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Question for the Money Doctors

Question submitted on Apr 19, 2014.

Question

I am new to the investing game, and just got my first full-time job. I am starting at an entry level position. I'm looking to make some investments and not sure where to start. I have started a savings account, and currently looking for a house. I would like to know how to get into creating Liquid Assets, and maybe other forms of investments like bonds, stocks or mutual funds with a low income. I also have a large amount of student debt that I need to take care of as well.

Answer

If you are starting at an entry level, I assume you are fairly young and just starting your career.

Be certain to first set up a rainy day fund or emergency fund with three to six months of expenses. If the job does not work out or if you have some large expense, such as a major car repair, you can handle it without going further into debt.

If your employer offers a 401(K) type of retirement plan, you should fund as much as you can into the plan and take full advantage of any matching contributions that your employer offers. If your employer does not offer any retirement plan options, you should put as much into a Roth IRA as you can comfortably afford.

You should also be paying down your student loan debt, and depending on the interest rate and terms of your student loan, you may want to pay the loan off more quickly and only contribute enough to the 401(K) plan to take full advantage of the employer match.

Don't get overextended on debt by buying a house too soon. Establish the rainy day fund, pay down your debt and save for retirement first, while you may be saving for a downpayment.

Discipline is extremely important, especially when starting a career.

Good Luck!


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