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Retirement

Recent grads do not normally worry too much about retirement. It is the nature of the beast when you are under 30 to think about something that is at least 30 years in the future. But we all know that Social Security is probably in significant jeopardy and even if it is still in place when you retire it will probably provide less then 15% of your need.

So what to do? The answer today is to participate as soon as possible in your 401K. Max out and never draw on it. You get the power of dollar cost averaging and the power of compounding growth. The concept of dollar cost averaging is that if you invest the same amount every month, then when stocks are up you buy less and when it is down you buy more. This is a great way to build wealth. The second the power of compounding growth means you will be doubling your money every few years. I can still remember the month that my growth in my 401 K exceeded the amount I was putting in. A 401K participation is what allowed me to retire (kind of) at 50 with enough money to live on the interest the money makes.

So my advice is when you are young and healthy, the 401 K is probably the benefit to look for.

"Working your way up", how have you done it? What obstacles did you personally face?

It is always a challenge to find ways to work up in a company. The implications is always that you are in competition with others and that favoritism will rule.

I do not believe this premise and in my career it did not work this way.

I have found that by following some simple principles / processes you will move up because there are so many people who don't so you are quickly recognized as an achiever / leader.

They are as follows.

1. Work Hard, always give a bit more then expected. This may be coming in 10 minutes early and not leaving as soon as the day is done, it may be putting a bit of flash in a report, or simply double checking your work so the common errors don't show up.

2. Treat everyone with respect. Both above and below. It doesn't matter how smart you are or how well you do the job, if people don't like you, they will avoid you and they will pass you over when choosing bosses.

3. Always take on extra responsibility. In general do it without asking for more money. The money will come. It is the old adage " You Dance Like You Don't Need the Money"

4. Train those under you to do your job. It is not commonly understood, but you can not move up until someone is able to back fill you. It is very common for people to hold on to information about their job believing they are protecting themselves. What they are doing is locking themselves into that position so they can not move up.

5. Look for opportunities for the company to grow or excel that are out side your normal responsibilities. Think like an owner, not an employee. Find ways to improve the company.

I can almost guarantee that if you learn to live the above simple principles you will excel and move up in any organization and as a corollary you will probably happier then a good percentage of the population because the same principals allow you to have pride in what and how you do it.

When is the right time to ask for a raise

In general there is never a good time to ask for a raise. If you have a good relationship with your boss / company raises should be accomplished at regular intervals. There are a couple of exceptions to this rule.

If you are given a new job, title, or significant increase in responsibility then it is legitimate to ask if additional compensation comes with these responsibilities. Do not be surprised if the answer is that in the next cycle this will be considered. The employees that I have seen get the largest raises over time are those who take on the task with the understanding the money will follow.

Implicit in this relationship / understanding is that you received fair compensation when you hired on. This is the most legitimate time to negotiate your salary and when you can expect increases over your present compensation. If this is the first real job, do some research so you know what is reasonable for the position you are hiring on to. Do not be afraid to negotiate this. Almost every employer I know will make an offer at a lower price then they are willing to pay. This is because a large percentage of people will counter and an employer needs to be able to counter as well. It is also reasonable to enquire about any probation period and if a raise can be expected at the end of this period.

One strong word of caution, never, never, never lead off with this discussion.

First and foremost you must determine if you are a fit for the job, if the job is a fit for you and if the corporate culture is a match for where you wish to work. You should be inquiring / demonstrating how you can benefit the company through hard work, not how you can get a job and what it pays. If you are successful in this exercise, when the offer comes you can then negotiate. Be prepared should you be asked how much you want and respond that you would like to be paid a fair compensation in line with your peers and the position and responsibility you are anxious to assume. Try not to put a price on yourself unless you are confident that you know that number and you will not take less.

I have seen many people state a required starting salary thinking they are starting negotiations. When this number was over what the employer could pay they where taken out of the running. In later discussion I learn that the would have taken less. It is much better to hear what the employer offers, add 10 to 20% and see if that is attractive. It keeps your options open and allows you to make informed decisions when you are not in the interview mode.

Finally the quickest way to raises is to take on functions that are outside your normal responsibilities. Any employer worth their salt will give the larger raises to the folks who are demonstrating they are willing to do more then they are paid for or assigned.... It is just good business sense and leads to a win win situation.

Taking out a loan

Taking out loans are like any other purchase. I have taken loans out for many reasons. Loans are in general never the first choice. The first choice should always be to save for what you need. Of course there will come a time when you need something you just don’t have the cash for and you have to get a loan… A car… A house or some other large purchase. When you find yourself in this condition, the simple rule is the same rule you apply to the purchase of any commodity. Pay the least you can. Loan fees come in three forms. 1. Initiation fees, 2. points to get a better rate, and 3. the interest you pay. You should always take the second two and average them to an annual interest rate you compare from loan to loan. Pick the loan with the lowest Annual Percentage Rate (APR) Do not be fooled with teaser rates or rates which are not put in terms of the APR. The initiation fees are fees you pay someone to get you a loan or process the paper work. Try to avoid these if at all possible by obtaining the loan yourself.

One final thing it is always good to establish your credit before you need it. Get a credit card, use it slightly and pay it off every month. This process establishes your good credit for when you really need it.