I’m in my 20s and I’ve been really into saving for retirement since I was 18 when I opened up my own individual retirement account (IRA). This morning I read a New York Times article on saving 15% of your gross income just for retirement, then splitting it 33/33/33 percent into these accounts:
A US total stock market index fund
A international total stock market index fund
A US total bond market index fund
In If You Can: How Millennials Can Get Rich Slowly, it recommends doing it on your own. After using MarketRiders (try it and get $25!), I have a gist of what I should do (and what I’ve been doing for the last year) and I wholeheartedly think this is the best idea.
Since I use Fidelity, I use the FREE ETFs (exchange trade funds) that costs nothing to buy or sell (most costs $7.95 per trade at Fidelity). ETFs basically act as mutual funds but costs 0.10-0.30% vs 1-3% (so you keep more money! Woot). It’s a collection of companies in one ‘fund’ which is a great way to diversify. Often you don’t want to own just one company stock just in case it tanks.
Ok, so let’s say you really want to make this happen. Hypothetically, let’s say you have $3000 to invest. That means we will put $1000 into each major category. Here’s how I would break it down using the ETFs I recommend below.
A US total stock market index fund
I like the S&P 500 ETFs growth (IVW), blend (IVV), and value (IVE) because it follows the S&P 500, which on average over long term, it pulls in 10%. That means if you invested $5000, by the end of the year you’ll get back $500. That’s pretty good to me!
I also like the S&P small cap 600 growth (IJT) because it’s nice to invest in smaller companies. While there’s more ‘risk’ to it, it has a higher potential to bring more back to you.
Using a total of $1000 (as of 5/5/2014*; round up or down as you see fit): IVW: $250. 1 stock = 100.15* so buy 2 stocks. ($250/$100.15 = 2.5) IVV: $250. 1 stock = 189.21* so buy 1 stock. ($250/$189.21 = 1.3) IVE: $250. 1 stock = 87.51* so buy 3 stocks. ($250/$87.51 = 2.9) IJT: $250. 1 stock = 114.54* so buy 2 stocks ($250/$114.54 = 2.2)
A international total stock market index fund
I bought ACWI, but it’s hard to go wrong with one of the * ones which is a Core ETFs such as emerging markets (IEMG) or total international stock (IXUS).
Using a total of $1000 (as of 5/5/2014): ACWI: $1000. 1 stock = 58.65 so buy 17 stocks. ($1000/$58.65 = 17)
A US total bond market index fund
I recommend the Core Total US Bond Market (AGG) and High Yield Corporate Bond (HYG).
Using a total of $1000 (as of 5/5/2014*): AGG: $500. 1 stock = 108.58* so buy 5 stocks. ($500/$108.58 =4.6) HYG: $500. 1 stock = 94.00* so buy 5 stock. ($500/$94 = 5.3)
Just keep in mind that as stocks go up, bonds go down and vice versa. Don’t worry about the daily emotions of a stock — think long term. It’s a good idea to look at the profiles of the ETFs or any stock you’re interested in. What is the return? What are the rankings? What companies are they invested in? Do you agree with those selections (ethical investing can come later)?
By the end of the day, your hypothetical $3000 portfolio looks like this: IVW: $250. 1 stock = 100.15* so buy 2 stocks. ($250/$100.15 = 2.5) IVV: $250. 1 stock = 189.21* so buy 1 stock. ($250/$189.21 = 1.3) IVE: $250. 1 stock = 87.51* so buy 3 stocks. ($250/$87.51 = 2.9) IJT: $250. 1 stock = 114.54* so buy 2 stocks ($250/$114.54 = 2.2) ACWI: $1000. 1 stock = 58.65 so buy 17 stocks. ($1000/$58.65 = 17) AGG: $500. 1 stock = 108.58* so buy 5 stocks. ($500/$108.58 =4.6) HYG: $500. 1 stock = 94.00* so buy 5 stock. ($500/$94 = 5.3)
I’ve thought a lot about my impact on you, directly or indirectly. For me, one of my everyday joys is to view my blog stats and watch it grow every week. It’s the thing that cheers me up when I feel down, knowing that I’ve helped another soul gain insight into something that they didn’t know before. So thank you for reading my blog.
One of the most common questions I get through email is the following:
Is NYU Nursing worth it?
I think that by the time that you ask this question, you’ve already decided that a nursing career is for you. Now you’re deciding on which school to attend. Of course, with NYU as a top ranking school, you want to know if the tuition is worth it. Right now for the school year 2013-14, here is the tuition cost:
It’s about $21k for tuition. Plus fees and health insurance, it’ll cost about $24k per semester. As for a scholarship, I’ve heard they typically give students about $3-4k in “College of Nursing Scholarship” (that’s what I got). Let’s just say you have to pay about $20k for 4 semesters.
That’s about $80k, or approximately your first year’s salary as a nurse.
It’s quite possible that this is because many students stay in NYC area and the average starting salary as a brand new nurse is about $75k. Or graduates go back home to California and hot spots command an even higher salary (with a mandated lower patient-to-nurse ratio. That means less patients per nurse = more time with patients and less time running around making sure everyone’s safe. Because safety is always #1. That’s AMAZING!!).
This is even more than any business school. Only one engineering school and one computer science school beats NYU Nursing.
Just remember, sometimes it’s more about the LOCATION of the school rather than just the name. In NYC, private top hospitals command a higher salary compared to other locations.
Also remember that nurses run the hospitals. And yes, doctors go in and out, deciding on treatment plans, performing surgeries, etc. But a lot of time, nursing input is CRUCIAL and nurses are there 24/7 with the patients. So yes, while nurses do some ‘dirty work’, they are the ones performing much of the care. I remember during a code, a PA said that he knows WHAT to DO, but he needs to the nurse to DO it because he doesn’t know HOW. So I’m proud of that. And a lot of times nurses know what to do too… it’s just not ‘official’ until you have an order (that you may have suggested).
And as a nurse, from any school, you will be a vital part of the health care team.
But it still comes down to this. After you graduate from ANY nursing school, you will still have to pass the NCLEX and you will be a registered nurse.
A RN. And a RN is a RN.
On your badge, it’ll say that you are a RN. It doesn’t say which school. The only way for someone to know which school you went to is if you tell them. And yes, as a new nurse, a lot of people will ask you. Over and over again. And yes, patients will notice that you, as a new nurse, are just not as fast, or do things with grace, or seemed to be always crunched for time. But don’t worry. They will still appreciate what you do and you just keep going.
If you’re questioning if you should get a ASN or BSN, always go for the BSN, especially as a second degree student. You’d be in school for the same amount of time anyway and a BSN is standard now. Don’t waste your money and time on a ASN. I heard that most ASN are hired mostly by nursing homes now. And maybe that is the route you want to go but I say if you want to keep your nursing career options wide open, go for the BSN. Don’t limit yourself.
So let’s get back to the question:
Is NYU Nursing worth it?
There are two typical paths people take while going down the road of nursing.
If you wish to be a bedside nurse forever (and trust me, a lot of my colleagues have been. And they love what they do and they are amazing people!!!), then I think getting a BSN anywhere is ok.
If you wish to keep your options open, and you have that flaming desire to do more than bedside nursing such as management, informatics, research, global work, etc, then I think NYU Nursing is worth it.
Maybe it’s the characteristics of the students who go there have similar taste as you. Because they want the same things too. The same drive and ambition. The chances you take to learn something new and to overcome challenges. To not give up when it gets tough and to push forward. To help other coworkers and patients who aren’t assigned to you. To still have a smile on your face and still want more.
Maybe it’s the extra-edge of a ‘brand name’ school that gives you –or your future employer– the confidence. You’ll know you received a top level education and it doesn’t get much better than this (although as a student you’ll still think of ways to improve it because you can’t help it). You’ll know that whatever you don’t know, you’ll pick it up fast anyway and be able to perform at a top level.
Your future employer will know this school and not question its validity. Maybe not initially but down the road it becomes more significant. As you may or may not know, many of the top hospitals in NYC have Chief Nursing Officers (CNO) who are NYU Nursing graduates. Know that with pride.
Honestly though, you can still have all these desires to go on a winding nursing career and not go to NYU Nursing. It’s still an individual who decides her own path.
Here’s the second question:
How did I pay for my student loan?
Personally, I hate owing money. Especially at an interest rate of 6.8%. As soon as I started making money, I put everything I could into paying off my loan. Yes, you could pay the minimum payments for 10 years but I can’t do that.
For me, I had parents who were able to help me financially and I thank them for that.
I owed about $20k in student loans. After taxes, I received about $4k/month. Less than half went toward rent, transportation, and food. The other ‘more than half’ went to paying off the student loan as quickly as possible. In 6 months from December 2012 to May 2013, I paid out $15k, or about $2.5k per month.
In May 2013, I received a credit card offer for a balance transfer. Normally I ignored these but this one was offered at 1% fee. That meant instead of paying 6.8%, I could pay only 1% to borrow the money as long as I paid it off by the deadline of March 2014 (and also not use that credit card for regular purchases so credit card companies can’t confuse you with the different APR for balance transfer vs purchases).
I wrote the check to myself and cashed it at an ATM. I saw $5000 in my checking account. On the credit card, they deducted $5000 plus the 1% fee of $50. I paid off the rest of the student loan with that $5000 and that account was closed in May 2013. Then I spent the next 8 months from June 2013-February 2014 slowly paying it off about $650/month.
The good thing about this balance transfer is that I only had to pay $50 to borrow $5000. If I had left that amount in the student loan, then I would’ve had to pay $5000 * 6.8% = $340 to borrow that same amount.
Anyway, I hope this helped you. Please let me know if it did and if you have any additional questions, comment below or send me an email. Thanks.
We live in a world where money is king. We go to work to make money. Once we have money, we spend it on things that we need and want. Unfortunately, the US school system doesn’t teach us “Money 101.” Most Americans spend more than they make and owe credit card companies money. This is a problem!!!
Whenever I bring up topics about IRAs, 401k, stocks and taxes, my friends are often surprised by how much more I know about it than them. Wanting to help, I looked all over Google for the perfect step-by-step guide. I couldn’t find one. I’ve been thinking about creating one for the longest time now, so that they don’t have to keep saying, “Hey Jessica, can you go over that again?”
This guide is written in the order that I was exposed to them starting from when I was young to now.
My Money Story
Majority of what I learned about money is through my dad. As a 5-year-old kid browsing through the candy bars at the checkout lane, I asked my dad, “Dad, will you buy Twix for me?”
He replied, “No, but you can buy it with your own money. Did you bring your own money?”
Sad, I looked down and whispered, “No…” After I got into the car, I realized that it was just something I wanted, not needed to have. And that things cost money.
Just a couple of weeks prior, he opened up a savings account for me and gave me a weekly allowance of $5 (a dollar amount that matched my age so you can imagine my excitement each year on my birthday). He told me to save half in the bank and the other half in the cash box. In the first year at age 6, I had $120!
At age 10, my dad helped me buy a I Bond to save money at a higher interest rate (currently about 1.35%) compared to the bank’s saving interest rates (0.01%). Right now, there are 2 major types of Treasury Bonds – I Bonds and EE Bonds. Starting at $25, you can buy a Bond from the US Government online for yourself, as a gift, or for a child younger than 18. A ‘Bond’ is essentially lending the government money. In return, your money will go up at the rate of inflation plus a fixed rate that’s determined every 6 months. The purpose is to save for the long-term for up to 30 years. You can pull it out starting at 1 year but anything earlier than 5 years will have a penalty of 3 months of interest. Therefore, you would only ‘cash’ in the bond after 5 years.
Also at age 10, my sister bought a CD, or a Certificate of Deposit, which is another way to save at a higher rate (about 0.9%) but typically for a shorter period of time of about 1 year to 5 years. In case you anticipate to buy a large purchase down the road but you want to save as much as possible now, a CD is a good choice. However, personally I have never had a CD. You want to look for one that gives you the highest rate possible with no fees.
Most banks offer free checking accounts for kids age 13-18. I got my first one in middle school. This became my primary account where money flowed into and out.
Income: I got a job!
At age 15, I started to work part time (less than 10 hours/week). I got to deposit my paycheck into my checking account every 2 weeks. My dad’s word of wisdom is to ALWAYS deposit any check or cash you receive ASAP because you can easily lose it. It also creates a permanent record in your monthly bank statements. If possible, get direct deposit.
Sometimes you will get cash payments. You might think, “Oh great I have cash now, I don’t have to go to the bank.” It’s convenient! However, you need to have a record of how much you earned. Always deposit first before withdrawing it. The bank is your friend.
From the money standpoint, it’s important to have a working income because you need it to get a credit card, have a credit score, IRA, a car, rent, and really anything that you may need or want.
From a personal point-of-view, it builds character, teaches you how to interact with others, and gives you a head-start on your resume.
At age 16, I got my driver’s license and started to drive to school. Sometimes I needed to get gas. My dad got me an additional credit card under his name (with a very low limit of $300). This way I got to practice using credit cards. Here were the rules and the reasoning.
#1 Always pay with credit cards. Why: To have a record of your purchases. Also, most credit cards have purchase protection and warranty extension in case you don’t like your new product and cannot get a full refund. You’ll have less cash you carry. And if anyone steals your credit card, you can always cancel it and not pay for any items that you didn’t buy. With stolen cash, you’re left with nothing.
#2 Always pay in full. Why: Leaving any balance on your credit card means you will have a high interest rate (usually more than 10%) and pay much more. Why would you ever want to give someone more money than they should??! If you currently have any balance on your credit card statements, you have credit card debt. This is considered bad debt. Pay this off immediately.
#3 Always pay on time (or a couple days early if your credit card and bank are two different institutions to make sure you are not late with any payments). Why: Any late payments will result in a ‘late fee’ of typically $35 and decrease your credit score. One way to avoid this problem is to set to ‘automatic’ payments online. You just have to make sure there’s enough funds in your account before the due date each month.
You will probably see a couple of other things associated with credit cards.
Cash back, Miles, Etc
I personally like cash back. For every $100 you spend, you get $1 back (or more!) if it’s 1% cash back. Some have higher cash back percentages. Some cards give you miles. Just remember that you pay in full each month and don’t buy more than you need. This is just a bonus, not a way to make money.
0% Intro APR for Purchases for the first 15 months
This means that you can buy stuff and pay the minimum balance for 15 months. You are borrowing the money. You must pay off the entire balance before the end of the trial period otherwise you’ll get slapped with a APR that is usually more than 20%. That means for every $100 you owe, you’ll owe an additional $20 each year. Holy crap.
0% APR for Balance Transfers until Month/Year
This offer can happen when you first open up a credit card or in a form of a check that credit card companies religiously send to you several times a month (arg they are killing trees and it’s driving me crazy!!!). This offer is helpful if you have something else that you owe at a high interest rate (such as a student loan). Here’s how you evaluate if it’s a good deal.
It will always have a fee and a minimum shown like this: 3% fee with a minimum of $10. The minimum doesn’t matter unless you plan on using the check for small dollar amount. The only time I will consider the deal is if the fee is 1%. That means if I write a check for $5000, I will get charged $50.
The only time I used it was to pay off my student loan, which was charging me 7% interest rate. However, by using this balance transfer check, I paid only 1% on the $5000. That means I only pay $50 to pay back the balance in one year when the 0% APR expires. If I had left the $5000 student loan in the 7% account and paid off the account in one year, I would’ve had to pay $350. I saved $300 by using the balance transfer.
As you get older, try to keep the oldest credit card you have as that increases the length of your credit history. The longer your credit history, the better your credit score.
Free Online Money Management Service
At age 17, I had a checking account and a credit card with two different companies. To keep track of my spending and income, I used a free online money management service. I used Yodlee but now I recommend mint.com. You don’t have to use any of their recommended things. Basically you enter your account information and the service imports the rest of the transactions for you. They even have iPhone, iPad, and Android apps so you can keep track of your spending everyday.
IRAs (Individual Retirement Accounts)
The day I turned 18, my dad took me to Fidelity to open a IRA. “Dad, why do I need a IRA? I just turned 18!! I’m not retiring anytime soon!!!”
He replied, “Yes, but you will retire sometime. And time is the most important factor to make sure you’ll have enough when you retire.” And my, how true that is! You will always have more at the end if you put in (less) money early than (more) money later. Don’t put it off any longer.. get one today!!
To have a IRA, you must have income. For 2013, if you made less than $5500, the max you can put in is your total income. If you made more than $5500, then you can put up to $5500. Fidelity has a great program for people who are just starting out but don’t have that much. I put in $200/month into a Roth IRA through an auto-deduction with my checking account.
There are 2 types of IRAs: Roth IRA vs Traditional IRA. With Roth, your dollar gets taxed now (your paycheck is typically already taxed [net income]. That’s why you only see about 2/3 of what you actually made [gross income]). With Traditional, your dollar gets taxed later.
When you’re younger and not making as much money, put your money into a Roth IRA. This means that your income is already taxed and when you’re 65, the money you pull out will be tax free. If you desired, this account may be passed down from generation to generation.
If you’re making over $100,000, it may be wise to put money into a Traditional IRA, as it will act as a deduction to your gross income and thereby lowering your tax bracket for the year that you put your money in. However, at age 65, you must begin to take out money.
After choosing which IRA you want to put your money in, you have two more decisions.
1. Primary and Secondary Beneficiaries – Who will owe the account in the event that you pass away? You must pick these people and have their social security numbers ready.
2. Which fund? – I recommend putting it into the Fidelity Freedom Fund with the year closest to when you’ll retire. If you don’t pick Fidelity as your investment bank, there are other similar accounts. The Fund will change the percentage of bonds and stocks it holds based on how close you are to retiring. Typically, when you’re younger, the account will be more ‘risky’ and hold more stocks than bonds. Bonds are more ‘stable’ but also have less interest. It’s called a Freedom Fund because it doesn’t require you to do anything and it’ll do the work for you. This leads us to the next topic…
Stocks, Bonds, Mutual Funds, ETFs
I’ve spent over 5 years figuring out the best thing to do with my money by reading books, online material, and doing it with my own money. Here’s what I figured out. For you and me, keep it simple and forget about it. This applies to both IRAs and regular investment accounts.
After picking an institution (listed below), you must pick where to put your money. You can put them into stocks and bonds. You can buy them as an individual stock or bond (for example, if you like Apple and think it’ll grow, then you can buy their stock). Or you can buy them as a big group through mutual funds and ETFs. The good thing about mutual funds and ETFs is that it is already diversified, which means it has many different companies or bonds in that one mutual fund or ETF.
Technically, you should read about each company and you ought you come up with your own feeling about the direction of that company, whether or not it will continue to make profit. Then buy the stock based on that.
You may see in the news that the stock market goes up and down. It does that based on people’s emotions. However, over time the stock market increases, even after the depression. Companies will tend to make more money, as long as it has a sound philosophy and you believe in it.
Anyway, you may have heard to ‘diversify your portfolio.’ Your portfolio is what you own in terms of stocks, bonds, mutual funds, and ETFs. I am a big fan of ETFs because it diversifies for you. Why not mutual funds? Because PEOPLE are managing mutual funds and thus take a bigger cut from you each year (2-3%) whereas ETFs have COMPUTERS managing essentially the same exact thing but for much cheaper (0.05-0.3%).
What’s the difference between Mutual Funds and ETFs?
What is it?
many stocks into one ‘fund’
many stocks into one ‘fund’
Who controls it?
A broker (real person)
How much does it cost?
of the entire investment account
0.05-0.3% annually of the entire investment account
Costs a lot more over time
Free ETFs!! MarketRiders help you pick ones best suited for your situation
In general, you will make 8-10% annually with ETFs. And the best part is there are free ETFs where you don’t have to pay anything to ‘buy it’. Stocks, bonds, and mutual funds all cost a commission ranging from $2.50-$10 per transaction depending on the broker. So what are you waiting for???
The question becomes, which ETFs should I buy?
Here’s the best solution that I’ve come up with and currently use myself: use MarketRiders.
It is an online ETF portfolio manager. It has a 30 day free trial. After that it costs $120/year. It creates your own portfolio based on your needs. Use the free ETFs available through each broker (you can customize in MarketRiders). As of March 28th, if you try it by clicking here, you’ll also get a $25 Visa gift card. Not bad! Here are some choices for brokers.
I got one because I wanted to have some money that I can have easy access to and that wouldn’t have a penalty if I took the money out. Pick one that you trust, has a high interest rate, no minimum, easy to transfer money in and out. Then pick a set amount each month that you want to transfer so that you start to build your emergency fund of $1000.
Free Credit Score — Anytime!
It used to be difficult to find out your credit score. However, now more than ever, your credit score tells others your credibility and ability to pay on time each other. It is essential to know your credit score. You can get it free anytime at Credit Karma (www.creditkarma.com). It even tells you how you got your score, how to improve it, and has personalized scenarios of how the score can be impacted based on your actions.
401k and 403b
After college, I started to work for a company that has a 403b. What is a 401k or 403b? It is another retirement account that is only available through your employer. 401k are available for private companies whereas 403b are available for nonprofit organizations. Some companies will match a certain dollar amount up to a certain dollar. Other companies will simply have it available.
You want to take advantage of this program. You can put in a max of $17,500 in 2013. Personally, I put in $500 each paycheck. It will deduct your income pre-tax so that you will have a lower tax bracket. Also, you would think that taking out that additional $500 would leave you with a paycheck of $500 less. It’s actually only $300 less because it is now taxed at a lower rate. Totally worth it.
Please feel free to share. Let me know if there’s anything you’d like to know more in depth via email or through the comments below. Thanks!