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You'll get differing opinions on this, but my feeling is that your first goal should always be to be debt free from loans (credit card and education). I assume your rent is being paid for by your program, or that you're living in a dorm? Just because you said you'll easily cover them with your $30,600, but you also can't live in Boston making that amount of money if you're actually paying rent. Wanting to save for retirement early on, especially in such a low tax bracket as you will be in, is a great thing to try to do. And you'll almost certainly beat the 2.23% interest rate on your loan by investing in the market right now. But I still feel as though the prudent thing to do is pay down those loans, starting with of course the one accruing interest. I got a $5000 loan my first year of graduate school that was 1% interest that didn't need to be paid until I finished, but I returned it two weeks later when I realized I could get by without it. I mean say you graduate in 5 years, and you want to rent your own place in Boston or, god forbid, by a house in that area. It's going to be much more difficult to do that once you figure in the extra hundreds of dollars you are going to be paying on those loans, and the money you would have in that Roth wouldn't be doing much good in that respect.
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Mar 8, 2010 14:42
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| # ¿ May 5, 2024 12:47 |
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With that much extra money, knock out those student loans - you're just letting that interest bleed you away otherwise.
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Jun 27, 2010 21:56
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Div posted:Sorry if most of this has been asked before, I tried to read through the thread but found most of the questions were for people with different problems. I would recommend the book "Smart Couples Finish Rich". It's very accessible and gives some clear steps on how you can secure your future savings. If you have trouble with spending your savings, "locking" it away in retirement accounts is always a good idea. I don't know the British equivalent, but in the US money you put into a retirement account is certainly more difficult to withdraw from than a standard bank account. polyfractal posted:Anyone who uses ING Direct: How long does it take for your Direct Deposit payments to process? I was theoretically paid on Friday and still don't see any money as of this morning (Monday). I'm not sure if I messed something up the numbers I gave my employer, or if ING just takes a while. Glad to hear you got it figured out. For future reference, I've never seen a direct deposit from an employer not arrive in the bank account on payday. But maybe I've just been lucky.
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Aug 3, 2010 16:24
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BorderPatrol posted:I just got done reading "The Automatic Millionaire", would recommend this book? Is there much in there that's different from what I just read? No, I've read both and they're both good but they overlap each other quite a bit. Might be worth borrowing it from the library and skimming through it, but that's probably it.
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Aug 3, 2010 19:16
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Sophia posted:Okay, I have a couple of questions and I hope this is the right place to ask. I've been reading around the resources here but I'm totally new to any kind of investing and I just want to make sure I've digested it correctly. I apologize if this gets long! Sounds like you are pretty well on track. As for what to do with your saved money ... I'd first make sure you know the withdrawal procedure for your CD if you are going to use it as an emergency fund. I'm honestly not all that familiar with them, and what it takes to actually get that money, but one of the keys of an emergency fund is that you can get to it quickly, so make sure that's possible. Though it sounds like you have a few thousand available if you need it right away, so that's good. Opening a Roth is a great idea, and better than contributing to your 401K past your match since you have more control over it. Since you are just beginning with investing a good idea would be to open up that Roth at Vanguard an invest it in one of the target retirement funds. For the rest of your savings, like moana said, a big question here is when you will need it. If you are, say, saving for a down payment that you will need in 5 years, you'll want to be careful how much of that is invested in, say, stocks which have a variable return over 5 years. 10 years is a safer number, though of course you occasionally have oddities like this past decade. It's tough though - a year or two ago it'd be a no brainer to keep that money in an online savings account earning 6.5% interest. For now I'd probably recommend SmartyPig, as they offer 2%, one of the best current interest rates I have found. For your credit scores, those limits seem pretty loan considering your income (the fact that you're saving $750/month makes me think you earn at least a decent income). If you only have two cards I would certainly recommend opening another card to increase your overall credit limit.
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Aug 9, 2010 16:07
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polyfractal posted:Practical advice needed. I'm currently throwing $200 a month in savings and $200 into a "Roth IRA" savings account. Since Vanguard requires a $3000 minimum before opening an IRA, it will take me 15 months to save enough to open one. Would it be better to divert some of the "Savings" fund into the "IRA" fund so that I can hit that minimum quicker? I have 4k in "Emergency" so theoretically I don't need the savings for anything short-term. The Vanguard STAR fund only requires $1000 initial investment and is a fine choice until you reach $3000.
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Aug 11, 2010 19:24
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Really? It was up 4.83% over the last 10 years and has beat the indexes in every other period except 1 year. Considering nearly every major index lost money during the last 10 years, I think that's pretty darn good.
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Aug 13, 2010 13:30
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I think he needs at least a couple thousand in a liquid savings account before investing it in an IRA.
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Oct 21, 2010 23:57
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moana posted:He'll have $11k left after paying off the debt, $3k in a Roth will still leave him with $8k liquid. Yes? Rereading that I have no idea how I missed that fact. Nevermind then!
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Oct 22, 2010 10:52
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DreadCthulhu posted:Welp, here's my series of questions to you more seasoned personal finance folks: For your first question, I also read that book, and after finishing it wanted to go out and buy and rent out a house. It is very inspirational and convincing. I also didn't realize there was so much controversy about it when I read it. One thing I realize after though is that that book was written just at the beginning of the housing boom, when you could buy any dump on the street and flip it six months later. That's no the case now, so I have to wonder whether that approach could really work in a non-bubble market. As for investing, I have my retirement portfolio split between a target retirement account and individual stocks. The target retirement account of course runs itself and is "safe". The rest of the money is invested in stocks I choose from the investment advisory service I work for, Cabot Heritage (https://www.cabot.net). Services like that do the research for you, though of course you have to find a good one, and be ok with paying the subscription.
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Feb 14, 2011 19:32
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