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College Student: What should I do with my money?

tkepongo

tkepongo

macrumors regular
Original poster
Jul 31, 2007
102
0
Oregon State University
Hey guys,

I'm a 20 year old Accounting/MIS student (on loans) who's pretty good at managing his hard-earned money. Lately after reading a book about millionaires, I've been clueless about how I should spend my money. Here are my three options:

Stocks through E-Trade
I'm thinking of investing money into the energy sector...but I haven't learned about stocks yet and would need to teach myself. High risk but can be very rewarding and can learn alot from this experience.

IRA-Individual Retirement Account
Start investing into my retirement. Let it build interest and enjoy my retired years.

Spend the money and enjoy my last years of college.
I've been budgeting for a bigger HDTV especially after getting a PS3 and surround sound. Going out to the bars when I turn 21, having fun, having a girlfriend, drinking, trips....you know, enjoying your college life before the C word (Career) and family comes into your life.

Option 3 sounds most tempting and I know that I wouldn't ever overspend. I create budgets for everything (food, rent, social, new a/v, investment). If I were to go with option 3, I would invest 20% of my low college-income into a savings account.

So, what would you do if you were me?
 
Well, you didn't mention how much money, but...

Retirement. Maybe not all of it, but at least some of it if it. You can hold some back and buy something nice, too. No reason you can't enjoy your hard-earned money.

This assumes you don't have debt. If you have debt, pay that off first.
 
20% of your take home pay to the stock market. If you're a literate individual you can manage yourself. Don't pay someone to do it for you. Start out investing in companies you like.
 
Best bet is save it in an IRA, mutual fund, etc...unless your family is loaded and will be giving you money later in life, forget about spending money on expensive toys, you'll regret it later.

best advice i can offer is what no one ever told me, save as much as you can, as often as you can.
 
Badandy said:
20% stocks
20% retirement
20% save (to pay off loans)
40% have fun
Click to expand...

Yeah, because college and food are free. I don't know where you're getting your money, OP, but if you are actually paying your way through college with enough extra money to be investing it; then you have it made. Put it in a long term savings or retirement fund and enjoy it later in life.
 
If you can afford it, put it into a Roth IRA.

MSN Money Central said:
Here's a simple recipe to become a millionaire:
Work four summers, starting at age 16
Save the income in a Roth IRA account
Invest it in a simple, low-cost equity portfolio
Simmer slowly for 47 years
Serve ungarnished (and untaxed) at age 67

Let's suppose that you are 16 years old, in high school, and willing to work. Let's also suppose that you can clear about $2,000 over the course of a summer, if only because a doting grandparent puts money in the Roth while you take your earnings to school. If you invest in a Roth IRA, it will grow, tax-free, for as long as you have the account. All withdrawals from the account after age 59 1/2 will be tax-free.

If your money is invested in common stocks and you achieve the average compound annual rate on large-capitalization U.S. stocks, 10.7%, your account will grow to $9,378 at the end of the fourth year. You will be 20 years old. Invested in the same way, with no additional savings, the account will grow to:
$25,917 by the time you are 30
$71,625 by the time you are 40
$197,943 by the time you are 50
$547,037 by the time you are 60
And $1,114,423 by the time you are 67
And you will have started and finished all of your saving before turning age 21.
Click to expand...

http://moneycentral.msn.com/content/Investing/Startinvesting/P73751.asp

Obviously since you haven't started yet, you wouldn't earn as much but I'm sure it would still build to be quite a large nest egg.
 
Just buy beer like all the other college students. I'm serious, too. You'll never have another period in your life with so much freedom and so little expected of you.
 
with my senior year coming up this fall semester, I've to some extent been thinking of these issues. I personally plan on putting most of my extra cash into retirement. Im not looking forward to working, but I am looking forward to retirement already.
 
taylorwilsdon said:
Yeah, because college and food are free. I don't know where you're getting your money, OP, but if you are actually paying your way through college with enough extra money to be investing it; then you have it made. Put it in a long term savings or retirement fund and enjoy it later in life.
Click to expand...

I go to college, so the sarcasm isn't necessary.

Maybe I'm wrong, but when the OP asked this question, I assumed he was asking us how he should invest/spend/save his money after bodily necessities, such as eating, were taken care of.
 
Some people say to enjoy your life while you're young. But on the other hand if a 30 year old spends $100, they only sacrifice 40 years of interest, whereas a 20 year old sacrifices 50 years. If you start saving at 20 you can almost definitely retire a millionaire, even on only an average income.
 
if you have any debts/loans, pay those first. then i suggest splitting the money between savings and spending (don't deprive yourself of things while you're young for an uncertain future).
 
Assuming you have no debt, put it towards your retirement. Getting that started early is key to continuing a successful retirement savings plan. Most people start doing so too late.
 
You appear to still be in college.

1. Max out a roth IRA.

2. with the money you have left, put a little into savings for emergencies/living expenses.

3. spend the rest. this is the only time in your life you will have to be frivilous, stupid or what have you.. have a good time, enjoy it, and when you get a full time career, buckle down and be frugal, and save for the future. enjoy it while you can i guess- just dont be stupid and ruin your credit.
 
I'd say enjoy life! I started investing in my retirement plans (401k then 403b) when got my first full time job and put a decent amount in.
I also enjoyed all I could while in College (though I wasn't too heavy into the bar scene. Usually a club once or twice a week, and always eating out with friends.)
Yeah I could've saved a TON of money, but those times are priceless.
I'm also a bit of a tech freak, but not I'm starting to make money on those investments by doing videography as a side job.
I'm doing pretty well now, though I'm still saving up for my own car/place.
I really can't complain, but I might not be the best person to be talking to regarding savings, haha.
 
Reading your original post, it seems like you have a good understanding of your options. Why not pay into all of your options. Investing, IRA and having fun.

I guess the only drawback is the amount of toys you can buy and the amount of times you can go out a week if you do pay into all three.
 
I would save it, you never know when you might need it and you would be pretty p*ssed if you do but have already spent it on clubbing and drinking... You said you where on loans, I would try and pay them off quicker then look at buying huge HD TVs.
 
Badandy said:
20% stocks
20% retirement
20% save (to pay off loans)
40% have fun
Click to expand...

I would do something along these lines. College is some of the best years of your life, and one of the last times where you have minimal responsibilities. But you don't want to come out of college broke.
 
high interest savings account!

While you are figuring out how you want to enjoy your last years of college, look into investing with a high yield savings account. ShoreBank, who I work for, offers a 3.50% APY on all new accounts and we invest in socially responsible projects. A HYSA is a great way for students to save because funds are liquid which means they're accessible when you want/need them. Check out http://shorebankdirect.sbk.com.
 
Buy more beer.

Seriously, as long as you get of college alive and with a 3+ gpa, you will always look back and think "I should have been crazier in college..."
 
An answer...

10 years ago I was studying at collage, my parents gave me a lot in some county in FL. I paid the taxes $700 and they transfered the lot to me. I never paid attention to it until last month I got a call telling me the lot was auctioned to pay debs and the remaining was $12,000!!! ready for me to get.

I mean, the lot I believe should be around $60,000 at least right now.

That make you thinking in what opportunities are out there. Right now I am 33 and I am ok, a bit wiser in some aspects than when I was 23 back then.

Just start to consider those little investments. If you do not need the money make it grow itself. the biggest mistake is to start a business or an investment and expect a huge return within a few months, for what? you will be the same person in 3 years any way.

Think about long term investments that wont take much of your budged because those are actually very cheap, and those are those little seed that will make you rich by the time you needed.

Imagine, I got $12,000 with a $700 investment 10 years ago... and if I had taken care of the lot I would have made a lot more. They just took the taxes from the auction and there were around $900. Less than $10 a year! Real State still a good business when talking about land.
 
Contrary to a previous post.... you'll have a lot of time to be foolish with your money later on but now its really about clever spending! Saving should be your first priority! Set out a limit that at any cost you have to pay this much to the bank like a rent! From this save something as well.... for spending frivolously!
 
You were studying at collage?

Your collage education must have incorporated snippets from all over.
 
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