I know that this might be better placed in money section but it is more closely linked to your job:
Definitely look into employee sponsored retirement accounts. Whether it’s with a company match (where your firm matches your contributions) or offers a plan with significant benefits, you should be investing.
Also, a small tip for those being offered company stock, I tend not to support holding on to them beyond the vesting period or after you have left the firm. I say this because usually that is a hook used by firms to keep the employees from leaving/while making sure that their performance is held high.
the pretax contributions also reduce your taxable income
people say oh I cant contribute so much etc, but once it just stops showing up in your paycheck you adjust.
employer match is free money, companies vary, but I have seen 100% match upto 6% of base, plus employer may make discretionary contributions as well. this is free money, which people will miss unless they are contributing.
and the sooner you start, the better. enjoy the power of compounding.
I totally agree with you guys!! It's the best way to look out for your future...and like you said...its "free money...for you future" My company does this and I contribute the max that I'm allowed and they match it....what could be better! lol
There are positive tax implications but they vary from country to country. Most MNCs do have the availability of retirement accounts, which means that people should be taking advantage of it.
Since we are not permitted to put money in interest bearing accounts or buy bonds, investing in the global stock markets might provide a strong return.
Remember folks you make or lose money when you sell, so please don't worry about how much your portfolio is down when you have 10+ years to retirement.
I am hoping someone could help me this. I am about to start my first graduate job in a few weeks with one of the major banks in the UK. As part of the salary package, I am entitled to shares, pension scheme and retirement savings plan (collective).
I am overwhelmed by all the add-ons. Could someone advise me best in what to opt in for and what not to do?
With regards to the pension scheme, we are also allowed to take the yearly equivalent as wage instead. Should I invest this in a private life insurance plan or just save?Or even contribute to the pension scheme?
It’s hard to recommend what is best for you because we need to know what your plans might be.
As a rule, always take part in retirement plans where the firm is willing to contribute a portion. In the case of a pension, what are the guidelines and the vesting period to be eligible for the benefits.
My best advise is for you to schedule some time with the Benefits consultant at your firm. If no one is available, then get all the literature, get some chai/coffee and start reading.
Remember, if this is your first job and your investing, try to take a long term perspective on where you want to be 20-30 years from now. All the best!
If you have any specific questions, please share them and I’ll do the best to help!
here is a good general question..
should people contribute to retirement accounts or pay off loans.
the short answer is, look at the net effect
e.g. tax savings, interest rates on loans vs return rate on investments etc.
the detailed answer is the financial guru i.e. pakone's homework :)
here is a good general question..
should people contribute to retirement accounts or pay off loans.
the short answer is, look at the net effect
e.g. tax savings, interest rates on loans vs return rate on investments etc.
the detailed answer is the financial guru i.e. pakone's homework :)
:D
X2 bro just trying to spread a little financial literacy. I do like your question, there are many variables involved, I'll bring up a few factors (assuming that you are US based, in your 20s):
Retirement Accounts: Is the a company match or not? If there is definitely contribute to the maximum amount that will be matched. Ideally you'd be receiving $1 to be matched by $1 from the firm up to a percentage of your income or flat amount. If there is a match your effectively doubling your investing power, so INVEST.
Roth IRAs: Invest right NOW. You will pay using post tax dollars and the current rate of the US deficit and spiraling spending. taxes should be higher 20 years from now. INVEST.
Loans: There are many types of loans so I'll bring up common types of debt:
Credit Cards: If you are carrying a balance with higher interest (anything above 10% is high). PAY THEM OFF. You enjoy no tax benefits and the finance charges/associated credit card fees are ridiculous.
Student loans: Unless they are private loans, most student loans have lower tax rates when govt sponsored and are tax deductible. Also depends on the how much of a balance you are carrying (If its $5K vs. $50K). So it DEPENDS.
Mortgage: Again depends on circumstances. I prefer an accelerated payment schedule. Small trick, if your mortgage company allows for bi-weekly pay option, you should definitely select it. It reduces principal much faster and depending on your term, you might be able to pay off the mortgage much faster. So it DEPENDS.
Car Loans: I hope you didn't buy new unless it was cash for clunkers or otherwise subsidized program. Cars heavily depreciate (lose value) as soon they are driven off the lot. If you are looking to buy, might as well buy a 1 or 2 year old car with a solid reputation like Honda or BMW. If your loan interest rate is low then you might consider waiting for the payments or else PAY THEM OFF.
Guys these are just STARTING POINTS to make you think about your financial, don't take it to heart. If anyone specific questions, I will do my best to help so bring them up and be as detailed as possible.
X2, I don't want to insult anyone but when the level of financial literacy is so low, I don't think that people will be able to calculate the net effect which is why everyone should have an accountant/financial planner helping them chart their financial course based on their individual/family goals and retirement plans. It's really foolish to save a few hundred in accountant fees when you may have potentially lost thousands in poor investment choices or needlessly paying interest.
Now anyone want to help me review this pitchbook that will take all night? My lafanga Analyst is away celebrating his gf's birthday.
the level of financial literacy is low, but then also I think people do not get prepared properly, in schools or even universities. and especially for people who have moved to a new country for education and end up staying its not like their elders know the system.
good explanations though. thanks for taking the time.
aside from investments, a big thing to focus on is credit ratings, many ppl screw them up not knowing how it works, although with tons of info on the net its much easier now.
the level of financial literacy is low, but then also I think people do not get prepared properly, in schools or even universities. and especially for people who have moved to a new country for education and end up staying its not like their elders know the system.
good explanations though. thanks for taking the time.
aside from investments, a big thing to focus on is credit ratings, many ppl screw them up not knowing how it works, although with tons of info on the net its much easier now.
I agree with you on the lack of proper education but when I received my first paycheck I was incredibly worried about financial planning and spending money. I had more money than I needed at that time and wanted to park it in an investment vehicle with a strong return. So we all need to do our part to learn, instead of expecting others to spoon feed us the information. After all it will benefit the individual's retirement plans the most, that alone should be the greatest incentive.
I'd like to do a credit rating write-up as time permits. Also with the latest proposed legislation, there might be some significant changes ahead.
I'm not in banking. though in the financial industry - working as a junior trader aka everyone's biatch...
how did 2008/2009 treat you guys' portfolios?
No worries, traders have the better hours :D
We were down in '08 but had bounced back by Q1 09. Murder and Inquisition activity was down overall, but my energy group did knock out a few solid ones.