Date: Tue, 23 Jan 2007 10:39:18 -0600
From: darkness39@yahoo.com
Newsgroups: misc.invest.financial-plan
Subject: Re: Fresh College Grad
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teaks wrote:

Hi

I'll chime in with virtually everyone else here.

1. take the 4% match on the 401k.  That's a 100% return before you
start!  You aren't offered that opportunity in investing too often in
your life.

I would invest the 401k in a low cost equity index fund (Fidelity
certainly offers one).  If you have enough, split it evenly between an
international equity index fund, and a domestic one.  What you ideally
want is as wide a spread of (equity) investment as possible, at the
lowest total cost (MER or Management Expense Ratio).

(my thinking being this money is going to compound for 40 years.  You
want to take the maximum risk with it, since even a bad 10 or 20 years
might well be followed by a very good period.  Take the most risk, get
the highest return).

Say over the next 4 years you and your employer invest $15000 together
in your 401k.  Say also it returns 8% pa (low cost equity index fund)
over 40 years, which is a bit below historic returns.  That would be
$325k when you retire-- 43 times the $7500 you invested.  You'll be
glad you did this 10 years down the road when you have a family and a
big mortgage and are struggling to save any money at all.

2. pay down your non-student debt ie the highest rate debt you have, as
a number 2 priority.  Your low interest loan doesn't strike me as too
critical.

3. a top MBA is a $100k expenditure.  I believe they are worth it
(whereas if you are not in the top 15 or so MBAs*, I would rather do an
exec or part time MBA programme ) to your career.  But you need to
start planning for that.

4. in light of 3, live as cheap as you can, subject to still enjoying
life.  A 7 year old Honda Civic, say, may not be flash, but it will
likely get you to work, and the beach/ mountains on the weekend,
without too much hassle and at a reasonable fuel economy.

http://www.edmunds.com/used/1999/honda/index.html?mktcat=used&kw=1999+Honda+Civic&mktid=sh382318

looks like you might pay c. $8k from it (just picking this randomly off
the web).  there are lots of tricks eg you might not need the best
cable package (because you are never home to watch TV anyways).

The rest (company stock plans etc.) I leave to more informed posters.

* for want of argument: Harvard, Stanford, Wharton (Penn), Chicago,
Northwestern (Kellog), MIT, Columbia, Yale, NYU, Berkeley, Michigan,
Duke, Darden (Virginia), Tuck (Dartmouth), and overseas, London and
INSEAD.  I am sure I missed one or two good programmes in that list --
your mileage may vary.