financial_advice - BADGrads

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=====Financial Advice for Astronomy Graduate Students=====

//"Someone's sitting in the shade today because someone planted a tree a long time ago." -- [[http://en.wikiquote.org/wiki/Warren_Buffett|Warren Buffett]]//

==== Preamble ====
This is a general repository for financial advice for astronomy graduate students of the "I wish I had known that when //I// was a first year" variety.  The glossary is a good place to start if you don't know your Dow Jones from your Standard and Poor's;  if you know why index funds are such a good idea then you can probably just skip it.  The other four major links were designed to be read in order.  Finally, at the bottom of this page there are links to more information and bottom-line advice.  Some of the stuff here, like the glossary, is totally general financial stuff. Some of the stuff is Berkeley-grad-student specific, identified by a Cal icon ({{financial_advice::cal.jpg}}) so you can avoid it or skip right to it, depending on why you're here. 

====Finances====
[[financial_advice:finances|This section]] contains general advice about bank accounts, credit cards, and student loans {{financial_advice:cal.jpg}}.

====Investing====
[[financial_advice:investing|This section]] shows  how to safely become a millionaire on the stock market.  Really.



====Retirement====
[[financial_advice:retirement|This section]] tells you what all that DCP "safe-harbor" stuff {{financial_advice::cal.jpg}} is all about (i.e. why Fidelity keeps sending you mail), IRAs, 401(a)s, Roths, and more.

====Taxes====
[[financial_advice:taxes|This section]] is about what to do with your 1098-T form, fellowships {{financial_advice::cal.jpg}} and those education credits.  This section could use some work by folks who understand this stuff.

====Glossary====
You may want to skim this [[financial_advice:glossary]] of terms used above if you're not sure, for instance, exactly what a mutual fund is.  

====Saving for College====
[[financial_advice:college|This section]] describes a great way to save for college for a child, or to help out with college for a neice or nephew.  Makes a great wedding or baby-shower gift!

====Learn more====

  * Read [[http://en.wikipedia.org/wiki/Burton_Malkiel|Burton G. Malkiel]]'s 1973 classic //[[http://www2.wwnorton.com/catalog/fall06/006245.htm|A Random Walk Down Wall Street]]//  for a thorough explanation of the [[financial_advice:glossary#Efficient Market Hypothesis (EMH)|Efficient Market Hypothesis]] (or why it's so hard to beat the market) and how to invest wisely.  It's often called the first book any investor should read on investing.  There's also an advice-only version, //[[http://www2.wwnorton.com/catalog/fall04/032639.htm|The Random Walk Guide to Investing]]//, without all of the academic analysis.
  * [[http://money.stackexchange.com]] is a Q&A site with some good information.
  * [[http://finance.yahoo.com/columnist/archives/headline/futureinvest/2006/1|Jeremy Siegel]] and [[http://finance.yahoo.com/columnist/archives/headline/millionaire/2005|David Bach]] have some [[http://finance.yahoo.com/columnist/allbios|columns]] which can be instructive.  
  * Learn about [[http://en.wikipedia.org/wiki/Benjamin_Graham|Benjamin Graham]], [[http://en.wikipedia.org/wiki/Warren_Buffett|Warren Buffett]] and [[http://en.wikipedia.org/wiki/Berkshire_Hathaway|Berkshire Hathaway]], the paragons of active, low-risk, high-return, "value" investing.
  * [[http://www.morningstar.com|MorningStar]] is the gold standard for analysis of mutual funds, and has a handy, free web interface for keeping track of your investments.  Just don't take their star system too seriously.
  * [[http://www.fool.com|Fool.com]] is all about trying to beat the market (which is, in fact, a foolish strategy).
  * [[http://www.fairmark.com/rothira/toc-roth.htm|Roth IRAs]] can get kind of complicated. 
====Bottom line advice====

Right now: 
  * Pay off your credit card bills.  If possible, make this your most important financial priority after school, food and shelter.
  * Open a [[http://www.bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=33&sort=2|high yield internet bank account]] and keep spare cash there. 
  * Open a Roth IRA mutual fund. A simple thing to do is invest in a target retirement fund, something offered by most investment management companies. Assets in these funds are invested according to how close you are to retirement (higher risk, higher reward if you are retiring in the distant future, and then safer, lower return investments as you near retirement). In choosing where to open an account, pay particular attention to how much the investment company charges for managing the investment. In addition to the obvious thing like fees for having an account, look for the expense ratio of any mutual funds, which is the percentage of your investment that the company takes each year for managing the fund. Vanguard offers target funds with a 0.18% expense ratio, compared to an industry average closer to 1% ([[https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT|Vanguard 2050 Target Retirement]]). 
  * If you've worked here for a summer already, [[https://login.fidelity.com/ftgw/Fidelity/NBPart/Login/Next|move your DCP savings]] into something like the Spartan S&P 500 [[http://badgrads.berkeley.edu/doku.php?id=financial_advice:glossary#index_fund|index funds]], where it can start to grow for you.

Longer term:
  * Live below your means
  * Participate in the markets
  * Invest regularly
  * Get knowledgeable
Trace: • pay • start • day3 • day9 • launch_day_2021 • day12
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