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Advantages Of Working For A Large Company As A Young Professional

05.27.2020 by admin // 4 Comments

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Choosing to work for a large company, a small company, or starting your own business can impact the quality of your life. These days there is a lot of advice out there about working for yourself instead of a large company. Certainly, there are benefits to working for yourself but there are also benefits to working at a large corporation, especially when you are a recent graduate. Here are a few advantages for working at a large company as a young professional.

Opportunities for Career Advancement At Large Companies

Most large companies have specific criteria for advancement. At times, this may seem bureaucratic. But, you’ll clearly know what you need to do to get that promotion. For many jobs, there is a clear career path. If you start in inside sales you can clearly see two career paths: advancement to outside sales and advancement to an inside sales manager position. If you’re in professional services like accounting or audit there is a clear career path leading up to partner or a clear path to get promoted to a certain level and then go in-house.

Career Development Opportunities

One advantage of working for a large company is the amount of career development opportunities offered for free. If you work for a large corporation your team likely has money for training and internal training available. They also likely offer training internally, ranging from company specific training to skills training that’s easily transferable. Some companies also offer LinkedIn Learning for free. Don’t hesitate to ask your manager about what training options you have available through your company, or what opportunities there are for external training / certifications.

It’s important to continue learning and acquiring additional skills. You’ve invested in yourself by attending college, but it doesn’t end there. There are other professional certifications and additional degrees that can significantly increase your earning potential such as MBA or another Masters degree, CPA, CFA or PMP. If the external training / certifications will help you in your current job your employer may be willing to partially or fully pay for it. While a large corporation may not pay 100% of these costs, they may have programs that can help partially cover these costs. In fact, this is how I was able to avoid student loans and get my MBA.

Networking Opportunities

It’s important to surround yourself with people you admire. Find someone that has the job you want and learn from them. Surround yourself with people that you learn from, have positive attitudes and you enjoy being around. When you work for a large corporation there are plenty of opportunities to network and find people you admire. Leaders in your company may host lunch and learns. Companies also have employee resources groups and community service opportunities. Both of these serve as opportunities to meet coworkers that you don’t work with day to day.

Additionally, find advocates within your company. At large corporations getting put on projects that are high visibility will help expand your network of advocates. Another way is to join a large corporation as part of a leadership development program. Many decisions will be made about your career when you aren’t in the room. Have people who are in that room that will advocate on your behalf. Sponsors will advocate for you to be put on good projects, considered for new roles and for promotions. They will help push you in the right direction, put you in meetings to help you get executive visibility or expand your network. You are more likely to get a job through an employee referral and will have even greater odds if the person referring you is one of your sponsors.

Formal Mentor Programs

Many companies offer formal mentor programs that you can sign up to be a part of. Mentors will help give you career advice when you don’t know how to navigate a situation and help guide you on topics you discuss. Think of a mentor like a coach. Career advice is especially important for young professionals because the visibility you have so far is limited. Those with more experience or have greater visibility to the bigger picture can help you dream bigger.

Large Global Companies Offer Experiences Working with Different Cultures

When you work for a large corporation you likely have a much broader customer base and coworkers located around the globe to support that global customer base. There may even be opportunities to travel abroad!

It’s very beneficial to work with different cultures when you’re first starting your career. Diversity of thinking, creativity and access to talent anywhere were the top three benefits of global teams found in research conducted by SHRM. The diversity of thought helps you see situations from a different perspective and broadens your mindset.

Ability to Change Jobs Without Changing Companies

Your career path is as much about figuring out what you don’t like as figuring out what you do like. Luckily, at large corporations you can try many different jobs without having to leave the company. It is easier to figure out what you don’t enjoy at a large corporation because the opportunities are endless. This also helps you build transferable skills. Finding your niche skills will allow you to command a higher salary or start your own business down the line.

Are you in marketing and think you’d like sales better? Large corporations have large departments so there are more opportunities to make a career pivot. Want to live somewhere else? Large corporations have a large geographical presence and may even let you keep your current job and allow you to work remotely.

Invest in Retirement Early

Large corporations often offer 401(k) plans and employee matches. Many large corporations offer a company match up to a certain dollar amount or certain percentage amount. For example, if you put 3% of your salary into your 401(k) plan, they will match that 3% and make an equal contribution to your 401(k) account. This is free money.

401(k) plans are also a great investment vehicle when you’re a young professional because you have less responsibilities and you have time. Even if you’re paying down student loan debt, if you don’t have a mortgage and don’t have kids those are major expenses you aren’t paying right now. You’re able to take advantage of compound interest and have your wealth grow over time, faster.

Corporate Benefits Package

Large corporations have a number of other benefits in addition to 401(k) plans. They often offer health insurance, dental insurance, vacation time, sick time, tuition reimbursement and more. Your health insurance may include additional perks like money toward your gym membership and acupuncture. Some companies also offer Employee Stock Purchase Plans which enable you to buy company stock at a discount.

Not sure how much your benefits package is worth? Benefits accounted for 32% for employers cost of compensation for US workers in June 2018.

When you work for yourself, you think you have more flexibility for when you work and hours you work. While this is partially true, it is much easier to put on an OOO on during vacation when you work for a large company. Often, you’ll have either a boss or peer that you can put as your backup and they’ll cover for you. When you work for yourself, it is much harder to unplug and take uninterrupted time off.

Steady Salary to Pay Down Debt and Invest

When you work for yourself, your salary isn’t guaranteed. If you get sick and can’t work one day you won’t make money that day. If you get sick at a corporate job you’re much more likely to be able to take a sick day or PTO.

Because you know your salary when you work for a large company, you are able to budget and start forming an emergency fund. Within your budget, you can set aside money every month to put towards tackling any debt and money to invest.

Advantages Of Working For A Large Company As A Young Professional Summary

Advantages of working for a large company as a recent graduate include career advancement, networking opportunities, development opportunities, corporate benefits and more. Even though the upside income potential working for yourself is far greater, it’s hard to start your own business right out of the gate. Many either do not have the business acumen or risk tolerance to start working for themselves immediately.

Working for large corporations isn’t for everyone. It is very structured and you are one of thousands of people but there are plenty of opportunities for advancement. When you work for yourself, you may have unlimited income potential depending on the industry, but it’s also riskier. Regardless of which path you choose initially, you can always change your mind later.

What advantages did you see working for a large company as a young professional?

Benefits of a Roth IRA

08.26.2019 by admin // 2 Comments

There are several retirement account options available in the United States including Traditional IRAs, Roth IRAs and 401(k) plans. Even if you already contribute to a 401(k) plan at work, there are many benefits unique to a Roth IRA. You should contribute to a Roth IRA as part of your retirement savings strategy.

What Is A Roth IRA

A Roth IRA is a retirement account that offers you a tax benefit when you retire. Unlike traditional IRAs and 401(k) plans Roth IRA contributions are not tax deductible but you also do not pay taxes when you withdraw money at age 59 ½ +. There are certain Roth IRA rules such as income requirements and contribution limits you need to follow.

Broad Variety of Roth IRA Investment Options

In a Roth IRA account you can select what you want to invest in such as stocks, bonds and mutual funds. You can invest in nearly any financial asset but you cannot invest in other assets like artwork for example. Any financial asset offered by the financial institution you have your Roth IRA with can be invested in through your Roth IRA. This is a benefit offered by a Roth IRA that you don’t have in your 401(k) plan. A 401(k) plan offered by your employer typically only has a few options of what you can invest in.

Roth IRA Tax Benefits

Roth IRAs are funded with post tax contributions. This means you pay taxes on your Roth IRA contributions before you put it in the account. This is different from a 401(k) plan where you contribute money that hasn’t been taxed yet. Once the money is in your Roth IRA account the earnings grow tax free.

Borrowing Money from Roth IRA Earnings

It’s not recommended that you borrow money from a Roth IRA. However, if you get in a bind, there are a few benefits to taking out a loan / distribution from a Roth IRA. With a Roth IRA, you may have to pay a 10% penalty for an early withdrawal but there are a few exceptions. You can withdraw all or part of your money penalty free for 60 days as part of a Roth IRA rollover but you must pay back the full amount in that time frame.

You can also request a qualified distribution that you don’t have to pay back for a few reasons including buying or building your first home (up to $10,000 cap), certain education expenses or if you become disabled. Investopedia shares more details here about withdrawing from a Roth IRA. If this is something you are considering, it is best to contact your financial institution first. However, when you withdraw money from your Roth IRA you lose the tax benefits of those contributions earning capital gains and dividends tax free.

With a 401(k) loan, you can only take a loan out for a current 401(k) plan. You also may have to pay taxes on your loan and interest which is typically an interest point or two above the prime rate. Your loan is also limited to $50,000 or 50% of your balance, whichever is lower.

Roth IRA Contribution Withdrawals At Any Time

With a Roth IRA you are always able to withdraw your contributions penalty free (note: contributions, not earnings). You’ve already paid taxes on your Roth IRA contributions. Therefore, you can withdraw your contributions at any time with no restrictions. If you withdraw earnings on those contributions though, you may be taxed or penalized on withdrawing this money.

Once you hit 59 ½, as long as you’ve held the account for at least five years, you can take distributions on all money within the account and do not have to pay taxes on that money. Both 401(k) plans and Traditional IRA plans require you to pay taxes when you withdraw the money.

No Minimum Required Distribution for Roth IRAs

There are no required minimum distributions for Roth IRA accounts. Both 401(k) plans and Traditional IRA plans have required minimum distributions beginning at age 70 ½. If these plans are your only retirement saving strategy this could mean you’re in a high tax bracket depending what your required minimum distribution is. You don’t have the option to withdraw less to end up in a lower tax bracket. Since there is no required minimum distribution beginning at 70 ½ with a Roth IRA you don’t ever have to withdraw from this account. You can opt to pass this money onto your heirs.

Roth IRA Benefits Summary

It is a good retirement strategy to have a Roth IRA along with a 401(k) or traditional IRA to reduce the amount of taxes you’ll have to pay once retired and also to take advantage of the tax benefits offered by a 401(k) plan while you’re working. Having a mix of both will help reduce your taxes both now and in retirement. You’ll also have more flexibility with investment options and flexibility to borrow money from the account if you’re ever in a desperate situation.

How To Check Your 401(k) Account

07.21.2019 by admin // 2 Comments

No matter how much your investments are on auto-pilot, it is always beneficial to check your 401(k) account once or twice a year online. In your online account you can check your 401(k) balance, how your investments are performing, yearly rate of return and more. With this information, decide if any changes need to be made such as contribution amounts and investment choices. Summertime is the perfect time to check your 401(k) and see how you’re doing against your retirement and 401(k) contribution goals.

If you’re still new to retirement savings, check out John Oliver’s segment on retirement savings. He does the best job at making 401(k) plans entertaining.

How To Check Your 401(k)

First things first, how do you even check your 401(k) account online? Start by going to the website of your 401(k) provider. If you’re not sure who your 401(k) provider is, go onto your employer intranet and it should be listed under a HR resources section. Once you’re on their website, if you get stuck hit forgot username. If you’ve never set up an online profile this process will alert you to that pretty quickly. It’ll take a couple of steps to get your username and password retrieved / set up. Once you have this bookmark the page and save your username / password either through a password manager or somewhere you can reference later.

Check If Your Yearly 401(k) Contribution Goals Are On Track

In the summary tab online there should be a contribution box that tells you the percentage of you’re salary you’re contributing, your contributions this year and your employer contributions this year.

At minimum, always make sure you contribute enough to get your 401(k) employee match. This is free money that requires no additional effort. Additionally, consider contributing the maximum amount for tax benefits. Confirm if you are on track to get your company match. Are you halfway to your yearly contribution goals? If you want to contribute the maximum for tax benefits ($19,000 in 2019), have you contributed at least $9,500 this year?

If your 401(k) contribution goals aren’t on track identify what the gap is between where you are now and your yearly goal, how long it takes contribution changes to go through for your plan and how many paychecks will the new amount be withdrawn from. Then, figure out how much you need to increase your contribution per paycheck.

Check Your 401(k) Fees

When you originally picked your investments, how much attention did you pay to the fees charged? 401(k) fees can vary widely, anywhere from .5% to 5%. And, though the numbers may seem small it can add up to hundreds of thousands of dollars by the time you retire. While you may not have control of all fees in your 401(k) plan, understand which ones are in your control.

Look at the return of each fund option and the fees associated with each fund. Determine if the returns of those funds justify the higher fees. If not, switch funds. For example, if you are in a large cap equity mutual fund you can switch to a large cap equity index fund which will have lower fees. Mutual funds are actively managed funds which is why they have higher fees. Index funds are passively managed funds which follow as closely as possible the performance of its benchmark index.

To find the fees of each fund in a 401(k) plan with Fidelity, go to the Investments tab under your account and scroll down. Click each fund and each fund page will have the fees listed in the table.

Don’t think 401(k) fees are a big deal? NerdWallet shared findings that 401(k) fees could cost millennials $590,000 in retirement savings.

Check Your 401(k) Investments

For 401(k) plans with Fidelity, go to your account and look at your rate of return (both 1 year and year to date). Underneath the rate of return click on investment performance and research. Here, there are more details about the performance of each fund.

Some 401(k) plans offer target date funds which are funds aligned to the assumed year you will retire. If you’re enrolled in one of these plans, they tend to come with higher fees but require the least amount of effort from you to maintain. That way, the mix in your portfolio will shift automatically for you as the person who is managing it will change the investments over time. If you’d prefer to set it and forget it, you may decide this is worth the higher fees.

If you’re not invested in the target date funds, determine how the investments within your 401(k) plan are performing. While your 401(k) investments are in it for the long haul, it is always good to look at your investments once or twice or year. Should you be overweight or overweight in certain segments like international, large cap or small cap? Should you change only your future elections or current investments?

Lastly, how many years has it been since you’ve changed the mix in your portfolio? If you set your portfolio mix 10 years ago, you may be overweight on stocks and need to rebalance your portfolio to include more fixed income.

Check Your 401(k) Beneficiary

While you’re in your online account don’t forget to check that you’ve named a beneficiary for your 401(k) account. Typically, a spouse must be the beneficiary unless they sign a waiver. If you’re not married it’s important to name a beneficiary in your account. The Motley Fool shares additional tips on when someone inherits a 401(k).

Check Your 401(k) Balances From Former Employers

Did you switch jobs this year or in the past? While you’re doing a status check on your current 401(k) plan don’t forget about any previous 401(k) plans you have. If you don’t want to manage multiple 401(k) accounts, Fidelity outlines four options on what to do with an old 401(k) plan here.