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I don’t write too many posts about what’s going on my financial life, mostly because I figure that you’re all more interested in what’s going on in your financial life! I figured it wouldn’t hurt every now and then to share what I’ve been doing; maybe they’ll work for you if you’re at a similar place in life as I am.

A few months ago, I decided that I wanted to start saving for retirement, even though I’m still and college and most of my peers won’t be worried about it for another decade. I figured there’s nothing wrong getting a head start. Since I don’t have full time employment, but rather several part-time jobs to work my way through school, I don’t have any retirement plans available to me at work just yet. This means that the most desirable option for me right now is a Roth IRA.

I researched many funds with many different objectives, and settled on Vanguard’s 2050 Retirement Fund (VFIFX). The reason I chose it was its relatively low expense ratio (0.22%) compared to other retirement-specific funds, as well as the fact that it offered a very diversified and dynamic portfolio without having to invest in multiple mutual fund.

It’s very aggressive right now, there’s a significant chunk of it thrown into pacific and emerging markets stocks, which is fine since I have over 4 decades before I retire. As I get closer to retirement, It’ll be moved into some more standard growth funds, and when I retire, half of it’ll be in the market, and the other half will be in bonds, which is a pretty good balance for someone who’s about to retire.

For 2007, I was able to max out my contribution at $4,000. This is a little above 15% of my income right now, but my living expense are relatively low since I’m in college and live on seemingly nothing. I’m throwing cash into a savings account now which will be put in the mutual fund on the first day of 2008, so I’ll be able to max out next year’s contribution right away.

I graduate next may, so hopefully by then I’ll have some 401k options available to me to do some more retirement planning. I’ll plan on maxing out my ROTH right away, and taking whatever Match is offered, and probably some more after that depending on what’s going on in my life.

I don’t want to speculate how much money I’ll have when I retire, because who knows what’ll happen in the next 40 years, but if I keep doing what I’m doing, I think I’ll be able to relax on whatever beach I want to when age 65 comes around.



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