So now you’re on the path to deciding on your new career. Congrats and good luck! Now that there will soon be a paycheck in the picture, you can plan to make your money work for you. You know what’s coming: it’s finally time to sit down with a financial planner.
Here is where you review your salary, insurance benefits and retirement savings options along with any other potential perks involved with this new position. It’s also a chance to update your financial plan and the next piece to the puzzle- your future. It’s not as painful as you might think; in fact, when you realize it’s your money that you’re growing, it’s pretty darn cool.
Do It Right- Use An Expert
Take this opportunity to update your financial plan…with an expert. Don’t go into your new career without having your ducks in a row when it comes to where your money is going and how it’s growing. Maybe you didn’t have any kind of cohesive plan before, or maybe it is a plan that you have outgrown. It could be that you are hesitant to pay the fee associated with taking this step. Be assured, it’s worth it.
You cannot plan successfully for your financial future by yourself, unless of course you are a trained and licensed financial advisor. Remember the runner’s metaphor about being a marathon and not a sprint? To use another expression, a financial advisor knows how to make it to the checkpoints and weather the storms.
What, Me Think About Retirement?
It might be the farthest thing on your mind. Luckily, there are programs in place to stock the cash away without it hurting too much. One very common way to achieve this is using your 401(k) or 403(b) benefit to your advantage. The Internal Revenue Code allows you to use these plans to save for retirement on a tax-deferred basis, so it’s a great way to put the money away.
Believe it or not, there is a high probability that you, personally, can create a great deal of wealth for retirement. Some companies even offer employees a match program. These arrangements will match the employee’s contribution up to a given percentage and add to the "nest egg" you are building. Now that’s what’s meant by "found money." It really is. Don’t let it slip by.
Results Last Over A Lifetime- Usually Not Overnight
Ok, so you had the foresight to find a good financial advisor. Now, let him or her- and the advice offered- do their work. It is a little scary to entrust your hard-earned money to another human being, but checking on your account every day is not going to increase the value of your account. It does add stress to your already busy life.
If over the course of a couple of months, there is no contact between you and your advisor, or s/he is not accessible to your queries, take the time to seek a second opinion. It’s your money, after all: do not lose sight of your goals.
I’m Not Sure, But Is This Right For Me?
When you are discussing your portfolio with your advisor and something does not add up for you, trust your gut and ask! Any advisor worth his salt will take the time to answer all of your questions and explain why an investment is appropriate or not.
If there is a particular investment in your portfolio and you are not comfortable with it, you should feel free to openly discuss your apprehension with him or her. If you do not have this kind of honest and friendly relationship with your advisor, it might be time to shop for a new one.
Your advisor should be willing to explain the investment choices you have made and to take your concerns seriously. And, give you answers that are satisfactory to you.
Be Happy- But Take The Rose-Colored Glasses Off
The job market giveth and the job market taketh away. Even though you are on an employment "high" make sure that you are prepared in the event of a downturn. In financial lingo, always remember to hedge your bets. Set aside a regular sum of money from each paycheck for a "slush" fund available in the event you are unable to work for any reason.
You are not too young, it is not too early in the game, to plan for this thing we call ‘retirement.’ No, really. One day you will retire. Forget about the doom and gloom of what you are hearing about Social Security. Believe it or not, you do not have to be swimming in a pool of "Franklins" to be investing for retirement.
The average individual in his or her early twenties can use a tool called the Roth IRA to a maximum yearly allowable investment of $4,000 in 2005, to create- brace yourself- in excess of $1 million at retirement! This assumes a nine to ten percent return yearly (a typical rate at this time). Not bad for someone who claims to have no money!
Remember, you have every right to take a reactionary approach to your portfolio. It should meet your objectives and you should be able to, at any time, ask about the different investment options and have your advisor make the necessary adjustments to serve you. Good luck!
Peter Seyler is the president of Seyler & Associates, Inc. in Allentown, Pa. He can be reached at 484-223-1681 or by e-mail at firstname.lastname@example.org.