Description

Better spends some time talking to an expert to go over a few ways one can work on spending, particularly recent College graduates.

Transcript

Audra Lowe: When recent graduates get their first job, first thing most people want to do is celebrate. Why not, right? But sometimes this celebration can lead to big purchases like getting a new car, something expensive, that's way beyond their mean. So today Maribel Aber is here. She is a Financial Expert, Lawyer and Former Executive of the NASDAQ stock market. She is here to talk to us about how we can help our college grads plan for their financial future and not put their money down to nothing, before they have a chance, right? Maribel Aber: That's right, that's right. Audra Lowe: Welcome back. Maribel Aber: Thank you! Audra Lowe: Good to see you here. It's tough you are getting out of college, you spend a lot of time in college and you want to get out and do something fun with your money and even if it comes to getting your first job, lot of people aren't making that much money when it comes to their first job. But you are saying that they should still focus on saving their money, right? Maribel Aber: Well, it's -- I like you call it -- to not scare anybody, planing for your future, right? And it's so important to start early, because you are right on point right there. Let me give you an example of how you can start early. So you are 20 years old, you are just jumping, you are getting a new job, and you want to invest, so just take a $100 a month. A $100 month that is at 5% compound interest-rate, by 60 your NASDAQ or that investment alone would yield more than $153,000. Now if that 12-year-old had waited until they were 40, they yield about $40,000. Audra Lowe: Interesting, that's big difference. So part of that is it's really about education, you have to know this obviously, it's too late for a lot of people to get to that $153,000 mark, right? Alright, let's talk about the investment vehicles that are out there for college grads, they can't take advantage of. They are pretty simple but it helps. The most traditional form is just opening up the savings account. Maribel Aber: That's right, just open up the savings account, that or a money market fund? Audra Lowe: Yes. Maribel Aber: And that offer to a mutual fund and they'd actually tend to yield a higher interest rate so that something to consider. Another vehicle could be investing into stocks, exactly, we all heard about investing in stocks and what is it? Stock is an ownership in a company. Audra Lowe: And they've got time to if they want to invest it into the stock market. Maribel Aber: Absolutely, exactly, that you are not as risk at first, because you have the time, right? Audra Lowe: Exactly. Maribel Aber: So I would say, do the research first. You want to always do the research and look at things I mean everybody's on the internet right now, right? So look at Yahoo Finance, look at Google Finance and there is a new one that I just read about from the last few journals, FiLife.com. So just different ways, don't be afraid. Audra Lowe: Right. You got educate yourself, that's a little way you end up learning, right? Maribel Aber: Absolutely! Audra Lowe: Okay, a mutual funds, ETFs also. Maribel Aber: Mutual funds and ETFs, if you like stocks but you want to like a bigger, sort of diverse portfolio, an ETF is an Exchange Traded Fund and a Mutual Fund is actively manage by a fund manager. They are secured pools intensive stocks but the actively one as a mutual fund is continuously going in and out. So you want to also look, see if you are more into the ETFs or if you have a static group, or more into something like an actively manage fund. Audra Lowe: And when they do get their first job, they have to look into the 401K plan, it's like giving money away. Maribel Aber: That is my biggest, biggest, biggest point right there. You have to, I mean the 401K plan is the retirement plan for the company and to the employees. In 2009 you can contribute up to $16,500 now, and the way that most people do it, is just contributing a portion of their salary. So the great news here, is this is not reportable income, so you don't get tax until after withdraw the funds, hopefully when you are older. And the biggest selling point, and why all employees should be in it is because a lot of times the firms match. So if you are putting in 3% of your salary and they match 100%, why wouldn't you take it? It's like they are inciting you for invest in the future. Audra Lowe: So leaving money on the table for you to take. Maribel Aber: Exactly! Audra Lowe: Alright, well these are all good points. Thank you so much, helping out a lot of parents out there and college students too. 1