Rasine
New Member
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Joined: 11 Jul 2006
Location: Florida
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i just turned 18 and i will be going to college in the fall. i have some extra money (about 1,000) that i would like to invest in somthing. i thought about a money market or cds, but is the rate of return worth it? then i thought about a mutual fund, but which one do i invest in?
i have a lot of time for this money to grow. where should i invest it and how can i go about doing it.
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Wed Jul 12, 2006 12:05 pm |
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Rasine
New Member
Cash: $ 0.85
Posts: 4
Joined: 11 Jul 2006
Location: Florida
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so....would my money be more worth paying for my college or doing an ira than anything else?
see i have a student loan of about $2,000, should i attemped to pay some of the principle with that 1,000 that i have?
or should i do an ira? if that is the best option, what kind of ira do you all suggest?
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Wed Jul 12, 2006 1:10 pm |
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Blue Eyed Cat
Contributing Member
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Joined: 12 Jul 2006
Location: Central Florida
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My grandson started college last year and I recommended he open an internet savings or money market account that could be linked to his checking account. This way money could be transferred to and from the internet account very quickly (1 or 2 days). I suggested Emigrant Bank because the transfers are easy and free but there are other banks that offer the same thing. The interest rates on these account are 4-5%. That may not seem like much but CDs are paying the same interest rates and the money is not available without paying a penalty. Other banks to look into are ING and HSBC and probably more.
The plan is to have the money earn interest and anytime you have extra money in your checking account, transfer it to the MM to get more interest. When you need money (for school expenses) you transfer back to the checking.
I would not recommend investing money in an IRA until after you finish school. First you can only put "earned" money into an IRA so investing in them in dependent on your working. Second, school is the most important investment you can make now. The advantage of an insured MM is that you are not "gambling" with your principal as you would with an investment such as stocks.
If this money will absolutely never be needed for school expenses, the advice changes.
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Wed Jul 12, 2006 1:40 pm |
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Rasine
New Member
Cash: $ 0.85
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Joined: 11 Jul 2006
Location: Florida
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in the long run... would my money be put to better use in paying off that loan before it collects intrest...or could i use that same money and let it grow, which could turn into more than the intrest on my loan?
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Wed Jul 12, 2006 1:40 pm |
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Blue Eyed Cat
Contributing Member
Cash: $ 2.90
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Location: Central Florida
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Regarding paying off the school loan. It depends. If the school loan is accruing interest from day one, yes paying it off is good if the interest rate on the loan is greater than 5%. If the loan is interest free until you graduate, there is no real advantage in paying it off now.
If you don't really need the loan money you can put it in the MM where it will gain interest and then pay the loan back when it starts accruing interest.
By the way, earning interest is always good. The benefits of compound interest should never be underestimated.
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Wed Jul 12, 2006 1:55 pm |
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Rasine
New Member
Cash: $ 0.85
Posts: 4
Joined: 11 Jul 2006
Location: Florida
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the intrest on ym loan is more than 5% and compounds quartly as soon as i get the money.
however, i do have other spending money in my checking that i could be earinging intrest on. do u have to keep a min. balence in a mm and does it cost much to open one?
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Wed Jul 12, 2006 1:59 pm |
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Blue Eyed Cat
Contributing Member
Cash: $ 2.90
Posts: 29
Joined: 12 Jul 2006
Location: Central Florida
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I checked the information on Emigrant Direct.
No Fees
No Minimums
Interest rate is currently 5%
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Wed Jul 12, 2006 8:58 pm |
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more freedom
Full Member
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Joined: 12 Jul 2006
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Rasine, if you dont know what to invest in, then why not invest in yourself first?
Read more financial books. You mind is your BIGGEST asset
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Thu Jul 13, 2006 4:25 am |
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David Briggs
Senior Member
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$1,000 is best used as a contribution to current cash flow. Float. Tide you over on minimum payments between inflows from other sources.
Are you going to be coming up the ladder with salary from a high paying job which your education is going to bring you?
If a high paying job is not on the horizon, then control costs. Pay yourself first. Make regular small payments into dividend paying funds. There are so many ETFs which pay out monthly!
~~David
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Thu Jul 13, 2006 4:42 am |
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