New Grad. 22. 70k saved, I want to invest - how should I start?

Submitted by rougebit t3_127opk1 in personalfinance

I'm looking for some advice on how to push myself to the next level in my current situation such as investing, or just how to save even better.

I'm currently a 22 year old upcoming new grad with an offer to a FAANG company for 98k/120k in stocks over 4 years/50k sign on split between two years. Over the past couple years, I've worked on software and I have been fortunate enough to save almost $70,000. I currently still net about $6000 a month from these software jobs while being in college. I'm a pretty calm guy and I don't really do much with my money in terms of investing.

I own my car with an insurance of $160/monthly, and I live in a one bedroom apartment that is $1850/monthly before utils. I normally cook and eat out sometimes but I am working on making it to where I treat myself but also not overspend. The rest I usually save which is about $3000 a month. I also have a credit score of 747 that I've been building these past years for low APRs if I ever wanted to get a house.

I'm looking for ways to stretch the money I am currently making and do more in terms of stock options.

In terms of long term growth, I don't have any ROTH or 401k's setup yet but once I am employed at this company my 401k will start.

Any advice would be amazing - thank you!

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irie56 t1_jef37lx wrote

always max out employee contributions

Open brokerage and ROTH (fidelity is great, cheap and easy) Or Schwab although I find them a little slow sometimes. Although I think schwab just offered a High Yield , insured savings.

Moving cash savings to a high yield account or brokerage and into a treasury fund where you can make 4-5% interest.

Max out ROTH (while you can) ~$6500/year (double check that)

start auto contributions to a fidelity ZERO fund. Set it and forget it. Don't look at the market, don't bother with CNBC or picking stocks. Just do it rain or shine forever. Make sure to check all boxes that say reinvest dividends. Depending on your need for cash - place a chunk of your savings in the fund or do it $2-$5k/month until you hit the amount you want to invest.

If you comment is in regards to buying or selling stock options - uhh let that dream go until you have more experience in the market.

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rougebit OP t1_jefb1of wrote

How much cash savings should I start off with in a high yield savings? Are they FDIC insured?

For the fidelity ZERO fund, is there a certain target age I should do for my ROTH? How about the backdoor roth?

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irie56 t1_jefel4n wrote

Most high yield savings accounts are FDIC insured. Treasury funds are not. I use AMEX for my HYS.

Cash is only for what you could need in case of emergency or would need quickly. That could be regular savings or in some cases you can transfer from HYS to checking in a day. Consider your lifestyle and is there a circumstance where you need several thousand bucks today or tomorrow? If not lock it away and earn money while you can.

There are a handful of zero funds. Typically with a very long investment time period you start with higher risk - mostly stock or a higher concentration on stocks. (= higher volatility) or just go S&P500

Backdoor roth is for when you earn too much to contribute to roth. You aren't there yet

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rougebit OP t1_jefh7lv wrote

Thanks, I actually looked into Marcus as a HYS and I was also able to get a refer code to get it to 4.5x for a few months then back to 3.5x.

You're actually right, there's no need to have that much money sitting in a regular savings when it could be somewhere else. I've also maxed out my IRA for the year - thanks for the tips!

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Exioras t1_jeffkd7 wrote

You are pretty much set up for an ideal start to life as far as this sub is concerned. There is not much more than the basic guide for kicking off ROTH/401k that you'd need. Don't go crazy in trying to pick stocks. Follow the basics we practice here. Read the sidebar. You're in a very very nice spot. Good job and good luck at the new job.

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rougebit OP t1_jefhgci wrote

Thanks! I started off my ROTH already it seemed like i. 2021 and I had about $17 extra already which isn't that bad. I've decided to kick off the start to saving smarter now. Appreciate the kind words also, I'm excited to start.

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Longjumping-Nature70 t1_jefudmp wrote

Start the ROTH NOW.

When you do the 401k, put it all into the S&P 500 index fund that you will have as a option.

Invest in a mutual fund, automatic deposits every month. Pick a fund. Since you are young you can play and learn. Pick something exciting. Such as an all health care fund. Maybe an all Electric car fund. No idea if that exists, but what the heck.

Look at starting a Dividend Reinvestment Plan into a utility. Slow and boring. I always recommend either AWK or WTRG. Every one needs water. You will not make 500% in a water utility in a day, buy you also will not lose 85% in a day. This is what I call a foundation for a young investor. A good building is built on a strong foundation.

If your company gives you stocks options, and they are sold at a discount to you, exercise the options and sell the stock. Yes, you pay capital gains but you make money. No one ever went broke making a profit. Plus, if the company goes in the toilet, you are not holding a bunch of worthless options.

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