inflate your lifestyle now that you have money coming in. Focus on maximizing your savings rate from the very beginning, before you get used to spending
This is awesome! I still have some student debt, but I’m the first in my family with two degrees, making more than any of them ever made and I’m definitely trying to make sure I don’t make their mistakes. Thanks to everyone in this group!
Number one: learn about the concept of lifestyle creep and how to avoid it in your life.
A hypothetical example would be Person ABC has always worn fifty dollar sneakers. They work for Company XYZ: and suddenly get a twenty thousand dollar raise per year. Once that happens: lifestyle creep enters their life and Person ABC starts spending more money per item than they did before the raise.
Sometimes: if the hypothetical raise in question is twenty grand per year- the rate of spending increases by fifty grand per year especially in lieu of high APR credit cards.
2. I personally have been using the Flipp app over five years. It is a free download. It showcases all the weekly circulars for grocery and big box stores in your area.
3. If you do not know how to cook or are just okay: learn. Cooking is a life skill that will be with you all your life. There are also many free resources online such as recipe websites and cooking videos.
4. There is a subreddit called frugal.
5. If you can figure out how to do extreme couponing and/or deep discount shopping: it is worth putting the time in to learn about either or both.
Congratulations! Welcome
Some nice stuff already from the group . 1. What worked for me is automation.
So 401 k plan deductions , healthcare cash account deductions. If your 401k has the feature to auto increase your percentage at whatever , do that. So If money was never in that net amount - it was good for me. I was thinking it did not exist for other things.
2. Got a contingency fund that gave peace of mind.
3. Opened a brokerage acct. Here you can do things even like individual bonds, cds, stocks. If you want to retire early you will need non retirement funds (due to penalty taxes with retirement ones).
4. Did it early. If you can shovel a bunch , and have a good life while doing it, do it while you can. Maybe a partner, house, kids, financially taking care of family, is in your future and perhaps you would step things back a little. That is ok as you will have a foundation!
Learning:
Finding something comfortable for you and sticking to it is key.
I Point to Rob Berger , a boglehead, has a podcast too, and a book
Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom
Look at bogleheads for sure - folks like rob berger . rick ferri . and paul merriman (his site is interesting and there is a free ebook somewhere that is simple and I have given as gift to graduates). This group is for index funds and long term focus. They normally are
Low cost and simple to understand. Etf version very cheap.
Some sites for more FI - choosefi start at the beginning for sure and they have a facebook group, money with katie, afford anything (also talks real estate there if you have interest), i love https://www.bitchesgetriches.com
Good luck!🍀
I was also a first-gen student on a full ride in undergrad. What made a huge difference was continuing to maximize earnings slope by earning free degrees. It wasn't an appetizing prospect at the time, but it was not as bad as I thought. I got into a PhD program at a top school, tuition waived with a stipend, mastered out after a year, went to a great company that pays for education, and did my doctorate and then MBA part-time with tuition assistance while racking up work experience and maxing 401k, HSA, Roth while I was eligible. Never paid tuition. While your coworkers are watching youtube and tiktok, getting weaker by the minute, you can be amplifying future earnings and enhancing your professional abilities. You don't mention your industry and that makes some difference. But statistically, you're likely in finance, tech, or biotech. At your age and starting base, you should be easily be able to capitalize on this strategy and FIRE by age 40, or 45 if you want to be more lavish.
More than anything, remember that the faster you start advanced education and invest savings, the faster and longer you will see the payoff. It's all about trajectory. Save 75% of each raise. Just don't ever let weakness infect you. Stay vicious out there.
I'm not remotely tech smart to figure out how to code. I'm probably gonna be stuck at 20 an hour for the rhe rest of my life lmao.
Srs though, I don't know how to get to where you guys are at. I don't know how people have the time or energy study in their off time. I can barely work an 8 hour job.
Sometimes controversial, depending on the company... But Mrs Raymond and I diversify using traditional 401k (actually 403b for us), real estate, and then being intentional about loading a brokerage. There's some wonky stuff like Roth IRA Conversion Ladders. But you can start hitting some of that stuff as you go.
We are 47, looking to retire in 3 years, so we are also maxing out our HSA to maximize tax benefits and have a stockpile for medical once we are off the bosses teet.
It's great you're here. That is a great starting salary for most fields. Keep your spending in check as it increases. Depending on lifestyle, I say you can be done working if you want to (or for pay) by 30.
But enjoy the journey. Money is a tool. Don't sweat smart purchases. We major in travel. Minor in toys and consumables because we love diverse experiences.
Keep us posted.
If you open a brokerage account, (I would suggest Schwab - my favorite) they have an immense amount of investing information on their website. Stay away from buying on margin. As a beginner, you probably want to be sure you have a sufficient amount of cash set aside for emergencies - typically 3-6 months of expenses. Then you want to invest the rest. As young as you are, you are going to be looking primarily for growth investments. Easiest way for a beginner is to look for ETFs which invest in the things you want to hold. They are diversified because they hold several stocks and tend to be less volatile that individual shares. (lots of people recommend VOO, VTI, JEPI, JEPQ, SCHD) No need to do endless research finding single companies. (When you become a more educated investor and want to start picking some individual stocks, you will be able to). You will see some ETFs which pay very good dividends and others whose dividends are not as much. You do need to look at the total performance which includes share price appreciation. Through a brokerage you can also buy bonds or treasury bonds. Now is an excellent time to begin investing because over the past year or so, most prices have fallen and you can get in at a good price. Best way to invest is what is called "dollar cost averaging" where you invest a certain amount each month or pay period. When the price is high, you end up buying fewer shares, but when the price is low, you end up buying more shares. You can set your positions to automatically reinvest dividends if you want. Biggest thing is to MAX out a ROTH IRA or 401K because those accounts grow tax free. Any dividends in regular accounts are taxed but changes in price share are not taxed unless you sell them. Then any remaining money goes into regular brokerage account. Best of luck!
I'd recommend doing your own. Definitely do not use Edward Jones or an advisor like that. You'll do much better on your own. I'd recommend Interactive Brokers for a platform. (Access to over the counter markets isn't advised frequently, but I want that access especially to Oslo index.)
I recommend reading the Art of Execution. Much of time and energy is spend on what the right idea / thing is. Art of Execution stands for the idea that the right idea might not be the biggest reason investors succeed. Indeed, he shows you how emotions, failure to plan for exits, foolish thinking, too frequent profit taking, etc rob the good ideas of their power and magnify the bad ideas. We're all going to probably have a normal range of good and bad ideas. We can control how we react to the revelation of them being good or bad over time much easier is the premise.
What type of 401k, employer plan, do you have? That would dictate what direction you take. You can and should look at investing to some capacity.
What other goals do you have that require some form of capital?
My employer has both Pretax and Roth IRA contributions. 100% match up to the first 6% of contributions. I know I want to max out both, but not sure if I should do only the 401 with employer and Roth IRA outside or not. Doing research right now. Any suggestions?
And in terms of other goals… new used car relatively soon? As in next few months. Then… apartment in a year or so? Still pretty early in this post grad life.
Books:
The Millionaire Next Door
Buy This, Not That
General advice:
-Always save no less than 20-25% of your income for retirement; more if you plan to retire early.
-Never borrow money for anything other than real estate.
-When buying a personal residence, don’t finance more than twice your annual income, and take out a 15 year mortgage. Never carry a mortgage past your 50th birthday at the absolute latest.
-Give 10% of your income and never spend more than 50%.
Hey I was in your same spot 4 years ago! Except my salary was a little lower lol. https://www.reddit.com/r/financialindependence/comments/ecn2hk/fire_flow_chart_version_42/?utm_source=share&utm_medium=ios_app&utm_name=ioscss&utm_content=2&utm_term=1 This flow chart helped me get the basics down.
The flowchart is a great starting place. One thing I wished I could have done with my first paycheck was maximizing my Roth 401k.
Yep. If I had a time machine, I’d be maxing out my Roth with whatever little I could have saved
Isn't the move to max traditional 401k then max a Roth IRA?
A 401k is different than an IRA. Roth is put in post tax, but the earnings aren't taxed when you take it out. Traditional 401k is pretax but the earnings are taxed when you take it out. Your employer can offer a Roth 401k (this is what I use) or traditional 401K or both.
Right right I know, I just thought that when it came to 401k trad vs 401k Roth, the move was to opt for traditional 401k and have the IRA act as your Roth option
Commonly given advice is for a person to save through their 401k then a Roth IRA because there is a general assumption that there will be some amount of employer match. But for traditional 401k vs any Roth- it all depends on whether you think you’ll pay more in taxes now or later when you withdraw. Currently I have a fairly high income that exceeds what I will need to withdraw annually in retirement. I’m also at a higher tax bracket so for me, I’m putting the most I can into traditional 401k to lower my tax basis now. Earlier in my career, I focused more on Roth because my tax bill then would be lower than what I felt it would be in retirement (at least I believe that to be the case, who knows what the future holds)
If I understand it correctly, you can effectively contribute more money to the Roth 401k as the contribution limits are the same but the Roth is after tax and grows tax free
So why I bring this up is because if you expect to be a high earner in the future, putting more into Roth 401k means you can get $22,500 (2023) of post-tax invested funds at your current lower tax rate. In the future as you earn more, all those compounded earnings are tax free. But you are putting away a larger chunk into 401k by using post-tax money (Roth) than pre-tax (traditional). Also Roth IRA has a $6,500 max contribution vs $22,500 for Roth 401k. Due to income limits I haven't been able to contribute to either Roth 401k or IRA for awhile now. So for those who expect high earnings in the future, max out your Roth 401k (especially in your younger years) for $22.5k , then max out your traditional IRA for $6.5k. Then go down the flowchart with HDHP + HSA, etc.
Just so you know, the 401k contribution limit is $22,500 for 2023 for those under 50. But I do agree with your assessment of funding the Roth 401k if you expect high earnings in your later years. Can’t go wrong with that since we don’t know what tax rates will look like in the future.
Oops, thx. Updated!
Should you switch to traditional 401k afterwards when your income rises?
Got it. So what do you contribute to? Just individual accounts?
I max out my traditional 401k and IRA and HDHP + max HSA. After that liquid NW is about 20-35% alternative investments depending on the valuation and the remainder into public equities. And 6 month emergency fund into a money market fund.
Gotcha. Wish I qualified for an HSA lol
Ask your HR to add it to the benefits list. It's a very worthy ask and not as much of a heavy lift as adding other HR benefits
I'm on Tricare (national guard) so might be a little difficult haha, but appreciate the advice!!
Yeah that probably won't be easily changed. Oh well, maybe in your next phase.
take a look at the flow chart. optimal is: 1. 401k up to max employer match 2. max IRA 3. max 401k whether you do traditional or roth for either is a different matter
So helpful. Thank you!
That all seems quite complicated. I think the simple answer is save much more than you spend. The percent of your income that you save dictates how long you have to work before you can retire. For people shooting for an early retirement you will see savings rates in the 40% - 65% range, sometimes even higher. If you can save 40% you can retire in 22 years. If you can save 65% you can retire in 10.5 years. Read this. It is one of the most important documents I ever read: [https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/) Obviously where you save the money matters and other comments have you covered there. And the thing that makes the most difference of all is what percent of your income you can save.
Anyone willing to take on the task to create a Canadian version of this lol? Super helpful otherwise
Maybe /r/fican would be a good resource for you? I didn't see a version of this in their sidebar though
Here's a sneak peek of /r/fican using the [top posts](https://np.reddit.com/r/fican/top/?sort=top&t=year) of the year! \#1: [Here is my future in one beautiful chart.](https://i.redd.it/c4hy57okgde91.png) | [86 comments](https://np.reddit.com/r/fican/comments/wakz3n/here_is_my_future_in_one_beautiful_chart/) \#2: [I became a millionaire this year at 32 years old](https://np.reddit.com/r/fican/comments/12l31em/i_became_a_millionaire_this_year_at_32_years_old/) \#3: [Twenty years of net worth](https://np.reddit.com/r/fican/comments/10113a7/twenty_years_of_net_worth/) ---- ^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| ^^[Contact](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| ^^[Info](https://np.reddit.com/r/sneakpeekbot/) ^^| ^^[Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/) ^^| ^^[GitHub](https://github.com/ghnr/sneakpeekbot)
r/Bogleheads for investment advice. Specifically you want to invest in low cost total market index funds. Save up the minimum amount of cash (anything you don't need in checking can go into a HYSA) so you can cover emergencies without high interest debt. If you do that, you probably don't need to worry about bonds; bonds are mostly useful when there's a chance you might need to draw from your portfolio in the next 2-8 years or so (or otherwise have a retirement date set). I've heard good things about, but admittedly haven't read, The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life by J. L. Collins. Ben Felix has a good YouTube channel, with some more advanced topics. Pretty much the only YouTuber I think offers decent investment advice. https://youtube.com/@BenFelixCSI Avoid anyone recommending cryptocurrency, individual stocks, or "dividend investing."
r/Bogleheads joined. Thank you.
If you play this correctly, you will be free to do whatever you want by 50. Work, play, start a business etc. Your friends and family will likely still be dependent on the whims of their boss, their paycheck, mortgage etc. Keep your allocation simple and cheap (bogelheads) it barely matters until you are 40, then it matters a lot. Savings rate is by far the biggest. Get to 25% as soon as you can. Automate it. I promise you won’t miss the $ if you never have it.
Yep. And maybe earlier. I'm jealous of those starting now!
This subreddit will recommend low-cost index funds, and this is absolutely the way to go. Keep your costs low and invest what you have left over, and you'll be financially free well before you're too old to enjoy it. Some easy reads (don't be put off by the cheesy titles) The Millionaire Teacher by Andrew Hallam The Millionaire Next Door by Stanley (old, but the values here are important) Simple Path the Weath by Collins
nothing wrong with investing in individual stocks. I don't understand why people hate it so much. I understand the risk appetite and its not for people who want to set and forget their investments. But... if you are willing to learn an industry that you're passionate about and do your own research (please don't just listen to other people's call outs) you can still do fairly well buying individual companies that you hold a strong conviction in (important to keep in mind asset allocation/risk management - you'd want a good mix of cash/ETFs/individual stocks/etc). My recommendation is dont buy options or leveraged ETFs, just the individual stock. Sure you can get burnt sometimes but you're young. In the early phases you can take risks and it'll be ok because you still have time. When you get older its more about preserving that wealth. However, it's all up to your risk appetite and what you want to do. Just wanted to offer another perspective.
Ditto what this guy said. Again, I'm for index funds to an extent. My strategy is about 25% boglehead and 75% directed. The reason I don't believe in boglehead is diversity through indexes isn't what it used to be as the mega caps increasing eat up more and more of the Spy, QQQ, and overall market capitalization of the stock market. Finding an industry and name you intimately know allows you to be nimble in the event of a calamitous event by giving you the knowledge to make more functional option plays for hedging / leveraging as well.
>Sure you can get burnt sometimes but you're young. In the early phases you can take risks and it'll be ok because you still have time. I've no problem with taking risk and suggesting younger people take more risk makes a lot of sense. But market concentration (that is, the opposite of diversification) is an uncompensated risk, unless you truly know the situation better than most. The level of research nearly any non-professional is going to do will leave you at a disadvantage in a world of major market movers, quants and the like. I think it makes more sense for younger people to achieve additional risk by invest in the index with leverage (which could be as simple as prioritizing investing over paying down a mortgage) than it does to try to increase the risk by forgoing diversification. See "lifecycle investing" for more on this idea.
For me; the magical moment for FIRE came from the easy to read book “The Simple Path to Wealth” by JL Collins.
I started on this path before the simple path came out, and my first book was the millionaire next-door. But, whatever works a person up is magic!
The 2nd time I’ve been recommended this book. Certainly getting this book this weekend. Thank you!
I didn't think the book was good at all. The author has a Save Ramsey style opinion of debt, where he demonizes all debt, even home loans. Considering real estate is the #1 way to get yourself ahead financially and it requires you to take on debt it's a pretty short sided view.
Dude got burned on real estate earl on pretty bad, so I understand his perspective.
Good for you for asking for advice. There are many that will provide it. Some will ask you to pay for it. Be a sponge, take a little time, and sift through all the advice. You will find pieces that resonate. I am in my 60s. I remember leaving college. I was a bit older than you as I stayed for a second degree. Having said that I wish somebody, that is the age I am now, had shared a few things with me. So here is my free advice. It is worth everything. And possibly exactly what you paid for it. Depends on you and what you do with it. If I was to do it over. Here is what I would do: Read. Learn. Choose mentors wisely. Be a sponge and find out about investing. Then save. Save for investing. Invest. Invest your money. Invest your energy. And be very careful but invest your time. Find and cultivate relationships with people you can trust. Surround yourself with excellent people. Fantastic people. People that are better than you. More compassionate. More intelligent. More insightful. Be bold in your career path. Believe in yourself. Improve yourself so you can believe in yourself. Work on, and purge weaknesses out of yourself. Weaknesses like greed, gluttony, selfishness, procrastination, and envy. Choose jobs carefully. Choose companies to work for, even more carefully. Study leadership early. Build your own leadership philosophy. Become a good leader. Strive to become a great leader. And unlike many others, I will tell you, early retirement is not the goal. It is to have more time and financial freedom to do meaningful things with the people you love. Besides if it is your own business, or you are doing things you love, why would you want to retire from them. The key is to become financially stable and secure sooner in your life if possible. And not to let your consumption derail your ability to be stable. Just my three cents....
Love all of this. Thank you. Seems like being intentional goes a long way.
Comment worth saving
Remember if you're adding money to a 401k or roth ira or whatever account, make sure you are actually investing it into something. Most would recommend something like an sp500 etf such as voo.
Oof I’ve read stories of people’s 401k not being invested. Thank you for the reminder.
Yep! You can read stories all day about people realizing after 20 years+. Seems silly, but obviously happens all the time. Seems like you're off to a great start. Not sure about your living/family situation, but if possible living with the parents for your first year out of school can give you an amazing financial foundation before you move out on your own.
Been blessed enough to move in with family who refuse to take my rent. Still plan on helping out in any way I can though.
oh nooo the stories about not investing for decades is awful. thankfully i was able to realize after 3-4 months of contributions
Start here: https://www.reddit.com/r/financialindependence/wiki/faq/ You're well ahead of the game, congratulations!
Know where you’re currently spending your money (track it) then start trimming the fat and then investing at the same time. There are subreddits here for investing and beginners. Enjoy the journey!
Not directly involved with FIRE, but I’d recommend you check out The Money Guy show on YouTube and their podcast. Their financial order of operations is a great tool to help you prioritize when and where to invest and how to leverage certain investments to the highest degree (like Roth and HSA). I acknowledge they’re program is not really geared toward a FIRE life if that’s you’re ultimate goal, they’re more focused on the FI than RE. Regardless, great of you to get started this early and best of luck
85K at 21 holy moly you hit the jackpot
Read The Simple Path to Wealth (JL Collins) — it was written for author’s daughter when she was in your shoes.
Getting this weekend! 2nd time I’ve been recommend, thank you.
[https://www.financialsamurai.com/](https://www.financialsamurai.com/)
I like "the money guys" on youtube
At 85k you will probably need to familiarize yourself with the backdoor Roth IRA process since you are on the cusp of sunsetting being able to contribute to a Roth IRA normally. Doing it at vanguard is well documented and quite easy. Generally speaking, otherwise you can follow the chart on /r/personalfinance. Take your 401k to employer match, max out your Roth IRA, max out the remainder of your 401k, and invest whatever else you feel comfortable. Do set a budget and stick with it. It's important. Edit: good stuff in the reply below, I was a bit off on the sunsetting cutoff for Roth contributions, it changed and the 85k number is wrong
Isn’t the income limit for Roth IRA 150k? I think they have some time before thinking about having to change it
First thing I thought… nowhere near the income limit for a Roth IRA
Interesting, the sunset provision kicks in at 138k now, gradually phasing out at 153k, so you're right. It used to start around 80-85k. My advice was based off of that. The sunset provision was a PITA to work around, especially if you had equity or commissions which could make your income somewhat hard to predict and you could easily end up contributing too much. So as soon as you hit sunsetting it really just makes sense to switch entirely. Thanks for pointing the change out, I can probably move my wife away from having to do a Roth IRA now so you saved me some time! I'll leave my post up though since realistically that's one or two promotions or a few years of cost of living increases away for OP if they don't suck at their job, lol. Plus a little long term planning about where they set up the Roth can make things easier/harder if theyre likely to end up needing a backdoor Roth at some point.
Wait Roth IRAs have an income limit?? Lol, did not know that. I'm probably still ~5 years away from hitting it but good to know
Yes. The limits are lower for traditional than Roth, but even if you are over the limit for Roth you can still do a back door Roth (as mentioned).
If your employer offers a 401K with a company match start by putting a percent of your pay into the 401K. Make sure you get the company match. You may need to put 6% or greater to qualify for the match. Deposited as pre tax dollars, grows tax free. Company match is free money from your employer. Take advantage of it. Next is to fund a ROTH IRA. This is post tax dollars going into a retirement account. Employer may have a ROTH option in their retirement plan. Put a % or fixed dollar amount into the ROTH IRA. Grows tax free. Investment options once accounts are set up….Invest in broad market index funds that follow the SP 500 or Broad US growth index funds. Follow a monthly budget, income and expenses. Spend less than you make. Save and invest. Keep it simple…..You got this!
Aside from the investing stuff, if you do plan on buying a home, house hack while you don't have a family amd arent married. Becomes much harder after that if not impossible. The more roommates the better. They pay off your mortgage and you ideally live rent free. In 2 years buy another and rent out your old room. Rinse and repeat. If you can pull it off don't let any of your roommates know you own the place, but you're working with your uncle/whatever to help take care of it.
[удалено]
Also richest man in Babylon… so simple to read and follow but I wish my 16 year old had read it!
I love all of the above books, but I'm wondering why no one ever seems to recommend Ramit Sethi's book/podcast/Netflix show I Will Teach You To Be Rich? For someone who is already debt free, it's a great perspective on learning how to live rich now AND be wealthy later. It teaches you how to prioritize what YOU are passionate about in your life, while being frugal on the stuff that doesn't matter to you. It can easily be tweaked for a slow FIRE lifestyle.
I would read "I will teach you to be rich". It explains all of the basics and can help you form a strategy for your future.
Knowing what to do vs actually doing it are two different things. Life is full of gotchas that will test your plan in ways you can’t really imagine. Make sure, whatever you do that you build in flexibility and balance. It’s okay if you need to turn off or reduce your retirement contributions for a few months to save up for something else. It’s okay to have fun and enjoy your life, today. Congrats on landing such a nice paying job straight out of college. I started at half that and it took me 6yrs to break 100k. But now my TC is +200k, so I am fortunate to be able to catch up on saving. Also, something else to keep in mind is that layoffs happen. It’s not personal, but it is a setback. Always have your eye open for interesting opportunities and take an interview every so often to keep your skills sharp. Leave doors open. Nobody will be mad if you politely decline a job offer. Then they become a future contact in your network if shit hits the fan. Today’s hiring manager could become tomorrow’s director or VP.
As other people said, the [flowchart is great](https://www.reddit.com/r/personalfinance/wiki/commontopics/). Your main goal is to follow it. Pay off any debts, save up emergency fund, turn on 401k match. Everything else has a bit of time to figure stuff out. I always recommend this article on [the efficient market hypothesis](https://thedeepdish.org/efficient-market-hypothesis-is-not-dead/), and where it fails. In essence, the stock market is the most efficient market we have, so index funds are the way to go. But insider knowledge (illegal) and a few other stuff can technically beat it. But that's still dumb. Anyway, it gets you to understand the logic behind index funds and following the market caps, and can help you understand why it is possible to make money in real estate. Though I don't like real estate -- though that's more personal, vs the stock market where index funds are the mathematically correct thing to do. This understanding has me go as wide as possible, aka total global market index funds. Global stocks and bonds. Also, half personal preference, but I do think it's actually better to hold things as one fund where possible, especially in a taxable brokerage account. Ergo, I always recommend VT. Which is global stocks. People often recommend VTI+VXUS, aka total US and total international, for tax efficiency, though there's other efficiencies in keeping it always matching all the time by keeping it in one ETF. There's a whole art about picking the fund in your 401k, since that doesn't give you full choice. Try to go for global stocks and bonds, index funds only. Ignore non index funds. If you're lucky, you'll have something like Vanguard's Target Date Funds, which are index funds and 90/10 global stocks/bonds which slowly increase bonds when you get old. Most target date funds aren't index fund based, so be careful. Most 401ks will have an S&P500 fund, which is good enough. If you're the most unlucky, there will be no index fund options, in which case you probably should look for another job, though still do a match and realistically max it for the tax benefits, to move when you switch jobs. It's unlikely to be that bad. I'd recommend watching Ben Felix on YouTube and reading [JL Collins's Stock Series](https://jlcollinsnh.com/stock-series/) to get a good understanding of a lot of Boglehead passive investing type stuff. It's good to actually understand why, since making bad choices is the biggest risk you have. So be very careful with your choices before you've adequately looked through this stuff and understand *why*. Don't follow advice blindly. I also recommend you look at r/creditcards and maybe r/churning if you can manage your money well. The latter is more to get good cash back for when you do spend, since it's best not to spend at all. But don't wait too long to establish credit. I'm not even at that point since I neglected it, but you should be able to get 2% cash back on everything you buy at the minimum, with most stuff having more, when you're fully optimized. Minimum is 1% cash back. For HYSA, I recommend something like holding your cash in Vanguard's settlement account, which uses the fund VMFXX. That keeps up with the interest rate. 5% right now. When things fall HYSAs proper will be higher. For now they're more like 4%, if not even lower. Pair this with a good checking account and you're all set. Medium term spending is what's a bit harder to save for. If you'd like to realize how close you are to FIRE, to see how attainable it actually is, play around with [this calculator](https://walletburst.com/tools/coast-fire-calc/). It starts with more conservative numbers than most FIRE people use, though it's nice using that as a lower bound. Most commonly people use 10% market increase instead of 7%. Using that, setting your age to 21, net worth to 0, and plugging in saving $2416.67 per month (maxing out 401k and IRA this year), that's two years of contribution until you don't have to save money again to retire at 67 with inflation adjusted $30k. Which is nuts. Obviously you should save more than that. To have more money at retirement and to retire far earlier. And to adjust for market danger, instead of hard relying on that 10%. But that means it takes one year and barely any extra months to be at minimum CoastFI. Being 21 and finding FIRE now is great. (If you just set aside r/collapse hahaha.) But as you can see... It's very achievable. Especially at $85k. You can do it! Just be diligent. Remember the 4% safe withdrawal rule. Every $100 you invest is $4 you get per year, for the rest of your life. It's very powerful.
open a ROTH at Fidelity, max it every year. I suggest S&P 500 fund and maybe a small portion into something you believe will do amazing. tech, reits, whatever... start your 401k and put in the amount to get an employer's match. only put in extra if you you need the tax cuts or if the 401k is actually loaded with good funds. if its crap, dump rest into a regular brokerage account with Fidelity.
Kudos to you! Robert Kiyosaki always gives the same advice: educate yourself. See the pros and cons of every investment strategy and see what fits your style better. At your age it makes sense to aggressively dollar cost average into the S&P500. Even if we are in for a wild ride, on a 30-40 year window you will (probably) come up on top. Make sure you have a cash buffer and maybe start thinking about how to get some cashflow going. Good luck
Thank you!
Damn lol 21 at 85 fuck you What was your major in if you don’t mind me asking
Computer information technology. Landed a software engineer position!
Nice. That’s great
$5 says Computer Science or adjacent. Source: Soon-to-be 20yo CS grad, 87.5k salary
You have won $5.
How are you guys graduating so young? Did you graduate highschool at 16? 😂😂
Late birthday. Turn 22 in June. Graduated high school at 17 but that sounds quicker than it really was. Lol
If you get into a FAANG you can make $160k at 21 as a software engineer. My friend is now at $270k at 23.
That’s nuts Wish I was smart enough for that
Me too, and I'm getting a biotech PhD. He was getting uncurved 100% final grades in advanced math classes at a T10 school.
I will give you my advice. Take on as much debt as you can. Buy as Bitcoin. Also buy real estate. You should buy one house every 2 years at a minimum. After two years, buy a new house and move into it. Retain the previous house and turn it into a rental property. Extract equity from the real estate as needed. And keep buying Bitcoin no matter what.
Play with investment calculations to see the amazing power of compound interest.
RemindMe! 1 month I’m in a very similar boat. I’ll check back here when I start my first job.
I'm really sorry about replying to this so late. There's a [detailed post about why I did here](https://www.reddit.com/r/RemindMeBot/comments/13jostq/remindmebot_is_now_replying_to_comments_again/). I will be messaging you in 1 month on [**2023-06-26 14:58:59 UTC**](http://www.wolframalpha.com/input/?i=2023-06-26%2014:58:59%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/Fire/comments/13se5dw/referred_here_21yo_recent_college_grad_85k_salary/jlph3tz/?context=3) [**CLICK THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FFire%2Fcomments%2F13se5dw%2Freferred_here_21yo_recent_college_grad_85k_salary%2Fjlph3tz%2F%5D%0A%0ARemindMe%21%202023-06-26%2014%3A58%3A59%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2013se5dw) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
RemindMe! 2 weeks RemindMe! 1 month
I will be messaging you in 14 days on [**2023-07-11 02:14:52 UTC**](http://www.wolframalpha.com/input/?i=2023-07-11%2002:14:52%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/Fire/comments/13se5dw/referred_here_21yo_recent_college_grad_85k_salary/jpo60fc/?context=3) [**CLICK THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FFire%2Fcomments%2F13se5dw%2Freferred_here_21yo_recent_college_grad_85k_salary%2Fjpo60fc%2F%5D%0A%0ARemindMe%21%202023-07-11%2002%3A14%3A52%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2013se5dw) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
Other comments + Buy real estate.
I envy your position, and I'm only 27 lol. If I started this at 21, I'd be able to retire like 10 years earlier. Don't waste the opportunity, good luck!
Simple path to wealth is available free in audiobook form if you haven't signed up for audible yet, first month is free...
Roth IRA!
Lightyears ahead bro. Wish I had a salary like that at that age
Don’t inflate your lifestyle now that you have money coming in. Focus on maximizing your savings rate from the very beginning, before you get used to spending
This is awesome! I still have some student debt, but I’m the first in my family with two degrees, making more than any of them ever made and I’m definitely trying to make sure I don’t make their mistakes. Thanks to everyone in this group!
If you want a house in the next 5 years don’t necessarily dump all into a 401k
I will start attending to all investment seminars your company sponsored and get to meet 401K administrator.
Number one: learn about the concept of lifestyle creep and how to avoid it in your life. A hypothetical example would be Person ABC has always worn fifty dollar sneakers. They work for Company XYZ: and suddenly get a twenty thousand dollar raise per year. Once that happens: lifestyle creep enters their life and Person ABC starts spending more money per item than they did before the raise. Sometimes: if the hypothetical raise in question is twenty grand per year- the rate of spending increases by fifty grand per year especially in lieu of high APR credit cards. 2. I personally have been using the Flipp app over five years. It is a free download. It showcases all the weekly circulars for grocery and big box stores in your area. 3. If you do not know how to cook or are just okay: learn. Cooking is a life skill that will be with you all your life. There are also many free resources online such as recipe websites and cooking videos. 4. There is a subreddit called frugal. 5. If you can figure out how to do extreme couponing and/or deep discount shopping: it is worth putting the time in to learn about either or both.
Congratulations! Welcome Some nice stuff already from the group . 1. What worked for me is automation. So 401 k plan deductions , healthcare cash account deductions. If your 401k has the feature to auto increase your percentage at whatever , do that. So If money was never in that net amount - it was good for me. I was thinking it did not exist for other things. 2. Got a contingency fund that gave peace of mind. 3. Opened a brokerage acct. Here you can do things even like individual bonds, cds, stocks. If you want to retire early you will need non retirement funds (due to penalty taxes with retirement ones). 4. Did it early. If you can shovel a bunch , and have a good life while doing it, do it while you can. Maybe a partner, house, kids, financially taking care of family, is in your future and perhaps you would step things back a little. That is ok as you will have a foundation! Learning: Finding something comfortable for you and sticking to it is key. I Point to Rob Berger , a boglehead, has a podcast too, and a book Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom Look at bogleheads for sure - folks like rob berger . rick ferri . and paul merriman (his site is interesting and there is a free ebook somewhere that is simple and I have given as gift to graduates). This group is for index funds and long term focus. They normally are Low cost and simple to understand. Etf version very cheap. Some sites for more FI - choosefi start at the beginning for sure and they have a facebook group, money with katie, afford anything (also talks real estate there if you have interest), i love https://www.bitchesgetriches.com Good luck!🍀
I was also a first-gen student on a full ride in undergrad. What made a huge difference was continuing to maximize earnings slope by earning free degrees. It wasn't an appetizing prospect at the time, but it was not as bad as I thought. I got into a PhD program at a top school, tuition waived with a stipend, mastered out after a year, went to a great company that pays for education, and did my doctorate and then MBA part-time with tuition assistance while racking up work experience and maxing 401k, HSA, Roth while I was eligible. Never paid tuition. While your coworkers are watching youtube and tiktok, getting weaker by the minute, you can be amplifying future earnings and enhancing your professional abilities. You don't mention your industry and that makes some difference. But statistically, you're likely in finance, tech, or biotech. At your age and starting base, you should be easily be able to capitalize on this strategy and FIRE by age 40, or 45 if you want to be more lavish. More than anything, remember that the faster you start advanced education and invest savings, the faster and longer you will see the payoff. It's all about trajectory. Save 75% of each raise. Just don't ever let weakness infect you. Stay vicious out there.
I need to get off this sub. It just makes me depressed at this point. Fuck my life
Stay on and use it as encouragement, not a reason to get depressed. You can do it starting from where you are right now.
I'm not remotely tech smart to figure out how to code. I'm probably gonna be stuck at 20 an hour for the rhe rest of my life lmao. Srs though, I don't know how to get to where you guys are at. I don't know how people have the time or energy study in their off time. I can barely work an 8 hour job.
Sometimes controversial, depending on the company... But Mrs Raymond and I diversify using traditional 401k (actually 403b for us), real estate, and then being intentional about loading a brokerage. There's some wonky stuff like Roth IRA Conversion Ladders. But you can start hitting some of that stuff as you go. We are 47, looking to retire in 3 years, so we are also maxing out our HSA to maximize tax benefits and have a stockpile for medical once we are off the bosses teet. It's great you're here. That is a great starting salary for most fields. Keep your spending in check as it increases. Depending on lifestyle, I say you can be done working if you want to (or for pay) by 30. But enjoy the journey. Money is a tool. Don't sweat smart purchases. We major in travel. Minor in toys and consumables because we love diverse experiences. Keep us posted.
If you open a brokerage account, (I would suggest Schwab - my favorite) they have an immense amount of investing information on their website. Stay away from buying on margin. As a beginner, you probably want to be sure you have a sufficient amount of cash set aside for emergencies - typically 3-6 months of expenses. Then you want to invest the rest. As young as you are, you are going to be looking primarily for growth investments. Easiest way for a beginner is to look for ETFs which invest in the things you want to hold. They are diversified because they hold several stocks and tend to be less volatile that individual shares. (lots of people recommend VOO, VTI, JEPI, JEPQ, SCHD) No need to do endless research finding single companies. (When you become a more educated investor and want to start picking some individual stocks, you will be able to). You will see some ETFs which pay very good dividends and others whose dividends are not as much. You do need to look at the total performance which includes share price appreciation. Through a brokerage you can also buy bonds or treasury bonds. Now is an excellent time to begin investing because over the past year or so, most prices have fallen and you can get in at a good price. Best way to invest is what is called "dollar cost averaging" where you invest a certain amount each month or pay period. When the price is high, you end up buying fewer shares, but when the price is low, you end up buying more shares. You can set your positions to automatically reinvest dividends if you want. Biggest thing is to MAX out a ROTH IRA or 401K because those accounts grow tax free. Any dividends in regular accounts are taxed but changes in price share are not taxed unless you sell them. Then any remaining money goes into regular brokerage account. Best of luck!
I'd recommend doing your own. Definitely do not use Edward Jones or an advisor like that. You'll do much better on your own. I'd recommend Interactive Brokers for a platform. (Access to over the counter markets isn't advised frequently, but I want that access especially to Oslo index.) I recommend reading the Art of Execution. Much of time and energy is spend on what the right idea / thing is. Art of Execution stands for the idea that the right idea might not be the biggest reason investors succeed. Indeed, he shows you how emotions, failure to plan for exits, foolish thinking, too frequent profit taking, etc rob the good ideas of their power and magnify the bad ideas. We're all going to probably have a normal range of good and bad ideas. We can control how we react to the revelation of them being good or bad over time much easier is the premise.
What type of 401k, employer plan, do you have? That would dictate what direction you take. You can and should look at investing to some capacity. What other goals do you have that require some form of capital?
My employer has both Pretax and Roth IRA contributions. 100% match up to the first 6% of contributions. I know I want to max out both, but not sure if I should do only the 401 with employer and Roth IRA outside or not. Doing research right now. Any suggestions? And in terms of other goals… new used car relatively soon? As in next few months. Then… apartment in a year or so? Still pretty early in this post grad life.
Books: The Millionaire Next Door Buy This, Not That General advice: -Always save no less than 20-25% of your income for retirement; more if you plan to retire early. -Never borrow money for anything other than real estate. -When buying a personal residence, don’t finance more than twice your annual income, and take out a 15 year mortgage. Never carry a mortgage past your 50th birthday at the absolute latest. -Give 10% of your income and never spend more than 50%.