Can you recommend some things I should think about and/or investment opportunities I should consider (e.g. 401k, Roth IRA, etc) and how to decide where to start?

The most important thing is just to start!

When you start working put money into a 401K through the company especially if they match. Contribute to your IRA as much as you can. I also am from the old school of slow and steady wins the race. My husband and I kept more in regular savings and CD’s than most of our friends, and in the end I am glad we did, because if you are not really on top of the stock market or are not sure when to buy and sell, you can win a lot, but you can lose a lot. As you probably know many people in the last 2 years have lost big money. If you do play the market or by funds of some sort my idea has always been to sell if it starts trending down, and buy back in once it has starts to trend back up. I don’t worry about selling at the tippy top, or buying at the very bottom, because it is hard to guess what those will be.

Back to the CD’s and savings. I think a good goal is to have a year’s salary in savings that is easily liquidated without penalty. You won’t have this right off the bat, but it is a good goal to keep in mind.

Next, remember this rule of thumb money doubles in 15 years at 5%. So if you have $100,000 saved by the age of 30, even if you save nothing else it will be $200,000 at 45 even if it is just in 5% CD’s (well, right now CD’s are a little lower and there is taxes to be paid, but you get the idea). So, if you save $1million when you are 50, you will have $2million at age 65! Money gets money. That $2million at 5% is giving you $100,000 a year to live off of in interest without touching your savings.

Also, when you first get out of school don’t feel like you have to have all of the things us old people have. Start small so you can save, and never have credit card debt, it is the stupidest loan you can take. Using credit cards is great because you can get other benefits using the card and have your money in the bank longer until you pay the bill, BUT you MUST pay the bill on time and in full.

Lastly, my father always told me money gives you independence and freedom, this has served me well. I think less about things I want to buy and more about being able to quit a job I hate, travel where I want, or that the bank cannot take my house. I love watching my money grow in the bank as much as the Porsche in my garage.

You are just getting started, so money will probably be tight at first, it was for me too, so don’t feel like you are failing if you are saving very little, but as you begin to earn more, and bills are easier to pay, don’t immediately get bigger and better things, save for a while.

We need to know what you are saving for before we talk about investments? JLeslie has a good answer.

@critter That is not how I think about finances, but I know it works for many people. I personally never save for a particular thing, I save period. I save as much as I can. When I decide I want to buy something I am deciding do I want to spend my money on that or not? The savings is there. I generally don’t want something before I can afford it, because I would never put myself into a debt I can’t handle. I guess the only thing I consciously work on “saving for” is retirement.

Also, I forgot to mention originally, I don’t drink and I save a fortune compared to my drinking friends. I’m not saying you can never have a drink, but at bars and restaurants the expense is crazy.

@JLeslie: Well you have to have some idea in mind what the money is for, whether it be for retirement, for an emergency fund, for a wedding ring, etc. Obviously if you are saving up for a house you aren’t going to put money into a 401K, IRA, or Roth IRA. If you are trying to save money for a wedding ring you probably don’t want to invest in the market or something extremely risky or you may never get married. Even in your case, even though your not saving for something in particular you know that the money you put in is for a future emergency, for your retirement, for some unknown need or want in the future. I wasn’t sure whether davidb was planning on saving for retirement, which is awesome and an incredibly early start, or whether he was saving for a house or car or something tangible within let’s just say 2 years. I don’t need to know exactly what it’s for but a general idea might make our investment ideas more worth while. :)

Another piece of good advice is to pay yourself first. Decide on a certain percentage of your income that goes directly into savings and is never included in your budget as available for spending. Right now as a student, that might be less than 5%, but it will add up. Once you’re working, sign up for automatic deductions from your paycheck. When you get raises, consider increasing the percentage that goes to savings before you get used to having it in your take home pay.

And @jleslie is right – if your eventual employer offers matching retirement contributions, make it a top priority to take advantage of that. My employer matches the first 4% of each paycheck I put into a retirement fund. That gives me a 100% return on my 4% contribution right up front! You usually get to choose between a variety of different types of investments, from fixed principal and interest, to stocks & bonds.

@critter, it sounds like you’re talking about short term savings goals vs long term. Retirement is by definition long term, pretty much everything else shorter term. The sooner you need the money, the more liquid easily accessible it needs to be.

@critter1982 I see what you are saying, I think @MagsRags summed it up well as long term vs. short term. I just worry that people who save to buy spend their money once they save it, but you are talking about all different types of savings, my mistake. Still, I don’t think like that in my brain really. I like to have lots of money in savings, more than most would advise I think, so I have money for house, car, travel, repairs etc. kind of laying around. We just paid off our mortgage a couple of years ago because I was saving saving saving in an account that was not for the long term. It wasn’t a solid goal to do it, but once we had amassed quite a bit of money my husband decided he was tired of paying the mortgage every month. So, I did a calculation and found we save more money counting the tax write off if we pay it off, so I agreed. I also assume some of the regular savings will be counted as retirement money (although we do have IRA’s and 401K’s) in the end. My husband and I used to have a retirement plan for 55, so we needed to be able to get at our money. Not that we would do nothing, but be able to work less and not be concerned if money was not steady maybe as consultants or have our own small business.

I do think that there are many ways to financial security and freedom, so I am not arguing to be right, just stating how I think and what I do.

Talking about mortgages if you can get a 15 year take it. Most can’t on their first home, but maybe by your second or third it is something to think about. You get a lower interest rate and spend much less on the house over time.

@davidb I think the most imporant thing is to be aware of where your money goes and have some sort of plan, that you revisit maybe once a year. You don’t have to obsess about the money, just taking an interest in savings and future needs puts you ahead of a lot of people.

I like Dave Ramsay, but he can be extreme. I am not as extreme as he is. http://www.daveramsey.com/?ictid=glpdr

I just found a good website that offers some good tips and ideas.