College Student: What should I do with my money?

[ChrisA]

There is no reason for a 20 year old student to think about long term investments. OK think about them but don't invest. The reason is that very soon, in say 5 to 10 years you will be making 5 or 8 times as much money as now. Why should a 20 year old poor student put away money to give to his "future self" who will be much richer.

It's silly for a guy making$10 an hour to save money so it can be spent after you get that $50 an hour job. But you should save for the shorter term. Will you be needing a car or computer in the next couple years?

The best thing you can do now with your money is pay for education. Education has the largest payoff. "Education" might include overseas travel. Spending a summerin Europe, Japan or China will pay off later. I use "education" loosly. Spend on it NOW because later you won't have the time.

In fact even if you have to borrow money and spend that on education do it. Spend every dime you can beg borrow or earn and pay it off after your salery has gone up by a factor of eight or so. Then after you've paid back the debt, invest.

OK education can be gained by small scale investment. Invest some disposable money just so you can learn how it works. Right now with the stock market down you should but money there. You are young enough to wait 20 years. The advice is that the younger you are the more risk you can take. This week stocks are a buyer's market. But keep it small -- this is education, not investment.

 

[Apple Ink]

When I say Save.... I mean save for necessities like a new computer or other gadgets/equipments you like and will come in handy to you! Me.... I'm a huge Apple fan boy and I generally keep small savings just because I know Apple is going to release something very cool and I'll be drooling about it! At that time I'd rather fetch something from my stash than give up and run to my parents!

 

[Heath]

My 2 cents...

Proven steps to build wealth, follow in order presented.

1)Set aside $1000 for emergencies, and don't ever touch it unless an actual factual emergency happens.

2)Pay off any and all debt, never borrow money again.

3)Save 3-6 months expenses for a real emergency fund.
3b) Save up for a house either a down payment, or 100% payment.

4)Once those are done, invest 15 percent of household income into Roth IRAs and pre-tax retirement.

5)Assuming you don't have kids, but if you do, then college funding for children.

6)Pay off the house if necessary.

7)Build wealth and give! Invest in mutual funds and real estate

Enjoy your money, taken from http://www.daveramsey.com/.

 

[gregdrummeraz]

There is no reason for a 20 year old student to think about long term investments. OK think about them but don't invest. The reason is that very soon, in say 5 to 10 years you will be making 5 or 8 times as much money as now. Why should a 20 year old poor student put away money to give to his "future self" who will be much richer.

It's silly for a guy making$10 an hour to save money so it can be spent after you get that $50 an hour job. But you should save for the shorter term. Will you be needing a car or computer in the next couple years?

The best thing you can do now with your money is pay for education. Education has the largest payoff. "Education" might include overseas travel. Spending a summerin Europe, Japan or China will pay off later. I use "education" loosly. Spend on it NOW because later you won't have the time.

In fact even if you have to borrow money and spend that on education do it. Spend every dime you can beg borrow or earn and pay it off after your salery has gone up by a factor of eight or so. Then after you've paid back the debt, invest.

OK education can be gained by small scale investment. Invest some disposable money just so you can learn how it works. Right now with the stock market down you should but money there. You are young enough to wait 20 years. The advice is that the younger you are the more risk you can take. This week stocks are a buyer's market. But keep it small -- this is education, not investment.

short term hold on FSLR(Not short-sale, hold for a month). and then get a couple ETF's.

Your welcome

 

[InvalidUserID]

There is no reason for a 20 year old student to think about long term investments.

I respectfully disagree with that statement. As you mentioned, he is still young which translates into a very long horizon and many years of compounding. I would say that funding an IRA would be a very good decision and one that you would likely look back on and be glad you made. Is it necessary? No.

I started funding my IRA when I first got into college with the goal of retiring early. Along with my company's retirement plan, personal savings, home equity and IRA, I'm on track. I like to think that I'm ahead of most 20-somethings. Of course, your end goal is likely different from mine.

Whatever your decision, I think there needs to be balance. I wouldn't advocate fully funding an IRA while neglecting your college campus life. At the same time, if all you are doing is hitting up the bars and clubs, I would suggest putting at least a little away for later. As for stocks, read up and learn as much as you can but understand that you WILL make mistakes and you WILL lose money. Thats just the game.

And don't fear the career. I enjoyed my college days (Nu Zeta Phi!) of parties, drinking, clubbing, etc but having a career doesn't mean you can't party anymore. Just replace class, studying and HW with work and you still have plenty of time to party...just now with more $$$.

 

[nakamuramori2]

i would do tock on E-trade. recently, saving in bank is not safe anymore.

 

[InvalidUserID]

i would do tock on E-trade. recently, saving in bank is not safe anymore.

By not safe, I'm guessing you mean due to the recent financial happenings? As long as your account is backed by the FDIC and you don't have over $100k in it, you have nothing to worry about. The bank could go belly up and your money is still insured by the government. According to reports, even people who had money with Countrywide had full access to their money within a few days of the collapse.

I would say impractical rather than not safe. Earning 1-2% at a commercial bank is pathetic when there are other options with the same low-risk factor.

 

[Tom Sawyer]

Stocks are tricky but the experience is completely exhilarating (both in the positive and negative sense). There are tons of inspiring stories out there, our beloved Apple being one of them. The challenge, finding the next one.

But if you do decide to buy some stocks (I really love Scottrade btw), treat the $ like gambling money.

There are 2 rules to gambling:

#1) Only bring what your WILLING to lose
#2) STOP when it stops being fun

Live by those two and you'll enjoy the stock market with it's up's and downs. I've recently begun investing and beyond the fact that it fits my personality very well, it's a fun thing to do in the context of "the rules"..

Best of luck and kudos to you for thinking in these terms at your age! I wish I had at that age as I would have bought Apple and I would be sitting on quite a nice chunk of change right about now (ok lets say right about Dec of 2007)

 

[0098386]

My 2 cents...

Proven steps to build wealth, follow in order presented.

1)Set aside $1000 for emergencies, and don't ever touch it unless an actual factual emergency happens.

2)Pay off any and all debt, never borrow money again.

3)Save 3-6 months expenses for a real emergency fund.
3b) Save up for a house either a down payment, or 100% payment.

4)Once those are done, invest 15 percent of household income into Roth IRAs and pre-tax retirement.

5)Assuming you don't have kids, but if you do, then college funding for children.

6)Pay off the house if necessary.

7)Build wealth and give! Invest in mutual funds and real estate

Enjoy your money, taken from http://www.daveramsey.com/.

I absolutely cannot fault this. My student loan will be the only money I ever borrow, my folks drilled that into me ever since I was a kid and I have no intentions of getting a credit card (though they can be useful if product/service goes b0rked) or take any other kind of loan.

College is free here so I don't need to save for my kids

My advice to the OP? Just don't piss it up the wall.