Where Do I Go From Here?

[ctigers0714]

Hey everybody, I'm a college sophomore and I'm extremely interested in learning more about personal finance. I've been reading about all different types of investing for the past 6 months or so and I'm not quite sure what to do now. I recently put $500 on tradeking just to learn how things work. I had a couple specific questions:

1. Is now a good time to start an IRA? Traditional or roth? I make about $10,000 a year working part-time at a restaurant and I go to school for free on scholarships and grants so I get to keep it all.

2. Should I invest in mutual funds and how do I choose which one? And from where?

3. Where should I allocate most of my money right now? I have around $3000 saved up and I'm not sure where to put it.

Thanks in advance.

[bigdaddybus]

I suggest you open up a Roth IRA. you can contribute up to $5500 per year and take out the principle (just not the earnings) at any time. Some use this as an emergency fund, which if you truely use it as an emergency I think that would be a good idea.

I also suggest you look at getting several vanguard low cost mutual funds.

Its never a bad time to save, the younger the better.

[Folio Explorer]

Congrats on the scholarships and grants!

1) I suggest you look into Roth IRAs because contributions are after-tax, not pre-tax. Your tax rate will likely be higher in the future, so paying taxes on contributions now is preferable. (If this is confusing, I'm sure users on this forum will be happy to explain further.)

2) I suggest looking into index or target date mutual funds with low expense ratios, so maybe Vanguard, Fidelity, or T. Rowe Price.

3) Before locking money in a retirement account, you should make sure you have enough to cover several months of emergency expenses. (However, because Roth IRAs are after-tax money, you can withdraw *contributions* penalty-free after 5 years, I think. I *think* there are also allowances for education expenses and first-time home purchase.)

Good luck!