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Started By
Message
Looking for some realistic advice
Posted on 1/20/11 at 8:47 pm
Posted on 1/20/11 at 8:47 pm
Before I start, let it be know that I not only am I young but rather in the dark about most financial matters, so be kind.
I am a first year high school teacher currently living with my parents while I save money to go to grad school next year. I have no student loan debt, no credit card debt, or any debt for that matter to attend to, so basically I'm at the pure income level for a year because I pay no rent and my expenses are very little.
I also have a joint account started by my grandmother many years ago that includes not only money she gives periodically as gifts but also some inheritance I received about 2 years ago.
So my question is: Now that I have more substantial savings than I ever have had, should I invest any of my money into some stocks or mutual funds, or should I wait it out in the 1% savings account to not risk it. (looking at the $30,000-$35,000 range altogether by the end of my employment in August)
If(when) I go to grad school, I will likely be receiving a fellowship and thus will receive not only free tuition but an ample stipend for my lifestyle, so I don't see there being immediate need for my savings to bail out any living expenses I may have.
What say you financial wizards?
My limited knowledge thinks I should invest a chunk because I won't need it now and because over a longer term there is less risk, but tell me if that's the wrong way of thinking about it.
Thanks in advance.
I am a first year high school teacher currently living with my parents while I save money to go to grad school next year. I have no student loan debt, no credit card debt, or any debt for that matter to attend to, so basically I'm at the pure income level for a year because I pay no rent and my expenses are very little.
I also have a joint account started by my grandmother many years ago that includes not only money she gives periodically as gifts but also some inheritance I received about 2 years ago.
So my question is: Now that I have more substantial savings than I ever have had, should I invest any of my money into some stocks or mutual funds, or should I wait it out in the 1% savings account to not risk it. (looking at the $30,000-$35,000 range altogether by the end of my employment in August)
If(when) I go to grad school, I will likely be receiving a fellowship and thus will receive not only free tuition but an ample stipend for my lifestyle, so I don't see there being immediate need for my savings to bail out any living expenses I may have.
What say you financial wizards?
My limited knowledge thinks I should invest a chunk because I won't need it now and because over a longer term there is less risk, but tell me if that's the wrong way of thinking about it.
Thanks in advance.
7
Posted on 1/20/11 at 9:05 pm to SpyBoy
I'll keep it simple, yes, invest it
Posted on 1/20/11 at 9:09 pm to SpyBoy
Yes, why not? Pick something relatively "safe". Its still better than it sitting there. Mutual funds, bonds, etc.
OT- Covington's my hometown. Did you grow up there, or just live there now?
OT- Covington's my hometown. Did you grow up there, or just live there now?
Posted on 1/20/11 at 10:05 pm to SpyBoy
Others on this board have heard me beat this drum many times already and are probably tired of it, but I suggest you establish a Roth IRA and contribute as much as possible to it, right up to the annual limit if you can.
The Roth is not tax deductible like a traditional IRA, but you can withdraw your contributions (not your earnings) at any time without penalty if you need it. Meanwhile, any earnings you get are tax free. So this is slightly better than a regular checking/savings account.
Whatever account type you choose, you also have to choose what financial institution to use. I personally have used Schwab for 20 years and love them. There are other competitors that are perfectly good but I have no experience with them.
Finally, once you have the money in a particular kind of account (Roth, savings, checking, etc.) at a specific financial institution (Schwab, Fidelity, Bank of America, Bank of Bunkie), then you have to decide what to invest in.
Bear in mind that "the market" is extremely tough to beat even for those who try professionally for a living. You can do far worse than invest in a stock index fund, I do this myself. By doing that you are investing in a stock index, like the Dow Jones or S&P. The problem with most mutual funds is that they routinely don't do any better once fees are deducted.
And finally, study while you pile up savings. Don't be afraid to make mistakes, it's early in the game for you. Better to learn now than when you're 65.
The Roth is not tax deductible like a traditional IRA, but you can withdraw your contributions (not your earnings) at any time without penalty if you need it. Meanwhile, any earnings you get are tax free. So this is slightly better than a regular checking/savings account.
Whatever account type you choose, you also have to choose what financial institution to use. I personally have used Schwab for 20 years and love them. There are other competitors that are perfectly good but I have no experience with them.
Finally, once you have the money in a particular kind of account (Roth, savings, checking, etc.) at a specific financial institution (Schwab, Fidelity, Bank of America, Bank of Bunkie), then you have to decide what to invest in.
Bear in mind that "the market" is extremely tough to beat even for those who try professionally for a living. You can do far worse than invest in a stock index fund, I do this myself. By doing that you are investing in a stock index, like the Dow Jones or S&P. The problem with most mutual funds is that they routinely don't do any better once fees are deducted.
And finally, study while you pile up savings. Don't be afraid to make mistakes, it's early in the game for you. Better to learn now than when you're 65.
Posted on 1/21/11 at 10:17 am to SpyBoy
quote:
SpyBoy
Got a name of a small financial company in Mandeville if you're interested in working with a professional. I'm going through this now.
This post was edited on 1/21/11 at 10:17 am
Posted on 1/21/11 at 10:58 am to SpyBoy
Not trying to be rude because I don't know your circumstances (or that of your parents), but have you considered taking some of your money and moving out of your parents' house?
Posted on 1/21/11 at 11:34 am to SpyBoy
You are in great financial shape for someone just out of school. If / when you go to grad school you will be making another good investment in yourself and future. I like Fozhizzle’s and Dusty Bottoms above advice. I use Fidelity and Vanguard and am happy with both. I would go with Vanguard Total Stock Market Index Mutual Fund to start off with. Vanguard just lowered their already low fees by reducing the account balance needed to qualify for their lowest fees.
Posted on 1/25/11 at 12:05 pm to SpyBoy
quote:
The Roth is not tax deductible like a traditional IRA, but you can withdraw your contributions (not your earnings) at any time without penalty if you need it. Meanwhile, any earnings you get are tax free
This. In your case, you don't need the tax deduction from a simple IRA. Keep about 5,000 in your savings for emergencies and invest the rest in a Roth, or a Fixed Annuity (in some cases, they're pretty much the same thing). You're young and you can play with a little of it also if you can tolerate the chance of losing it.
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