Delia, another followup from BMitch
BMitch: There's nothing short-term about an aggressive mutual fund. If you're also earmarking that money for emergencies, I'd say you need to break out that 3-6 months' of expenses in something much, much safer, like an FDIC or CUNA insured savings account.
BMitch: Understand that the employer-paid disability insurance means that those benefits, should you become disabled, are taxable income to you. So you may want to consider whether the coverage is sufficient for your needs.
Pat, you can take this one from JacquesR
Pat, here is a question for you from from Jay8829
Jay8829, thanks for your question. So glad you are asking these questions early in your career. Now is the time to make savings a habit! Here are some suggestions:
Jay8829, you might want to consider these priorities - first be sure that you have 3-6 months of your normal personal expenses in a liquid account, to cover those periods of time when cash flow may get tight. This can come at first from your "extra" cash and if you save "from the top" first, then you can next consider long term savings/investments, preferably in an IRA or Roth IRA. Set a target, say 5-10% of your gross income, to be saved long term and again, do that "from the top." Then, anything remaining can be freely spend on your business. As your career develops and your income increases, you can then start to think about long term investments to supplement your retirement and safety savings. Hope this helps!
Travis, you can take this question from Sand
And here is a second question from Sand, Travis
Sand: This is a great question! This all depends on your level of risk as well as your current level of investment in the market. If you are almost fully invested right now I would have to say I would keep some new cash available to invest on market dips/correction. If you have 50% of your portfolio in cash I would find a couple safer investments to put some money to work, definately not all of it but nibbles here and there.
Sand: Fair market value is a bit of a vague topic that should be addressed with a CFP in person. I apologize I do not have a better answer for you at this point. Thank you for your questions!
Delia, here is a question for you from Drew
Drew: Good point. A good tax advisor who does some tax planning could answer the tax-related questions, but you also have questions more geared to a CFP, including cash flow, planning/budgeting, investments, etc. So I recommend you go to www.napfa.org and look for a fee-only financial planner in your area.
Brent, when you're ready, here is a question from Brandon
Brandon: Your first priority should be having a sufficient emergency fund: 3-6 months of living expenses. Second, while paying down debt is generally a good thing, I wonder if you could be using some of your current cash flow to avoid having your fiancee taking on even more student loan debt and having to pay the associated interest.
And Pat, when you're ready, here is one from Nate
Nate, your question is a little hard to answer as we don't have full information on your current income, spending habits, and what your retirement will look like. But here's a start, and some thinks to think about. You will notice that all of the advisors on this chat will recommend that you have 3-6 months of normal expenses held in some sort of liquid account (such as your great high yield checking account). You are making a good contribution to your 401k plan but it's not possible to tell if that will be enough to fund your desired lifestyle in retirement (along with other resources such as Social Security and pensions). You might want to check out some of the retirement calculators available to you (I believe Kiplingers has one) to see if you are on track. At that point, you can calculate what your overall spending capacity is/will be (and a proper savings rate), and then it's up to you to decide how much of that spending "nut" can be allocated to fun things, along with the necessities. I would encourage you to see a financial planner as everyone's situation is so unique that we can't really give you a good answer in this forum.
Nate, as long as you are properly funding your retirement and can meet all of your fixed living expenses now and in the future, then it's up to you to decide on your "fun" spending level and a good planner will give you permission to do just that! You actually can save too much - and I totally understand how that can take the fun out of life (and your spending)!
Delia, you can take this one from Jeff
Jeff: Congratulations on finding a job right out of college. Here are some steps to consider:
* First, be sure you start on a savings account for emergencies. The goal is to eventually have 3-6 months' of expenses set aside somewhere safe, like an FDIC-insured account.
* Second, you don't mention debt, but certainly be sure you're not carrying balances on expensive credit cards. If you have student loan debt, be sure you're paying the lowest interest rates you can
* You don't say if you're saving for a home, but if you are, that would favor contributing to a Roth IRA. In 2013 the maximum contribution is $5,500, and although you don't get a tax deduction for contributing, the funds grow tax free, and you can always withdraw your original contribution.
* Then check the benefits the tech start up is offering you. Be sure you have medical coverage and ideally, disability coverage. If there's no disability check to see if your state offers it; if so, you'd pay it as a deduction from your paycheck.
So these questions should help guide you to an answer of whether or not to contribute this year, and if so, how much. In general, I like to have clients contribute 10% off the top towards retirement, even though other goals may compete for that money.
Brent, when you're ready, I'm re-posting this question from Eric
Eric: You are absolutely not too late to begin saving for retirement! In fact, if you start now, you will be far ahead of most Americans that are much older than you in just a few years (sad, but true). What is great is that you've already laid the groundwork of a solid financial foundation (emergency fund, no debt). To start with retirement savings, I would consider a Roth IRA. You and your wife can each contribute up to $5,500 per year (in 2013). Do you think you could save 10% ($7,000) of your income per year toward retirement? If not, start with a lower amount that you can afford, then work to increase it over time.
@ Eric -- that's why we call it Jump Start!
Brent, we have a followup for you from Brandon