Just opened my first 401k today!

[alyssamarie]

I'm still in college (graduate in May) and I just got an internship and I was surprised when I got paperwork letting me know that I'm a participant in their 401k plan so I logged on today and set mine up to save 15%! I was surprised because I didn't even know that it would be available to me as an intern (it's a 2 semester internship). 

I set it up to put 50% in a target retirement fund and the other 50% to go in the S&P 500 index, both had low expense ratios (.18% and .03% respectively).  I also chose to put it in a roth 401k since my tax rate now is probably as low as it will ever be (I sure hope so at least)! 

In the grand scheme of things, I'm sure this will just be a very very small part of my retirement savings, but it feels good to get started!

[mongstradamus]

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@alyssamarie wrote:

I'm still in college (graduate in May) and I just got an internship and I was surprised when I got paperwork letting me know that I'm a participant in their 401k plan so I logged on today and set mine up to save 15%! I was surprised because I didn't even know that it would be available to me as an intern (it's a 2 semester internship). 

I set it up to put 50% in a target retirement fund and the other 50% to go in the S&P 500 index, both had low expense ratios (.18% and .03% respectively).  I also chose to put it in a roth 401k since my tax rate now is probably as low as it will ever be (I sure hope so at least)! 

In the grand scheme of things, I'm sure this will just be a very very small part of my retirement savings, but it feels good to get started!

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Are you getting any income from this internship? If so you can also start contributing to an roth ira at same time!!. Looks like you have some good options in your 401k , does this company do some kind of match for contributions?

[alyssamarie]

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@mongstradamus wrote:

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@alyssamarie wrote:

I'm still in college (graduate in May) and I just got an internship and I was surprised when I got paperwork letting me know that I'm a participant in their 401k plan so I logged on today and set mine up to save 15%! I was surprised because I didn't even know that it would be available to me as an intern (it's a 2 semester internship). 

I set it up to put 50% in a target retirement fund and the other 50% to go in the S&P 500 index, both had low expense ratios (.18% and .03% respectively).  I also chose to put it in a roth 401k since my tax rate now is probably as low as it will ever be (I sure hope so at least)! 

In the grand scheme of things, I'm sure this will just be a very very small part of my retirement savings, but it feels good to get started!

---

Are you getting any income from this internship? If so you can also start contributing to an roth ira at same time!!. Looks like you have some good options in your 401k , does this company do some kind of match for contributions?

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Yes, it's paid. They do offer contributions, but from what I read you have to be employed on Dec 31st of the year prior to be elligble, so next year I think I'd be able to get a match but not certain. I'm putting in 15% of my paycheck right now. My next step will probably be opening up a regular investment account (I work for an investment/banking company so it would have to be opened with them too), but for now I'm happy with this! 

[compassion101]

Sounds like a great start, Congrats!

[heyitsyeh]

Hey, good job getting started in the investing world!

A couple of things:

1. With any 401k match, there's that one big caveat: vesting. Check on their vesting requirements (how long you will need to be working with the company for you to keep their match when you leave the company, which you will because it's an internship). For example my company only allows me to keep 100% of the company match if I stay with them for at least 3 years. The requirement in your case will likely be longer than the duration of your internship. Of course that won't matter if you decide to onboard with them after you graduate! Regardless, you are doing a good thing starting your retirement savings early; you always get to keep 100% of what you put in.

2. As for the tax-deferred traditional IRA vs. tax-free Roth IRA, Roth is the easy choice. Given the current trajectory of government spending as a function of GDP, you are almost guaranteed to be paying more taxes at retirement age than now, regardless of bracket, unless you decide to live a bare-bones life in old age for some reason.

[Stylez]

It sounds like your 401(k) is with Vanguard. You're off to a good start. If I where you, I would invest 100% of the money in equity funds. You're over 90% now so it's not a big difference, but at your age, 100% equities is the way to go.

[alyssamarie]

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@Stylez wrote:

It sounds like your 401(k) is with Vanguard. You're off to a good start. If I where you, I would invest 100% of the money in equity funds. You're over 90% now so it's not a big difference, but at your age, 100% equities is the way to go.

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I don't think the plan itself is with Vanguard, but the target retirement fund that I selected is theirs! I'm pretty close to 100, the Vanguard fund is 90% equity itself! 

[Anonymous]

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@alyssamarie wrote:

I'm still in college (graduate in May) and I just got an internship and I was surprised when I got paperwork letting me know that I'm a participant in their 401k plan so I logged on today and set mine up to save 15%! I was surprised because I didn't even know that it would be available to me as an intern (it's a 2 semester internship). 

I set it up to put 50% in a target retirement fund and the other 50% to go in the S&P 500 index, both had low expense ratios (.18% and .03% respectively).  I also chose to put it in a roth 401k since my tax rate now is probably as low as it will ever be (I sure hope so at least)! 

In the grand scheme of things, I'm sure this will just be a very very small part of my retirement savings, but it feels good to get started!

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Congrats on your future thinking. It is hard to see ahead 40 years but it comes faster than you realize.

[Anonymous]

Outstanding!  Congrats for properly seeing the future and fully leveraging the opportunities before you.

[uswala]

Congrats!