23 YO College Grad Looking for Advice

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23 YO College Grad Looking for Advice

Postby Tzale » Sun Feb 17, 2013 3:29 pm

Hi everyone,

I am a 23 year old that graduated college in May 2011. I am looking for some advice on what to do next to invest in my future / maximize my R.O.I and finally move out of my parent's house into my own place.

In an effort to make an analysis of my personal financial status as efficient as possible this is where I stand in terms of personal assets as of today:

$80,000 cash in savings account
$5000 in savings bonds
2012 Mustang ~20,000 kb value
Motorcycle ~2-3k kb value
$7000 in 401k (just opened this month) (1:1 match from company)
$0 outstanding student loans / credit card debt

I make $65,000 a year as an IT systems administrator, at least $10,000 in OT per year (this can go up to $15-20k), and a $10-12k bonus putting me at $85-92k per year in gross income when all is said and done. My job is secure, I work for a stable wall street firm and I'm planning on staying here for the foreseeable future due to much room for upward mobility, unlimited free training reimbursement (this alone could be worth tens of thousands of dollars over a few years), full reimbursement of cellphone and transit to/from work, and an overall positive sense of well-being at this company. Note: I spent May 2011-Sept. 2012 working for a company paying me only $45k as I took the job stupidly after being on the market for only 3 days, hence the lower savings than to be expected at a 90%+ savings rate.

My questions:

I want to move out soon, I have remained living at home with very understanding parents since I graduated in May 2011, I'd like to be out by May-Aug. 2013. I did this to save cash for investments knowing it was the wise thing to do at the time. Do I rent or do I buy a small studio / 1BR apt? What should I be able to afford given my income and current savings for a down payment?

What should my investment portfolio look like? I have roughly $5000 in savings bonds from when I was a kid, and I just opened my first 401k last week with $7000 cash sitting in a balanced fund, what should I do here given my age (23)? Would buying an apt be a wise investment for my cash / future earnings to build equity in place of renting?

I do not have a girlfriend right now, so marriage or any other big expenses like that are not on the horizon. I live in New Jersey, and would be looking at moving closer to NYC where I work, or to the city itself if it is not too financially challenging. I could potentially sell my car and get back $15-20k as it is a 2012 and hasn't depreciated all that much. I do not spend all that much at present, saving 90-95%+ of my net income living at home currently.

Thanks for your help, your advice is much appreciated. I've been mulling over these questions in my head for a while now, and figured now is the time to seek advice from those in the know.

Bichon Frise
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Re: 23 YO College Grad Looking for Advice

Postby Bichon Frise » Mon Feb 18, 2013 8:39 am

Define "R.O.I." Are we talking just straight cash return? Or are we looking at "qualitative" things like getting a girlfriend and not living with your parents?

If you are just looking at straight cash return, you'll continue to live with your parents, save aggressively and invest the savings.

As you've probably found out, there is more to life than just maximizing your cash "R.O.I." No one here can tell you what is better to buy, as we don't know what value you put on certain things like roommates, an actual bedroom, what part of town you can tolerate etc. Given the fact that you are here asking complete strangers, I would recommend you rent to find out for yourself what you value. And one thing is almost certain, if you do get a girlfriend and eventually tie the knot, she probably will want something different than what you picked out.

As far as your portfolio, I'm a big believer in lazy portfolios. With your small balance, I'd go with one of the simpler ones.


PS. a home is not an investment. It is a place you live.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

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Re: 23 YO College Grad Looking for Advice

Postby Swapnil » Mon Feb 18, 2013 10:33 pm

I think you have to decide what to choose as per your requirement you have locked some small amount in the savings in some securities you have mentioned they can generate some income in the form of R.O.I on your investment which can help raise your balance.
Do invest some more amount in bonds or credit securities which can give you some sure % of return on the investment out of cash deposits in savings account, also said that you are not planning to get married right now, I will suggest you to stay with your parents back at your home and this will help you to still save the bucks spent now on either purchasing or renting a new apartment for the place you are planning to move, this can help you to even invest it in purchasing some new house in future when you decide to get settled or marry may be after 4-5 years or so, till then the bonds and the saving account deposit will generate you some income and also, you can plan to spend your salary in house expenses and save the part of salary opening some other bank accounts to get income from the savings in them too.
You may also get chances to get rise in your pay scale between this years so say $75000 to be precise including OT to say $105000 or so(lets not go for too big) so the increase in income will help you to save more. :)

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Re: 23 YO College Grad Looking for Advice

Postby marco_salinas » Mon Feb 18, 2013 11:16 pm

As what you have stated here in your post. I think you can afford to move now with your own from your parents. You income can accommodate your expenses. Keep up your good job with good salary. But be sure to seek advice from your friends and relatives if this plan of yours is good for you.

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Re: 23 YO College Grad Looking for Advice

Postby jesselne » Tue Feb 19, 2013 10:07 pm

Hi Tzale!

Great work on the savings so far, you're off to a great start! I'm a year older but graduated at the same time, make a bit less and you're quite a bit ahead of me as far as savings go!

That being said, I highly recommend moving out and living on your own for a while! I am of the opinion that you should experience all of the joys of doing your own chores, cooking your own food, and dealing with roommates sooner rather than later. There is much more to life than saving money! The people your meet and experiences you have will be worth much more than any amount you can have in your bank account as you grow older(or so I'm told). I personally can say that I have had much more satisfaction from the money that I have spent with friends and strangers making memories than any amount of money I have saved(not to take away from the importance of saving for your future).

Sounds like you live in the NYC area where there is access to just about anything you could want to do... Take advantage as it may not last forever!

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