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I just got a job!!!

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I just got a job!!!

Postby mikus » Mon Jun 19, 2006 3:14 pm

Finally, after six solid years of college, I am set to enter the work force next Monday. I am working for a company called Intergraph Services Company in Huntsville, Alabama. I will be making nautical maps for use overseas.

Anyway, I have some questions about 401k. If you have one, what percent of your paycheck do you contribute? Intergraph matches 50% of my contributions up to 6 percent of my paycheck.

Also, what should I invest my 401k in? My friend -- an accountant for Ernst & Young -- told me to go all stock, since I am still young and although it is risky, should have the largest reward. What do y'all think?

If you any info at all to share, please offer it here. I am nearly clueless about this stuff. Thanks!
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Re: I just got a job!!!

Postby The_Dude » Mon Jun 19, 2006 3:18 pm

mikus wrote:Finally, after six solid years of college, I am set to enter the work force next Monday. I am working for a company called Intergraph Services Company in Huntsville, Alabama. I will be making nautical maps for use overseas.

Anyway, I have some questions about 401k. If you have one, what percent of your paycheck do you contribute? Intergraph matches 50% of my contributions up to 6 percent of my paycheck.

Also, what should I invest my 401k in? My friend -- an accountant for Ernst & Young -- told me to go all stock, since I am still young and although it is risky, should have the largest reward. What do y'all think?

If you any info at all to share, please offer it here. I am nearly clueless about this stuff. Thanks!


First off, congrats on the job, man!

If you can afford it, invest the maximum amount that they'll match in your 401K - and go all or 75-90% high risk/high yield (stock, foreign stocks, etc.), since you're young, and the market will go up in the long run.
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Postby HskrPwr13 » Mon Jun 19, 2006 3:23 pm

Congrats. Put into the 401k at least 6% otherwise your giving away a free 3%. As far as putting more than 6%, you might want to talk to a money manager about that. You may incur less taxes down the road by putting money into an IRA versus 401k. Either way, save as much as possible. You cant beat compounded interest. ;-D As far as stocks and such go, again its best to talk with someone to gauge your risk threshold although it sounds like your young enough to where you can be a bit risky with your investments. Spread the money out. One week bonds are performing, the next its corporate stocks, then its international stocks. If you dont have someone to talk to or want to spend the money, do a little homework on the different avenues that your company offers for your 401k investments, and make an educated guess. Just make sure you spread it out a bit to somewhat hedge your bets.
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Postby Dan Lambskin » Mon Jun 19, 2006 3:28 pm

agree with what's been said

congrats
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Re: I just got a job!!!

Postby jayday » Mon Jun 19, 2006 3:36 pm

Big congrats on the job man ;-D

And I agree with Duder that you should invest the maximum amount that they'll match....I'm not as much into stocks to give advice, but what Dude said sounds like a good idea as well....
The_Dude wrote:If you can afford it, invest the maximum amount that they'll match in your 401K - and go all or 75-90% high risk/high yield (stock, foreign stocks, etc.), since you're young, and the market will go up in the long run.
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Postby Twisted Sister » Mon Jun 19, 2006 3:37 pm

Congrats... at a minimum, do the full match (otherwise your flushing money down the drain).

For retirement, you should try to save between 15-25%. I typically max out the 401K (going beyond just the match). The pre-tax dollars saves you income tax as well.

Short term, you need to build up some cash for emergencies in a savings/money market account. Try to get it up to at least $10K... it may take you 1-2 years if you're also maxing out the 401K and just out of college.

Stay away from credit card and other debt (aside from a mortgage and a modest car).

Follow these guidelines and you'll be in great shape... I am.

In terms of mutuals, do your research. The_Dude's advice is pretty much what you're going to hear from a Financial Analyst. I can't fault it.

However, personally I don't have that risk tolerance, and opt for an S&P 500 Index fund as the foundation of my portfolio. Whereas many mutual funds are contigent on the decisions of fund managers (humans), the S&P is the market. The S&P and other index funds typically beat out over 90% of managed mutuals over the long haul (20 year period). So you have a 1 in 10 chance of picking a fund that will outperform... no thanks.
Last edited by Twisted Sister on Mon Jun 19, 2006 3:39 pm, edited 1 time in total.
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Postby dream_017 » Mon Jun 19, 2006 3:37 pm

Congrats. I put in 4% and I agree with the others that mention the higher risk since you are young ;-D
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Postby onnestabe » Mon Jun 19, 2006 3:52 pm

Congrats on the job Mike, maybe now you will make your UKL draft picks on time :-b

As far as the 401k stuff, definitely start off contributing the 6%. If you can afford to put more in, do so. The maximum yearly contribution allowed by law was $14k last year, and it is absurd how much money that will turn into by retirement, so the best thing to do is draw up a budget and put as much as you can afford to save into the 401k.

As far as tax issues go, it is a matter of your tax bracket is now compared to what you expect it to be when you retire. 401k contributions aren't taxed until you take them out, so if you will be at a significantly higher tax bracket at retirement, it may be better to contribute to a Roth IRA (some employers offer Roth 401ks - you may want to ask yours about it). Contributions to a Roth IRA/401k are taxed in the year in which you make the contribution, but withdrawals are tax free. No matter what, make sure you get the full benefit of the employer match at the very least.
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Postby ironman » Mon Jun 19, 2006 3:57 pm

Nice, is that the same Intergraph that makes GeoMedia? We're supposed to be getting a license for it soon. It'll be nice to have another GIS program at my disposal. Right now I just use ArcGIS.
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Postby xted30 » Mon Jun 19, 2006 6:13 pm

First off, congrats on the job. Secondly, if you can afford it, go with the 6%. You definitely want that free money. Thirdly, being in the financial industry, most 401k's offer mutual funds as opposed to stocks and bonds. That being said, equity (or stock funds) are your best bet for growth. As was said, over the long haul, the market tends to go up. Bond funds offer stability, but less growth potential.

The portfolio mix really depends on a couple of things.
1. As was mentioned, your age determines a lot. You have a long time frame until retirement, when you'll need this money.

2. Your risk tolerance. Just because you're young doesn't necessarily mean YOU personally can withstand a lot of risk. You want to feel comfortable with the ups and downs of the market, meaning are you someone who sweats losing even a couple bucks, or can you stomach some big swings like we've had in the last few weeks.

Lastly, again, if you can, try to take advantage of the fact that you can contribute to a 401K AND and IRA. Whether Roth or Traditional really depends on personal views on tax brackets later in life, but a Roth grows tax free, where as a Traditional is Tax deferred.

Good Luck! Any questions, let me know.
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