Travel Budget, Money Matters, Financial Talk Mom, can I borrow ten grand?! Gimme yo mastercard! How the heck can I pay for my trip?! Ideas for making money. How much dough do I need?
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11-16-2007, 03:00 PM
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#1
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IRAs?
yeah so my boss is some big finance guru, and he's tired of watching me spend money every day on amazon.com and is trying to talk me into opening up an IRA and putting a good bit of money each month in it while I'm here, and then dropping down to whatever I can afford when I am back in school, and once I'm in the real world again, kicking it back up.
I know it's prolly a smart thing to do but since I don't grasp things that aren't tangible right now (like, sure having money in like 40 years would be sweet, but it's hard to see it that way when you're 22). his cousin opened up one when she was 20 and I guess will end up with like 1.6 million by the time she's 60 at the rate she's going. So I see that it's a good idea to start early.
I guess I don't really get the whole thing. I know that there's some pentalty iof you take out your IRA early, and you have to claim it as income on your tax return and pay taxes on it. but that's really all I know about it.
any of you have an IRA? what do ya'll think?
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11-16-2007, 03:07 PM
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#2
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It is not a bad idea to start saving now for retirement. I don't know much about IRAs. I know there are IRAs and Roth IRAs. I was just thinking about the same thing. I'll look into it.
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"An oppressive government is more to be feared than a tiger, or a beer."
-Confucius
Somewhere in England (maybe) - Spring (TBA)
Israel - Summer (TBA)
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11-16-2007, 03:24 PM
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#3
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No one regrets traveling
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A Roth IRA is great for young people.
The IRS will tax you one way or another. Either you pay now and you don't pay when you withdraw, or you don't pay now and you pay when you withdraw.
So the bottom line there is if you are near retirement you probably want to contribute to a traditional IRA because you are at the end of your career and making more money than you will once you are retired.
If you are young, you want a Roth IRA because you probably aren't paying much in taxes and it grows tax free. A pretty neat little rule is the rule of 72. Take your interest rate divide it into 72 and the result is how long it takes to double.
For example, $1000 invested at 8% will be worth $2000 in 9 years, $4000 in 18, etc. in 45 years it will be worth 32,000. Make the 1k, 3k and do that for a couple of years and badabing you are a millionaire come retirement...in future USD which may not be worth much
Make sure there is a healthy international fund in there :D
--Joey
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11-16-2007, 03:37 PM
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#4
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Joe basically explained it, but just to clarify:
-if you deposit $1,000 in a regular IRA and you make $20,000 a year, you only pay taxes on $19,000 for that year. Your IRA deposit comes off your taxable income therefore it saves you some taxes. Then, when you retire, whatever you take out of your IRA each year is taxed then.
-if you deposit $1,000 into a Roth IRA and make $20,000 a year, you pay taxes on the full $20,000, just like you would if you didn't contribute to an IRA at all. However, as Joe mentioned, when you withdraw money after retirement from the Roth, you pay no taxes. It's a good deal.
Actually, they are both a good deal. You can set up an IRA with a bank or an investment company, such as Fidelity. You can then select different investment options like mutual funds. Its just like a 401(k) plan, except its not through your employer AND you are only allowed by law to deposit up to a certain amount each year, I think its around $3,000 or so. You should absolutely do it if you have the cash to spare.
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\\Jamie\\
"Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety." Ben Franklin
"The plural of anecdote is not data"
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11-16-2007, 03:50 PM
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#5
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is it possible to get a european one or something? joey raises a good point and I don't want to invest all this money to have it amount to like ten bucks when I'm 60 because the USD shit the bed.
I know very little about investing and finance, but even less about those things in the international plane.
to illustrate my knowledge of expertise vs. my bosses, he was teachingme the basics of the stock market today and he had is Janus account up. After he was finished I explained to him what the 2-faced logo for Janus meant and the whole story behind Janus from Roman mythology and what he represents and his stories. LOL. I like to contribute what I can.
I agree though, this is a good idea, especially with the deployment money, I can afford to invest, and probably should.
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UP NEXT: Mexico, Belize, Honduras, Grand Cayman Islands - Feb 2012
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11-16-2007, 04:29 PM
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#6
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Quote:
Originally Posted by pinknic38
is it possible to get a european one or something? joey raises a good point and I don't want to invest all this money to have it amount to like ten bucks when I'm 60 because the USD shit the bed.
I know very little about investing and finance, but even less about those things in the international plane.
to illustrate my knowledge of expertise vs. my bosses, he was teachingme the basics of the stock market today and he had is Janus account up. After he was finished I explained to him what the 2-faced logo for Janus meant and the whole story behind Janus from Roman mythology and what he represents and his stories. LOL. I like to contribute what I can.
I agree though, this is a good idea, especially with the deployment money, I can afford to invest, and probably should.
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I'm not an economist or financial wizzard by any means, however, I understand from market reports the "prediction" is the U.S. Dollar is going to get weaker, due to an inflated Chinese market, for the next two years before the dollar gets stronger again.
I also read somewhere that the best place to secure a bank loan is in Switzerland since their interest rates are low. In turn, the loan can be invested in a high interest market. I think you need money to do this.
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You can't take a shirt from a naked man. - Arab Proverb
"An oppressive government is more to be feared than a tiger, or a beer."
-Confucius
Somewhere in England (maybe) - Spring (TBA)
Israel - Summer (TBA)
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11-16-2007, 04:54 PM
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#7
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An Optimistic Realist.
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Since Joe pretty much covered the bases.. I will only say this.
The U.S. dollar will always be a staple. At least in our lifetimes. The dollar falling is a good thing for the business aspect as it makes importing more expensive. But it won't stay low. It will come back.
Also, if I would have begun investing in Apple Stock (AAPL) on my 18th birthday with $40/wk ($13,800 total investment) it would be worth over $230k today. Not all stocks make money, you can make quite a bit if you do a little research.
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.~Sijuki~.
2009-2014: February - Mexico (Cancun x 3, Cozumel x 1, Mazatlan x 2
2014 : Europe: Norway, Denmark, Hungary, Czech Rep, Germany, France, England
2015 : US:Yellowstone, Grand Teton, Joshua Tree NP, Salton Sea, Grand Canyon, Petrified Forest, Mt. Rushmore. 20 states. Europe: Stockholm, Barcelona, Madrid, Prague, Krakow, Warsaw, Ireland (month driving around), Northern Ireland, Edinburgh.
2021: Europe?
Need a Railpass for that Trip to Europe?
Or Maybe a Hostel Reservation?
Frog Creek Brewing -- Upcoming Microbrewery
Sijuki@gmail.com
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11-16-2007, 09:15 PM
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#8
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Just remember that if you are in your twenties right now...you have 40 years to go until retirement. Don't worry about a short term dip in the dollar (several years is short term) when you are looking at 40 years down the road....it is irrelevant. 40 years ago the Euro didnt exist. Diversity is key...domestic mutual funds, international funds....you want some of each.
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\\Jamie\\
"Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety." Ben Franklin
"The plural of anecdote is not data"
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11-17-2007, 05:58 AM
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#9
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Another thing I've learned is that you have to actively manage the money in your 401(k). I had some friends just evenly divide their input into every available option without looking into them thinking this was the best way to diversify. Yeah, well we were like 22 when we started and these people were putting money into mutual funds that were designed for people retiring 10 years from then so they were super ultra mega conservative. Not usually the best place for peeps with 40-50 years of employment ahead of them.
but i agree with what everyone has been saying regarding the IRAs. One of the goals for 2008 is to start the Roth one going.
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11-17-2007, 06:39 AM
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#10
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Quote:
Originally Posted by mbo108
but i agree with what everyone has been saying regarding the IRAs. One of the goals for 2008 is to start the Roth one going.
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I'm going to open a Roth too. I have been wanting to do it for a while.
__________________
You can't take a shirt from a naked man. - Arab Proverb
"An oppressive government is more to be feared than a tiger, or a beer."
-Confucius
Somewhere in England (maybe) - Spring (TBA)
Israel - Summer (TBA)
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11-17-2007, 03:18 PM
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#11
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i have a decent 401(k) account set up with my company. they match up to 5% which is great.
(semi-nerdish rant ahead)
in terms of the us dollar, despite all the bad press that's been going out about the dollar, it will still be a benchmark currency. while 20 years ago it would have been the single default trading currency, it is now sharing that with the euro and to the lesser extent the GBP. however, as long as oil continues to be traded in us dollars worldwide it is in no danger of being replaced by the yuan or rupee.
the only thing that sucks is the dollar's low value. this seems to be caused by the stregnth of certain worldwide currencies on top of the current economic situation in the states. my company buys our product in euros and sells in us/canadian dollars which is forcing us to lower our margins and raise our prices, it seems though (at least according to our CFO) the dollar will correct itself.
if you want a stable currency to invest in, apparently the swiss franc is the most stable.
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11-17-2007, 11:51 PM
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#12
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An Optimistic Realist.
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If you would like to know what a nerd I am.. I have my 401k from work, a mutual fund account my parents opened for me, a Roth IRA, and 4 Individual Stock accounts that each has it's own portfolio strategy.
While I have had to tap into each one for various reasons in the past (laid off, starting the business, moving, etc). I try to keep them all maintained in some way. Plus, I participate in my companies Employee Stock Purchase Program. Yep, I'm a dork.
__________________
.~Sijuki~.
2009-2014: February - Mexico (Cancun x 3, Cozumel x 1, Mazatlan x 2
2014 : Europe: Norway, Denmark, Hungary, Czech Rep, Germany, France, England
2015 : US:Yellowstone, Grand Teton, Joshua Tree NP, Salton Sea, Grand Canyon, Petrified Forest, Mt. Rushmore. 20 states. Europe: Stockholm, Barcelona, Madrid, Prague, Krakow, Warsaw, Ireland (month driving around), Northern Ireland, Edinburgh.
2021: Europe?
Need a Railpass for that Trip to Europe?
Or Maybe a Hostel Reservation?
Frog Creek Brewing -- Upcoming Microbrewery
Sijuki@gmail.com
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11-18-2007, 02:22 AM
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#13
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Quote:
Originally Posted by Sijuki
If you would like to know what a nerd I am.. I have my 401k from work, a mutual fund account my parents opened for me, a Roth IRA, and 4 Individual Stock accounts that each has it's own portfolio strategy.
While I have had to tap into each one for various reasons in the past (laid off, starting the business, moving, etc). I try to keep them all maintained in some way. Plus, I participate in my companies Employee Stock Purchase Program. Yep, I'm a dork.
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There is nothing dorky about that. Someday, while I am picking my lunch out of garbage can, I will look up and see you driving by in your hot new convertable full of dumb blonde babes. Then I will say, "I should of gotten me one 'em Roths."
__________________
You can't take a shirt from a naked man. - Arab Proverb
"An oppressive government is more to be feared than a tiger, or a beer."
-Confucius
Somewhere in England (maybe) - Spring (TBA)
Israel - Summer (TBA)
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11-18-2007, 07:19 PM
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#14
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An Optimistic Realist.
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It's honestly about the only way I can con myself to save money. Cause I find some joy in buying stocks.. it's like gambling. Luckily I do relatively decent at it.
__________________
.~Sijuki~.
2009-2014: February - Mexico (Cancun x 3, Cozumel x 1, Mazatlan x 2
2014 : Europe: Norway, Denmark, Hungary, Czech Rep, Germany, France, England
2015 : US:Yellowstone, Grand Teton, Joshua Tree NP, Salton Sea, Grand Canyon, Petrified Forest, Mt. Rushmore. 20 states. Europe: Stockholm, Barcelona, Madrid, Prague, Krakow, Warsaw, Ireland (month driving around), Northern Ireland, Edinburgh.
2021: Europe?
Need a Railpass for that Trip to Europe?
Or Maybe a Hostel Reservation?
Frog Creek Brewing -- Upcoming Microbrewery
Sijuki@gmail.com
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11-20-2007, 10:28 AM
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#15
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TPunk Moderator
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well I have decided to do it, through USAA, there are some great options, now that I've educated myself on the basics of personal finance. my boss told me I can afford to get a more aggressive one since I am young and roll over later, but I don't think I am confident enough in my knowledge to do all that. but USAA rules, ps.
also, I think my next adventure will be stocks with USAA because they've got a brokerage account where you get 25 free trades and each trade after that is 6 bucks. I think with all the big names like Janus and whatever, it's 12 bucks a trade and no free trades.
but I am not educated enough to hop on that train just yet. I only let myself go with dumb luck in Vegas!
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SO FAR: USA, Canada, Mexico, Ireland, Spain, Germany, Poland, Hungary, Kuwait, Qatar, Afghanistan, Kyrgyzstan
UP NEXT: Mexico, Belize, Honduras, Grand Cayman Islands - Feb 2012
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11-21-2007, 07:58 AM
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#16
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An Optimistic Realist.
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There is also Sharebuilder.com which has $4 stock purchases you can do. Basically you set it up and they do purchases on Tuesdays. You can always do a real-time trade for $15.95 (buy or sell).
But for someone that is just getting started and may not have a lot to invest the $4 trades can work well. Plus there are no other fees. (IRA yearly maintanance fee is $25).
Nicole I see you have the gov't plan, but for anyone else. It's really simple, and you can do stock research on their site and what not.
__________________
.~Sijuki~.
2009-2014: February - Mexico (Cancun x 3, Cozumel x 1, Mazatlan x 2
2014 : Europe: Norway, Denmark, Hungary, Czech Rep, Germany, France, England
2015 : US:Yellowstone, Grand Teton, Joshua Tree NP, Salton Sea, Grand Canyon, Petrified Forest, Mt. Rushmore. 20 states. Europe: Stockholm, Barcelona, Madrid, Prague, Krakow, Warsaw, Ireland (month driving around), Northern Ireland, Edinburgh.
2021: Europe?
Need a Railpass for that Trip to Europe?
Or Maybe a Hostel Reservation?
Frog Creek Brewing -- Upcoming Microbrewery
Sijuki@gmail.com
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11-21-2007, 12:04 PM
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#17
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Quote:
Originally Posted by pinknic38
well I have decided to do it, through USAA, there are some great options, now that I've educated myself on the basics of personal finance. my boss told me I can afford to get a more aggressive one since I am young and roll over later, but I don't think I am confident enough in my knowledge to do all that. but USAA rules, ps.
also, I think my next adventure will be stocks with USAA because they've got a brokerage account where you get 25 free trades and each trade after that is 6 bucks. I think with all the big names like Janus and whatever, it's 12 bucks a trade and no free trades.
but I am not educated enough to hop on that train just yet. I only let myself go with dumb luck in Vegas!
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I was looking at the USAA ones too. Small world. They are a good company.
__________________
You can't take a shirt from a naked man. - Arab Proverb
"An oppressive government is more to be feared than a tiger, or a beer."
-Confucius
Somewhere in England (maybe) - Spring (TBA)
Israel - Summer (TBA)
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11-21-2007, 08:18 PM
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#18
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Rabidly Xenophilic
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It's great you're starting out with some saving while you're young! It may seem like there is so much time ahead of you but starting early with just a little bit can make a huge difference. Have you ever seen one of these "power of compounding" examples?
http://finance.yahoo.com/expert/article/yourlife/1179
Quote:
Assume you start working at age 21. Assume that, adjusted for inflation, your real income grows by 100 percent in the course of your life (a very modest assumption). Assume that you invest in a broad portfolio of the stock market, say the Vanguard Total Stock Market Index Fund (VTSMX). Assume you take the very smart advice of my other investment pal guru, Ray Lucia, and keep lots of ready cash in a bucket so you don't have to tamper with your stocks and can keep letting them compound over long periods of time. Also assume you want to retire on 80 percent of your last year's salary before you retire at age 65.
If you start at 25 with six months' salary saved, you need only save 3 percent of your total, pre-tax salary per year to get the nest egg you need (roughly 15 times earnings at retirement) by age 65. But if you start at age 45, you need to save 18 percent of your salary (again, assuming you start out with six months' of salary saved). If you start at age 50, you need to save 28 percent of your salary. And if you start at age 55, you need to save nearly 50 percent of your gross salary to get where you need to be.
In other words, if you start with a sensible plan at a young age, you can get to your savings goal without breaking a sweat. If you wait until you are middle aged, it takes some serious doing.
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