Congratulate Yash for graduating with Bachelors and Master's in Computer Science from Stanford. We are so proud of you! And congratulations to all the graduates! Many of my friends kids are also graduating or already graduated and started their careers at exciting companies (and most of them want to stay in Cities - San Francisco is popular choice of course)
This blog is focused on various steps they should take to save for securing their financial future. Their parents learned this hard way....I am not financial advisor so use this writeup just as reference for you to consider. My usual caveat applies - do your own research before taking action. This would be beneficial to many folks who are already working few years but may not know about these.
Here you go...
Education: Education is best investment one can make and beats any other alternative. Even if you have graduated, don't stop learning..you can do it on the job, enroll in new courses/graduate program, learn by reading/listening/traveling/making friendships and just being curious about everything.
Friendships: Build lasting friendships. These are priceless and would stay with you for lifetime and would come to your help in situations which you cannot imagine. Life is so enriching and fun with these lasting friendships.
Home: One has to live somewhere. Instead of paying rents for decades, buy home in the area you plan to stay for long-term. Right now housing market is crazy and may be over-valued but in long run, paying mortgage instead of rent helps you build equity in your primary home. However this is very big financial commitment and you should take this step only when you settle down in terms of location where you want to live and financially secure enough to take on mortgage.
401K: As you start your career, you will feel that saving for retirement is only for parents. But that's especially not true when time is on your side...You have decades of compounding in front of you provided you start now. So as soon as you join, enroll in 401K and try to maximize your contributions. Check out 401K article for limits. Normally all companies have some kind of match. Make sure that you take full benefit of this match
After-tax 401K: This is not as well known to even most of the people working. It's hidden IRS secret. This tool can be very effective if you want/afford to save more than pre-tax limits and convert it into Roth IRA. Check out blog I wrote in 2016.
IRA/Roth IRA: In addition to pre and post-tax 401K, you can contribute upto $6000 IRA/Roth IRA depending on your income levels.
Deferred Compensation: This is not widely available and applicable. But for completeness, some companies do offer this for executive levels. One can defer some percentage of his/her income to grow tax-free. It gets paid when one leaves company or set time period (normally 4-5 years of first investment). But most likely it's not applicable to you so you can pass on this for now.
Invest: After you have saved in pre-tax accounts, you should invest in mix of assets (stocks etc) depending on your risk/reward. While investing do not get carried away with manias/hot trends like "crypto" or "meme stocks". Be disciplined. Generally the lesson of (Buy Product; Buy Stock; Keep Stock as long as you are using the Product!) I covered in "Million $ Teslas" blog works well.
Enjoy Life: Enjoy the life by doing what you like...hiking, movies, experiencing different cuisines, traveling to explore the world and different cultures, socializing or just spending time with families and friends...Today's generation is much better than their parents' generation in this regard. Something we need to learn and not worry too much. After all there is YOLO (You Only Live Once) term is coined by this generation!
To wrap it up.
Know what makes your graduation extra special? It’s having watched you grow up, having so many good memories of you and knowing all the challenges you’ve worked through to get to this day. We so proud of you.
Being a graduate doesn’t mean that you know everything — but you are better prepared to learn what life has in store for you.
A New Journey, A New Beginning, A new Life is in front of you! Live it Well!
/Shyam
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