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A journey of a thousand miles begins with the first step. FIRE here - congratulations on your new job. I am retired early and happy (just about to hit Breckenridge for a season of skiing). I got into commission based sales and worked my tail off to retire early. My advice is -EDUCATE YOURSELF about money. Thats what I did. My efforts in sales were rewarded, but good investment and minimising tax made it happen. I'm going to recommend a book which started me off its called 'the only investment guide you'll ever need' by andrew tobias http://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0547447256. This is the easy to read book full of solid advice that got me started seriously on saving and investing. I went on to read many more, but I feel that if you only read one book and followed its advice, this should be it. It was so influential for me that I wrote and thanked the author the day I retired. Read the reviews for other opinion.

On your chosen career - Theres a lot to learn about sales, so keep your ears open and talk to seniors in the field. I remember one day I asked a senior sales guy 'How come we can't get good sales guys' and he said 'Cos good sales guys are selling ferraris where they make tons more commissions'. I followed that path and found the field where I could make maximum commissions for my effort. Many people look down on sales, but I was managing a large business and noted that the good sales guys were making more than me consistently, so I got wise and moved into sales. I couldn't find any other field where your reward was equal to your effort.

Deeply sorry for your loss. I received some advice as a young man about windfalls that I’ll share with you.

Forget about the money for a year. Open a separate bank account that you won’t see and live like it isn’t there. The lost income from investments for one year will be insignificant compared to the cost of a hurried misstep.

In a year with a clear head and a strong heart educate yourself about different investment philosophies and see which ones resonate with you. Investing is very personal and there isn’t one right answer.

There isn’t a right answer, but be wary of the salesmen. All the money / wealth managers are well compensated for their advice and there are many ways they hide their fees and take advantage of their clients (even fiduciaries). If you’re considering enlisting a professional, a robotic trader like https://www.wealthfront.com/ or https://intelligent.schwab.com/ will serve you just as well with lower fees. If you do decide to enlist an advisor to help formulate a financial plan for you, find a fee-based advisor who you can pay once every few years to update the plan.

Here are a few books that were helpful to me in developing my investment philosophy that allowed me to retire in my early thirties.

Bogleheads / Vanguard Index Funds
https://www.amazon.com/Little-Book-Common-Sense-Investing/dp/1119404509

The Richest Man in Babylon (investing philosophy)
https://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/1505339111

Dave Ramsey / Personal Finance
https://www.amazon.com/Total-Money-Makeover-Financial-Fitness/dp/159555078X

Tax-Free Wealth - Tom Wheelwright / How investments affect your taxes
https://www.amazon.com/Tax-Free-Wealth-Permanently-Lowering-Advisors/dp/1937832058

Where are the Customer’s Yachts
https://www.amazon.com/Where-Are-Customers-Yachts-Street/dp/0471770892

I use You Need a Budget for budgeting. (www.ynab.com) Really good for budgeting and cashflow management. It's not good for tracking investments etc. though.

As far as what you should do immediately with that $400, I'd pay down that $600 loan. I'm sure the interest on that is insane and you're gonna get the most for your money that way. It will also give you a sense of satisfaction (hopefully) once you pay it off. You'll know you're on your way to financial peace.

You pay for your savings account?! Drop that immediately. Go for a free high-interest savings account that are all over the place nowadays (INGDirect for example is offering 1.1% on savings accounts right now which will go up when interest rates go back up).

Next you should concentrate on paying off those other loans. Some people like to start with the highest-interest loans. Others like to start with the smallest balance loans. I like the idea of starting with the smallest balance loans because of how quickly you can build up speed to pay off all your loans (google debt snowball).

Oh, and buy Dave Ramsey's Financial Peace Revisited book (http://www.amazon.com/Financial-Peace-Revisited-Dave-Ramsey/dp/0670032085/). Whether or not you completely agree with him, he's got great advice, especially if you're just starting out.

I would recommend 2 amazing books for you to first get started:

1. The 5 rules for successful stock investing: Morningstar's Guide to Building Wealth and Winning in the Market - https://www.amazon.com/Five-Rules-Successful-Stock-Investing/dp/0471269654
   
   
2. The Intelligent Investor - https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661
   
   These 2 books are touted as the "holy grail" of investment books and emphasizes a huge deal on teaching you how to do due diligence when you stock pick, rather than just picking stocks based on the "crowd".
   
   Hope this helps!

Some people say education is the best long-term investment.

So continue to learn about finance, living frugally, and really concentrating on your education until you can start developing a portfolio of assets. This is knowledge that will make you a lot of money summed over your lifetime. I waited until I was 24 before I started reading up on saving/investing/financial planning/FIRE. I wish I'd learned it all when I was your age (see Investopedia). I'd have focused much more on collecting income-earning assets and experiences, rather than wasting all my money on short-lived liabilities (like new cars or games I didn't really need).

Literally the most important thing to an investment is time. The earlier you start, the better, due to compound interest. As a rule of thumb, very low risk investments should probably be earning you 2%-5% interest per year (e.g. loans and government bonds, introductory savings offers) and riskier investments (e.g. stock market exchange traded funds) should be returning 7% - 8% per annum averaged over 5-10 years. Company-matched pension contributions are amazing, and make you thousands per year. These should be maxed out if you ever get the option. And then you avoid expensive debt (credit cards, payday loans) like the plague. Anything earning less than 2% AER makes you a few euros a year and is essentially pointless.

There's a book called Rich Dad, Poor Dad. The gist of it is that rich people are taught to build assets over their early working life. The first one is education. Then you could be writing a book, getting constant royalties from it forever (did this). Or you could make an online course (doing this), host an online service, get a lodger (doing this), rent your parking space, or rent out property or storage space. Then you can stop trading your time for income (because your time is always finite and so your earnings will always be linked to how much time you forfeit). Instead, rich-thinking people build a portfolio of assets that make them money. There's another book called The Marshmallow Test, which essentially discusses that smart people tend to be able to delay their own gratification in order to be richer in the future (although a bit of an oversimplification). Anyone can retire early and live out their hobbies; they just need to start saving and investing early and diligently.

It also really helps to really learn how to deal with windfalls of money that you weren't expecting. Most people tend to splurge on unnecessary things, then it becomes a habit. To start, here is the UK Personal Finance flowchart. I'm not sure if there is one for Germany.

No one will care more about your money than you. "Only 12 percent of active U.S. large-cap growth funds, for example, beat passive peers over the last decade, according to Morningstar's latest Active-Passive barometer.".

I suggest that you either read "The Smartest Investment Book You'll Ever Read" or listen to the audio book. The author is a financial expert who believes that proper choice of index funds is best, not hiring anyone to manage your money for you. This is also assurance that you don't give your money to another Bernie Madoff.

I've read about half of these. Pretty dry reading. I would recommend the following:

The Wealthy Barber

I Will Teach You to be Rich

Bogleheads' Guide to Investing

All About Asset Allocation

The basic point of all of the books above and in the article is that you aren't going to beat the pros in investing, in fact the pros can't even keep up the same record from year to year. Index funds are the way to go. Other books above go over what the asset allocation looks like and also goes over insurance and other things to make your finances sound.


As an aside, I never could stick with a budget until using the software YNAB and now that I'm doing a monthly budget I am seeing massive benefits.

One word: Vanguard (www.vanguard.com)

Resources I've found helpful for learning purposes:

Bogleheads (www.bogleheads.org)

The Boglehead's Guide to Investing (http://www.amazon.com/gp/aw/d/0470067365)

Good luck.

Tip: first thing, do a google search on the power of compound interest and tax-free growth. That should keep you motivated to get going and start saving now.

I had the same issue for a long time

I suggest reading "The Richest Man in Babylon" - It's changed my perspective on savings, and wealth in general. you can find it here; (https://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/0451205367/ref=sr_1_1?ie=UTF8&qid=1496006456&sr=8-1&keywords=richest+man+in+babylon)

Before you can truly save money you have to be in the right mindset, this'll help with that.

Since you said you don't know much about investing, I think what's more important than what you do with this $5k is learning about yourself and finding tools that work for you. I recommend reading "How a Second Grader Beats Wall Street" by Alan Roth. It's a great into to read when you're starting out. (And it's probably available through your local library) https://www.amazon.com/Second-Grader-Beats-Wall-Street/dp/0470919035

There's a concept about CD layering in the that might work for your short/mid-term goals. Plus, it's a pretty quick read 😁

Ask a 1000 people and you will get more than 1000 answers - this is how varied and complex investing is. If you are a beginner, I would suggest learning about investing first. There are ample materials out there. Concepts you should learn about: asset classes (stocks, options, bonds), diversification (not putting all your eggs in one asset class or stock). Learn too about "valuation" - how much should an asset be valued at. This is a crucial concept that you should understand even if you buy etf/mutual funds. You can, for example, buy the right asset at the wrong valuation and be hurt. Valuation tries to answer the question "Is this asset (class) fairly valued?" Implicit in understanding valuation is "know when to hold 'em and know when to fold 'em".

I have personally benefited from Warren Buffett's writings and recommendations - so I read his shareholder letters (http://www.berkshirehathaway.com/letters/letters.html). And I started with the "Intelligent Investor" by Benjamin Graham (https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661).

Good luck.

Doesn’t directly answer your question but check out “Educated” by Tara Westover. Great read, she also left home to pursue education and could be a source of inspiration for you

You don't need to pay for financial advice. It will just rob you of your wealth. If you have a $50M net worth, maybe you'd be rich enough to pay for financial advice.

• Quit your job now. Quit school now. These are distractions from what you need to focus on. You can find a job and/or go back to school later when you have set up your finances.
  
  
• Buy this book: https://www.amazon.com/Second-Grader-Beats-Wall-Street/dp/0470919035 . This will explain the rationale behind the rest of my instructions.
  
  
• Once the check shows up, deposit it in person at your local bank. Say no to all requests from the bank to "assist" you or "advise" you. Bank fees to invest money are borderline theft.
  
  
• After the check clears, book a hotel room or AirBNB in near where your current bank branch is. With a $5M deposit coming followed by a bunch of withdrawals as per my instructions below, your bank might want you to show your face in person a few times. Book this for at least 14 days. You need to be away from distractions.
  
  
• If the $5M is before income taxes, reserve 50% of it for income taxes. Put that reserve in an interest bearing savings account that pays at least 2%. Goldman Sachs, American Express, Ally, Discover, etc. have accounts and can be opened online
  
  
• Pay off all your debts.
  
  
• Open a brokerage account at fidelity.com
  
  
• Transfer 96% of what is left to your fidelity account
  
  
• After the transfer is completed, each week day, M-F, put 1% your fidelity cash into Fidelity's zero free S&P 500 mutual fund, FNILX. Do this until it is fully invested. It is tedious, it will take 4 months, but this way you don't invest all your money on the day before a massive stock market crash and then feel really shitty for year while it recovers (fear not though ... the S&P 500 always recovers in 7 or less years after a down year).
  
  
• The remaining 4% that is in your local bank branch is what you get to live on next 12 months. Including your hotel bill. Divide it by 12. That is your monthly budget.
  
  
• 12 months from now, you look at your fidelity money in FNILX, and take out no more than 4% of it, and transfer it to your bank account to live for the next 12 months.
  
  
• Any purchases you want to make have to come from your monthly budget. Want a $60,000 sports car? 4% of $5M is $200,000, or $16K a month. If you need $4K a month to live on, then that leaves $12K a month to save up towards the car. So you can buy that in 5 months. And then pay huge registration fees and insurance fees each year, which have to come from your budget. Wanna buy a house? Pay cash for it, and yes it will have to come from the fidelity money. But budget 3% of the purchase price in annual expenses to maintain the house, and pay taxes and insurance. So if you bought a $3M house, that would leave you with $2M. 3% of $3M is $90K, and 4% of $2M is $80K. Thus a $5M net worth cannot sustain a $3M house. Whereas a $1M house has 30K annual costs against 4% of $4M or $160K. 30/180 < 0.25, so you can easily afford a $1M house.
  
  
• You want to share money with your family which is fine. But it absolutely must come out of your monthly budget.
  
  
• 12 months later, rinse/repeat. Some years your 4% withdrawal will be more than last year, and some years it will be less. Because the stock market historically pays 7% compound annual total return (appreciation + dividends) after inflation, the 4% withdrawl rate will tend to produce an annual income that grows each year.

Read The Little Book of Common Sense Investing. It will take you an afternoon and give you a pretty good understanding.

You can afford to be aggressive since you have such a long time until you retire. I am 28 and have my portfolio in 100% stocks, I would say anything above 80% stocks is good.

Long term average of the market is ~10%, and inflation is ~3%. So you are looking at an average rate of return of about 7% above inflation. Of course there are huge variations from year to year.

The Only Investment Guide You'll Ever Need has a chapter specifically for winning $1m. It's advice is pretty good. Don't buy a boat.

http://www.amazon.com/Only-Investment-Guide-Youll-Ever/dp/0547447256

Solid list. Far & away best book I've read is: I Will Teach You To Be Rich by Ramit Sethi I'm 25 & this is perfect for recent grads or anyone needing a personal financial plan.

>Second of all, I appreciate that the DOL and IRS have made it easy for "shortsighted people" to save, but I don't appreciate the assumption you make about me not ever being able to save so much.

It was a deduction based on the facts presented.

>I don't have significant debt (less than $1,000 owed in total), and I don't have or use credit cards.

If you don't have CC debt then what is the $1,000? If it is mortgage, student loans or even a car loan then that is one thing, otherwise it probably is a bad sign.

>I just paid for a 12 day cruise with money I saved up over a couple of months. So, despite your assumptions, I assure you that I have the ability to save and am fiscally mature.

How much money do you have total? You just said that you have $1,000 in debt. You also have only listed $10,000 in retirement assets. I am glad that you could save up to go on a cruise, that puts you ahead of many people, but I still would wonder if you are saving enough for the future.

>Then the whole stock market mashup with guy who typed a b instead of an m made everything go tits up. I went from $7,900 ish to $7,000 ish.

Are you talking about the flash crash? You (almost certainly) did not lose 10% of your fund during the flash crash. When it happened the market recovered most of the loss before the end of the day. Since it is nearly impossible to do an interday trade in a 401(k), it is highly unlikely that you actually sold during the crash. In fact since 401(k) balances are typically updated at the end of the day you would not have even seen what the value of your account was at the low period.

If what you are talking about is the flash crash, then you are blowing a lot of smoke up my ass because it just didn't go down the way that you describe for a 401(k) participant.

>I realize that financial advisers tell us (me) that "it's not really money until you cash it out", except that's not entirely true. If I see a deduction from my paycheck for $110 per pay period, that's real fucking money.

They are generally right. The issue is that your time horizon is far too short for this money. You should not care what your 401(k) does in a month, in a year or even a few years. You should be investing with a time horizon of decades so these short term fluctuations will (probably) wash out in time. If your time horizon is really this short or you really are so risk averse then there are more suitable investments under your plan that you could move your money to.

>That's money I could have had in MY savings account NOT being arbitrarily messed with because some financial institution can't account for mistakes/fluctuations, etc.

Then you can always trade to an investment option which better suits your risk profile. Call your plan and find out what is available. They might think that your foolish for putting everything into a conservative investment at 29, but ultimately it is your choice.

>I find that I a) don't love seeing money I've earned through my hard work being put in an account and then disappear. I'd rather invest it myself.

It sounds like you would rather spend this money than invest it. In any case if you are so financially unsophisticated that you have to come onto Reddit to ask what would happen if you took a distribution from your 401(k) what makes you think that you will do any better investing your money than your current 401(k) plan? From your above attempt to (inaccurately) describe how the flash crash impacted you I get the feeling that you think you know a lot more than you actually do.

>I just wonder if I can find a better alternative than stocks that I don't understand in a mutual fund I share with people in my company.

What are you going to do, invest it in gold? What in the world makes you think that you know the first thing about investing. Do you realize that most of the people running those mutual funds have PhDs from ivy league universities and decades of experience? While there is some serious academic doubt that even with all of their knowledge that they can beat the market, what makes you think that you have the first clue about how to proceed?

I know that I may seem to be coming off as somewhat brash with my post. The reason for that is I really don't like seeing people throw their money away. I see a lot of terrible advice on Reddit by people that don't have any idea about how stocks actually work, but they are damn sure that it is all a scam and the only place to invest is (gold, property, tech stocks or whatever the scheme of the moment is).

There is a really good forum for educating yourself about investments here. You might also want to consider picking up some investment literature so that you can learn about the topic. If you really hate your 401(k) you could look at contributing, with future money, to a Roth IRA instead, which gives you more control.

Ultimately though it is your money and the decision is yours. No one on Reddit can give you personal financial advice because we don't know your full situation. Whatever path you take, I wish you luck and hope that it ends well for you.

A couple useful resources:

Get Rich Slowly

All Your Worth: The Ultimate Lifetime Money Plan

The first thing that you need to do is go to the library and read books on stock market investing. Personally I like this book.

http://www.amazon.com/Neatest-Little-Guide-Market-Investing/dp/0452298628

Given your take home of $4000 per month, $1000 on housing isn't terrible, but you have not stated estimated utilities. Are you including them in rent?

I am a big fan of cutting expenses if I can. Have you considered taking on a roommate? They will help with rent and utilities.

You should be trying to put away 10-15% of your income per year for retirement. I would suggest that you try to max your roth to $5,500 for the year.

Finally, have you fully funded your emergency account? You should aim to have 3-6 months of living expenses (6-12k for you) in an easily accessible account to cover you just in case you need to change jobs or something happens.

Hello Everyone! My name is Rachel and I am the author of “High On The Hog:Financial Progress.” My book is currently for sale on Amazon: High on the Hog: Financial Progress https://www.amazon.com/dp/B07Y4JNN4N?ref=ppx_pop_mob_ap_share. I wanted to teach everyone some proven methods that have helped me to purchase a home at the age of 23 & pay off a six-year car Ioan in 3 years! Follow the link, get your copy & let your MONEY work for YOU!

I'll look into The Little Book, thank you.

Do you mean I won't be a stock picker because advisors don't tend to get that hands-on in terms of stocks?

Edit: Is this the book you're referring to?

https://www.amazon.com/dp/0470102101/ref=cm_sw_r_cp_apa_zPZ7BbVAZSA0S

Do you have any significant debt you need to pay off before retirement? Otherwise, vanguard index funds. VTBLX 60 to 70% (low cost bond fund), VTSAX 30 to 40% (low cost stock fund).

read this (check local library) https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/1118921283/ref=sr_1_1?ie=UTF8&qid=1519193480&sr=8-1&keywords=bogleheads+guide+to+investing

I came back to the top after writing this because I know I sound like a dick. I know I'm not gentle. I know sound insanely critical and presumptuous about your life. I don't mean to be, I just don't know how else to write this and still get the message across.

> I want to ensure I have enough savings to buy a house once I leave university in 2/3 years

I don't like starting out on this note, but someone's gotta say it. Taking out a mortgage (let alone buying a house) within a year of graduating is not feasible for most who go to college on their own dime.

• Houses are stupid expensive.
  
  • A down payment is usually 20% of the sale price.
    
  • Mortgage rates are stupid high for young people with student loans.
    
  • Home-owners insurance is stupid expensive.
    
  • Property taxes are stupid expensive.
    
  • Maintenance costs are stupid expensive.
    
  • Missing a mortgage payment could easily result in foreclosure.
    
    • New grads are high risk. It's extremely likely any lender who gives you a mortgage can foreclose the second you miss a mortgage payment.
      
  • Dropping a large portion of your net worth on an investment you are extremely likely to lose is not smart financial planning.
    
    
• You have very little income.
  
  • You'll be an entry-level candidate with (presumably) an entry-level salary.
    
  • Using student loans to pay for a down payment on a mortgage is not smart financial planning.
    
    I draw attention to the house quote because it's symptomatic of a real problem everyone faces: Understanding how their finances align with their goals. But that's why you're here, and I haven't forgotten to answer that part of your question.
    
    You need to build a budget and track your spending before getting in too deep. Some points:
    
    
• Read I Will Teach You to Be Rich by Ramit Sethi and I'm a big fan. It's $6.99. I know the title is absolute shit, but it will teach you how to handle and track your money. "To know thyself..." and all that crap. The rest of my bullets are all covered in that book too.
  
  
• Use Mint and make a budget in Excel or google sheets. The first month, just track spending. You can set goals, but the key is to see your behavior from a bird's eye view so you know what to change.
  
  
• Change your lifestyle gradually.
  
  • I'm a foodie too, but you really should learn too cook at home. Here's my 2-week meal plan. Where I'm from, it's about $120 for 17-21 days of food. Spending $500+/mo on food is obscene. Cut that figure down.
    
  • Study at the library. Don't go to coffee shops or other commercial establishments where you need to buy a drink. That $2 adds up over time.
    
  • Cultivate hobbies in your downtime. Some people eat when they're bored. Personally, I spend money when I'm bored. That's advice I've never read in a book, but has helped me tremendously.
    
  • Do this all slowly. If you make drastic cuts, you're less likely to keep to your spending goals.
    
    
• Set reasonable goals.
  
  
  • Start with an emergency fund. There's a big difference between a person with $500 saved and a person with $5,000 saved.
    
  • For most, taking out a loan on a car is a more feasible and realistic goal before getting a house. You'll need it to travel to interviews, drive to and from internships, and it'll give you more freedom when deciding where to live around uni. That said, postpone it as long as possible. The cost is only worth it when the benefits are really high.
    
    
• Keep up or lurk with us on /r/Frugal, /r/budgetfood, /r/freebies, /r/coupons, and /r/personalfinance.