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What should these college kids do with the money in their savings/stock account?
Posted on 8/20/16 at 12:32 am
Posted on 8/20/16 at 12:32 am
Having worked part-time since they were 15, my oldest [one year from college graduation] has about $10000 and my middle [two years from college graduation] has about $8000 ... each in a Schwab stock investment account.
Should they stay in cash and wait for a better time to get in market or should they go ahead and put the money in an index fund or funds, and if so, which ones?
Should they stay in cash and wait for a better time to get in market or should they go ahead and put the money in an index fund or funds, and if so, which ones?
2
Posted on 8/20/16 at 5:28 am to amgslg
I would say keep 5k in cash and earmark as a post college moving fund/emergency fund (for moving expenses, apartment deposits, etc. for post-college job). Spend a grand or two or so on a cool trip/trips (backpacking thru Europe vs. awesome spring break + cool football road trips). Put the rest in a Roth.
Posted on 8/20/16 at 2:31 pm to amgslg
What am I missing... why do they have that kind cash in a brokerage account?
I agree with the other comment with each setting aside a portion for an emergency fund. After that, I would look at setting up Roth accounts once/if they are working. Assuming they have 5-8k leftover, I would dump into an S&P or whole stock market index.
Too many people fail to take advantage of a Roth, so just opening one early is a good first step.
I agree with the other comment with each setting aside a portion for an emergency fund. After that, I would look at setting up Roth accounts once/if they are working. Assuming they have 5-8k leftover, I would dump into an S&P or whole stock market index.
Too many people fail to take advantage of a Roth, so just opening one early is a good first step.
Posted on 8/20/16 at 2:50 pm to Oenophile Brah
They had it in their savings and just moved it to their Schwab account. Now looking to invest. If they have an emergency, I would be their emergency fund. I'd like them to see growth so they get excited about investing and start saving a percentage of their monthly pay checks when they graduate. If they open Roth IRAs, they would have the same question ... Would you put it all [by all I mean whatever is in the stock market] in a single broad market index fund or would you split it up somehow?
Posted on 8/20/16 at 4:30 pm to amgslg
Gotcha.
That's great they have a family buffer, but self reliance has it's own reward.
I like the idea of having 2 funds, 1 large cap & 1 mid/small cap. I know they're with Schwab, but Vanguard has excellent low-cost funds to consider. Once they reach 10k/fund, they should qualify for Vanguard's extra low cost admiral shares. That's a nice near-term incentive for them to shoot for. That would be an excellent way to start saving for mid/long term. If they're house hungry, they may want to lower their risk and keep a portion in a low return savings account.
That's great they have a family buffer, but self reliance has it's own reward.
I like the idea of having 2 funds, 1 large cap & 1 mid/small cap. I know they're with Schwab, but Vanguard has excellent low-cost funds to consider. Once they reach 10k/fund, they should qualify for Vanguard's extra low cost admiral shares. That's a nice near-term incentive for them to shoot for. That would be an excellent way to start saving for mid/long term. If they're house hungry, they may want to lower their risk and keep a portion in a low return savings account.
Posted on 8/20/16 at 7:56 pm to amgslg
I would probably just put $2000 or so into the Vanguard s+p 500 fund to start, and have them contribute 10% a month or so from their paychecks. I would do it in a Roth. If the kids cars aren't going to last another 5 years or so, or if they break down and you would expect them to replace their current vehicle, I'd keep it in cash.
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