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- Money -
Don't dream retirement... start saving TODAY! 
by rob deichert

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As a new or even not so new entrant to the workforce you may not realize you need to save for your own retirement. The good old days of pensions are long gone unless something drastically changes.
 
Full disclosure: I am not a financial planner, but I promise you I practice what I preach!
 
If you haven’t taken a finance course and you don’t like numbers I suggest you keep it simple. Even if you have taken a finance course I again suggest you keep it simple. There is a plethora of research that shows it’s really hard to beat the market. I would suggest focusing on crushing it in your day JOB. Getting promoted or a big bonus will most of the time outweigh the impact of another 1% of return in your 401k.
 
Remember, time is on your side with compounding interest, so keep in mind that markets fluctuate and the sooner you start the longer the runway you’ll have to smooth out the dips.
 
If you want a few books to read that make it simple I suggest, A Random Walk Down Wall Street as well as, The Four Pillars of Investing. Four Pillars is a bit easier than RWDWS.
 
I’ll break this advice into two buckets- what you can control and what you can’t control.
 
What you can control
  1. How much you put into your 401k. Obviously you have your own personal budget, but this is something you can control. Why is this important? If your company has a match program you could be giving up free money. Free tax deferred money. Let me repeat this, assuming you have a match and a stable value fund you’re getting a return on your money just by collecting your employer match. My personal suggestion is to try and get to the maximum contribution as fast as you can- you’ll be paying yourself first. At a minimum you should put enough into your 401k to maximize your employer’s match.
  2. The funds you choose from. Most 401k programs have a bunch of mutual funds to choose from and it can be very confusing. The funds are chosen by your 401k committee at your company. This means you could have a great set of choices or a somewhat suboptimal set of choices. Usually you need to choose between managed funds (humans making the investment choices) and passive index funds (computers make the decisions to ensure the fund tracks an index like the S&P 500). My suggestion is to stay passive because they usually have the lowest fees. I’ll cover more on this later.
 
What you can’t control
  1. What the market does. You can’t predict the future and most fund managers can’t either. Once you face this fact- you’ll be calm in the face of market volatility. There are many studies that show that humans tend to overreact which leads to suboptimal returns. You can always look back and say well if I had bought X fund I’d be up now! Right, then you should have done it.
  2. The funds in your plan. In the short term you can’t control the funds or the fees. In the medium term you can impact them. I’ll cover this in the second part of this article

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So to recap - the simple steps
1. Max out your 401k - the more you put in earlier the less you’ll need to do later. Also as your income grows it’s a good discipline and allows you to live within your means. Think about it, once you max out, every extra raise or bonus goes to you versus some going into your 401k. You’ll be certain to get all of your match (if you have a match) and you’ll save on taxes.

2. Minimize your fees - choose the funds that minimize your fees. For stocks that’s most likely an index fund. Hopefully the fees are very low. Make sure you get all of the fees to compare. A personal example, my fiance at the time was in a job where the retirement plan was highly suboptimal. Annuities inside a 403b (similar to a 401k). Our strategy was to put everything into a stable value fund (had almost no return) but didn’t have 2+% yearly fees. When she left the job we rolled that money into an IRA asap.

3. Minimize the complexity - you’re early in your career you can probably go 100% equities. Then the goal is to have a mix of domestic and international index funds. That’s all you need. The best part of index funds is they reduce the number issues to worry about. If you have a S&P 500 index fund if the market goes up by 5% your fund goes up by a bit less than 5%, if it goes down 5% your fund goes down by a bit more than 5%. Versus if you’re in an actively managed fund, then you need to worry did your fund manager beat the market? Plus once you’ve educated yourself you’ll quickly realize that lowest fees is the way to go.
 
Some other things to keep in mind
  1. Understand how your company matches - sometimes you need to make sure you spread out your contributions evenly over the entire year to get the full match. Make sure you talk to your HR department.
  2. When you leave your company - make sure you do a qualified rollover to your IRA. Do not just take the money out (you’ll pay taxes and penalties) and do not leave it in the old company’s 401k. Most 401k programs have extra fees so the returns aren’t as good as an IRA with equivalent funds. For me personally it’s one of the first things I do when I switch jobs. I can’t begin to tell you how many people I speak with who have money in multiple 401k plans from prior employers. Many times as you increase your portfolio at a investment firm you’ll get fees waived, be able to get lower cost mutual funds - all more money in your pocket.
  3. Fees matter - If you think a 1% fee on your mutual fund isn’t a lot. Let me reorient your thinking. That’s 1% on all of your money. Now let’s assume the stock market on average goes up 5% a year. That means 20% of your returns is eaten up by fees. (1% / 5%). Compound this over time and you lose a lot of growth. Take an index fund that charges .2%, you lose 4% of your return. That’s a 5x difference!
 
Note: I’m not a financial planner. I’m not a estate planning expert. These tactics and strategies have worked for me. I strongly suggest you read, The Four Pillars of Investing and get moving on saving for your retirement today!

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Other content by this writer: "How to Manage Vacation If Your Company has an Unlimited Vacation Policy" and "3 Things I Wish I'd Known When Starting Out"  


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Rob Deichert is Founder & President of Deichert Consulting LLC ("DC") a boutique firm specializing in digital marketing, advertising and publishing.  The services that DC offers range from Strategy and M&A through to Change Management, Organizational Design and Operational Excellence.  Prior to founding Deichert Consulting, Rob held executive positions at AOL, Criteo, Rubicon Project and The Weather Channel.  ​


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Must Do's

Achieve: Focus on Results
​
Achieve: Leading from the Start
Achieve: Small is BIG
Achieve: Take Action
Career Management: Annual Review. A "How To"
Career Management: Annual Review. As Career Plan
Career Management: Choosing a Mentor
Career Management: Careers Happen
Career Management: Career Journey
Career Management: Mentorship Explained
​
Career Management: Post Graduate Degrees
Career Management: Promotion Frustration 
Career Management: Moving up by moving out
Career Management: Selecting Your Company
Career Management: Understand Yourself
Finances: Retirement Saving (1)
Finances: Retirement Saving (2)
Hindsight: Balance the short- with the long-term
​Hindsight: Embrace learning and your manager
Hindsight: Focus at Work
Hindsight: Millennial Reflections
Hindsight: Regrets: Time, Money & Pride
​Hindsight: Take Advice Sparingly
Hindsight: Take a Career Mulligan
​
Hindsight: Transition from College
Hindsight: Winning Nicely
Hindsight: Work hard, network, be honest. Have fun too!
Managing Up: Manage Up to Move Up
Managing Up: Manager As Partner
Managing Up: New Manager
Managing Up: Questions for your manager
Managing Up: Secret Skills for Managing Up
​
People & Teamwork: Be A Giver
​
People & Teamwork: LinkedIn As Networking
People & Teamwork: Networking Hacks
People & Teamwork: Networking as a Relationship
People & Teamwork: Networking Simplified
People & Teamwork: Teamwork As Leadership
Speedbumps: Chutes & Ladders
​
Speedbumps: Laid Off? Take A Breath
Speedbumps: Layoffs. The Afterlife
Speedbumps: Owning Mistakes
Work Life: Work Culture. America vs. UK
Work Life: Ask Why
Work Life: Be Yourself. Be Genuine
​
Work Life: Browned Out?
Work Life: Business Travel Guide
Work Life: Calendar Management
Work Life: Difficult Situations
Work Life: Focus on Fiyah!
​Work Life: Ghosting
​
Work Life: Help the Early Stage Professionals
Work Life: International Remote Working
Work Life: Pre-Vacation Checklist
Work Life: Smartphones & The Office
​Work Life: Start-Up Glamor
Work Life: Stress Management
Work Life: Take a Walk
​
Work Life: They Quit
Work Life: Unlimited Vacation
Work Life: Welcome the Newbies
Work Life: "Work" from Home

Crushing It @ Work

What Time Should I Start? 
What If I am Running Late? 
Taking Vacation
Sick Days 
Working Outside Office Hours
​
How to prepare for One/Ones
Making Meetings on Time 
Business Presentations 
Social Media, Personal Email and Hanging Out on the Web
Give it Six to Nine Months to Feel @Home
Be Your-professional-self
Staying Positive

Money Talk

The Basics
Retirement Savings Guide

Job Search Must Do's

Resume
The Application Letter 
​
The Free Conundrum: Should You Take an Unpaid Internship?
Informational Interviews 
Taking a Shortcut: Using Your Network 
Dealing with a Low GPA
​Responding to Recruiters
The Job Interview
Interview Questions
Questions You Should Ask
Simulations 
Interviews with Other Applicants
Dealing with References
Negotiating Your Salary
How to Resign (if you already have a job)
​
The First Week
You Don't Get the Job: Getting Feedback
​Keeping Motivated Through the Search

USA Today Columns by Fergus Mellon

How to get started on LinkedIn: Do this, not that
Warning: Avoid smartphone shame at work.  Keep them out of sight
To succeed, be a Giver in the workplace, not a Taker
4 ghoulish personality pitfalls to steer clear of at the office
​
How to coach today's not so entitled Millennials as they join the rat race

Crushing IT

Money

Library

WISE WORDS

Bureaucracy

Copyright © 2016 - 2020
  • Home
  • Getting a job
    • Must Do's - Resume
    • Must Do's - Application Letter
    • Must Do's - Internships
    • Groundwork - Informational Interviews
    • Groundwork - Your Network
    • Groundwork - GPA Issues
    • Groundwork - Recruiters
    • Dealing with Rejection - Feedback
    • Dealing with Rejection - Keeping Motivated
    • Closing the Deal - The Interview
    • Closing the Deal - Interview Q's
    • Closing the Deal - Your Questions
    • Closing the Deal - Simulations
    • Closing the Deal - Group Interviews
    • Closing the Deal - References
    • Signing On - Salary Negotiation
    • Signing On - How to Resign
    • Signing On - First Week
  • Crushing It
    • The Hours - What Time Should I Start
    • The Hours - What If I Am Running Late?
    • The Hours - Taking Vacation
    • The Hours - Sick Days
    • The Hours - Working Outside Office Hours
    • Professional Skills - One/Ones
    • Professional Skills- Making Meetings on Time
    • Professional Skills - Business Presentations
    • Professional Skills - Social Media, Personal Email
    • A Level Head - Feeling @ Home
    • A Level Head - Be YourProfessionalSelf
    • A Level Head- Staying Positive
  • Wise Words
    • Achieve - Focus on the Results
    • Achieve - Leading from the Start
    • Achieve - Showcase Your Work
    • Achieve - Small is BIG
    • Achieve - Take Action
    • Achieve - Your New Job. A Plan
    • Career Management - Annual Review
    • Career Management - Annual Review Feedback Meeting
    • Career Management - Annual Review: How to Guide
    • Career Management - Career Contentment
    • Career Management - Careers Happen
    • Career Management - Career Journey
    • Career Management - Choosing a Mentor
    • Career Management - Discomfort Is Good
    • Career Management - Freelancing and Employment Gaps
    • Career Management - Mentally Healthy Choices
    • Career Management - Mentorship Explained
    • Career Management - Post Graduate Degrees
    • Career Management - Promotion Frustration
    • Career Management - Promotions. Move out to move up
    • Career Management - Selecting Your Company
    • Career Management - Understand Yourself
    • Finances - Preparing for a Downturn
    • Finances - Retirement Saving (1)
    • Finances - Retirement Saving (2)
    • Hindsight - Balance the Short- with Long -term
    • Hindsight - Embrace Learning & Your Manager
    • Hindsight - Focus at Work
    • Hindsight - Millennial Reflections
    • Hindsight - Regrets: Time, Money & Pride
    • Hindsight - Take a Career Mulligan
    • Hindsight - Take Advice Sparingly
    • Hindsight - Transition from College
    • Hindsight - Winning Nicely
    • Hindsight - Work Hard. Be Honest. Have Fun
    • Managing Up - Manager as Partner
    • Managing Up - Manage Up to Move Up
    • Managing Up - Mastering Your Manager
    • Managing Up - New Manager
    • Managing Up - Questions For Your Manager
    • Managing Up - Secret Skills of Managing Up
    • Managing Up - Yes Power
    • People & Teamwork - Be a Giver
    • People & Teamwork - First Time Manager
    • People & Teamwork - LinkedIn as Networking
    • People & Teamwork - Networking Hacks
    • People & Teamwork - Networking as Relationship
    • People & Teamwork - Networking Simplified
    • People & Teamwork - Reputations Travel
    • People & Teamwork - Teamwork as Leadership
    • Sliding Doors - Decision Paths
    • Sliding Doors - Success Requires Luck
    • Speed Bumps - Chutes & Ladders
    • Speed Bumps - Layoffs & Survivors Guilt
    • Speed Bumps - Laid Off? Take a Breath
    • Speed Bumps - Layoffs. The After Life
    • Speed Bumps - Owning Mistakes
    • Work Life - American Work Culture
    • Work Life - Ask Why
    • Work Life - Be Yourself. Be Genuine
    • Work Life - Browned Out?
    • Work Life - Business Travel Guide
    • Work Life - Calendar Management
    • Work Life - Change is Certain
    • Work Life - Difficult Situations
    • Worklife - Focus on Fiyah
    • Work Life - Ghosting
    • Work Life - Help the Early Stage Professionals
    • Work Life- International Remote Working
    • Work Life - In the Zoom
    • Work Life - Mom Skills
    • Work Life - Office As A Stage
    • Work Life - Office Ghouls
    • Work Life - Pre Vacation Checklist
    • Work Life - Returning to Work
    • Work Life - Smartphones & The Office
    • Work Life - Speak Up
    • Work Life - Stage Fright
    • Work Life - Startup Glamour
    • Work Life - Stress Management
    • Work Life - Take A Walk
    • Work Life - Tasks We Hate
    • Work Life - They Quit
    • Work Life - Unlimited Vacation
    • Worklife - Vacation Overview
    • Work Life - Welcome the Newbies
    • Work Life - "Work" From Home
  • Money
    • Money - The Basics
    • Money - Saving for Retirement
    • Money - Retirement Saving
  • Library
    • Book Reviews
    • Webinar Hub
    • USA Today Columns
    • Buy Early Stage Professional
    • Bureaucracy
  • Help Center
    • Annual Reviews
    • Career Speed Bumps
    • Managing Up
    • Promotions & Career Planning
    • Stress Management