investing in yourself or retirement

midnight · #1 (**permalink**) 03-09-2005, 12:48 PM

What is everyone's thoughts regarding investing in your own education instead of saving or investing the money for long term gain? I was thinking that if I had invested my college education costs (about $20,000) when I was 18 instead of paying for education, my retirement would be set already.

On the other hand, I probably wouldn't earn as much as I do now.

Which do you think is a better investment?

Momof3grls · #2 (**permalink**) 03-09-2005, 04:33 PM

I think investing in your own future is a better idea because you want to be able to earn more when you go into the work force leaving you enough to retire.

jacquelynrose · #3 (**permalink**) 03-09-2005, 06:22 PM

I don't know, I believe in working for yourself. I think you should invest in your retirement but I also think if you did invest in proper education you could still be self-employed.

Jacquelyn

skipper · #4 (**permalink**) 03-09-2005, 07:01 PM

If you get the education you make more in the future to invest and if your smart you can make up the diffference

PrincessPerky · #5 (**permalink**) 03-10-2005, 05:56 AM

I think it truly depends on if your job is degree dependant. In my family most of the higher earners have the least amount of college.

Unfortunatly my DH had 8 years of college, and makes crap

.

Also I would consider just how badly you need 4 more years of "playing the game" (when's the last time you used that oddball required class?) After all what were you doing for 13 years, and why couldn't you take those irritating oddball courses then? Or better yet take the courses that will help in your profession? (oh yeah not voluntary till college, right.)

Many proffessions will reimburse you for education while workng for them, so it makes some sense to get a job with them and then get the education. Also nice to get a raise after a degree instead of a boot out the door and a wonderful job hunt to begin.

They have done various studies on how education sometimes doesn't pay off. Go to an expensive college, yet the job market will not pay you enough to make up for it in many proffessions. Don't get me wrong so long as you pick the right proffession, and are very good at it, you will make your loot back. BUT pick the wrong one.......

gakline · #6 (**permalink**) 03-10-2005, 10:44 AM

Quote:

Originally Posted by PrincessPerky

They have done various studies on how education sometimes doesn't pay off. Go to an expensive college, yet the job market will not pay you enough to make up for it in many proffessions. Don't get me wrong so long as you pick the right proffession, and are very good at it, you will make your loot back. BUT pick the wrong one.......

I totally agree with that. I know plenty of people that got bachelors in music, and what are they doing now? office work. Why did they pick music? because it was fun. Going to college and learning something you like is fun, but half these people had no idea about actually working. It's different if you know that you will be able to get a job in music (or have some real talent). I would have loved to do archeaology, but even if I had discovered the next Tut's Tomb, I'd be broke. A minor would have been perfect for a "fun" study.

My 4 years of college cost somewhere over $80,000 (not including some extras outside of school) If I had invested that or started my own company, I probably would be worse off. I figure that all the 'life lessons' (not binge drinking) helped me become who I am now, and helped me get where I'm at.

If someone gave me $80,000 and said do what you want with it at age 18 (1998), I might have started a business or put it toward retirement in tech stocks and ended up broke. I figure I'm making over $25,000 more a year with a bachelors in engineering and my salary is steady and will only go up. If I went into a different aspect of engineering I'd be making over $50,000 more (than without a degree). Granted some people make it without a degree, but only a few.

A degree has also opened up tons opportunities for me. I am taken more seriously, and am given more respect especially as a woman in engineering.

I disagree with PrincessPerky's comment about being very good at what you do if you have a degree to earn the loot back. I know plenty of flunky engineers that are doing decent. They'll just stay where they are and never advance.

Sorry for being so wordy, but definately education over retirement. Assuming that you pick a degree that will be of use.

terry1156 · #7 (**permalink**) 03-10-2005, 11:50 AM

An interesting question. $20,000 invested in a roth IRA at 18 with a 9% average return would give you $1.7 million in your retirement account when your 65.

If you pay for education and earn more, do you save the extra earnings for your retirement or not?

There are too many factors involved to say one is better than the other, but it is an interesting way to look at it. I sure would be happy to have $1.7 million in my retirement account.

gakline · #8 (**permalink**) 03-10-2005, 01:11 PM

Technicallity:

The problem is you can't touch the Roth without a penalty till 65. So what do you live on till then?

Also you would not have been able to invest $20,000 all at a single time due to Roth IRA limitations. (for the record it would have taken investing from 1998 till 2005 for $20,000)

terry1156 · #9 (**permalink**) 03-10-2005, 03:51 PM

Quote:

Originally Posted by gakline

Technicallity:

The problem is you can't touch the Roth without a penalty till 65. So what do you live on till then?

Also you would not have been able to invest $20,000 all at a single time due to Roth IRA limitations. (for the record it would have taken investing from 1998 till 2005 for $20,000)

Again, I'm not trying to say that one is better than the other - just that it's an interesting option to think about

Even if you put your technicality into play so that only a certain portion could be tucked into the roth IRA each year, if you still assume the other money is invested (in a taxable account until you can move it to the roth IRA), you still come out with more than $1.3 million.

Of course you're right with not being able to touch the money, but that is what long term retirement savings is for.

You would simply get a job without the benefit of a college degree. Lots of people do. You might get paid less money, but you would never have to worry about putting any of the money aside for your retirement since that is already taken care of.

PrincessPerky · #10 (**permalink**) 03-11-2005, 05:33 AM

I just want to repeat the SOMETIMES from my post, and remove the part about being good at the job, gaklines right you can make good money just being in the right field.

But I also want to stick a minor note of reality into the wonderful retirment savings, who has 20,000 at colege age to stick anywhere? I mean some people do, but I sure didn't!

henrybemis · #11 (**permalink**) 03-11-2005, 12:56 PM

Why not think about earing a certificate instead of a full blown degree loaded with classes you don't need. I have a BA and now I'm gettig a certificate in Accounting. There are many good paying part time and full time jobs available in this area, many that don't even require a BA in accounting.

Certification is a great cost. Less time for a degree and less money as well. I'm paying for my certification by saving each month for classes and expenses and taking the certificate through a good community college.
No more private schools for me.

loveofpets · #12 (**permalink**) 03-14-2005, 12:03 PM

My understanding on the ROTH IRA's is that you can touch the PRINCIPAL (what you put in) at whatever time without penalty; but you can't touch the EARNINGS prior to the age restriction because those earnings haven't been taxed yet; the principal, or what you put in, is already taxed.

gakline · #13 (**permalink**) 03-14-2005, 03:31 PM

You're right about withdrawing, but I thought there was a limit to how much you could withdrawl. I heard the limit toward toward a down payment for a 1st time home buyer was $10,000.