I am 20 with 100k+

[Spaidenbeta]

Hey I'm new to this but I just really want to know what I should do. I have $100000 that I would like to invest so I can grow my money. I am a 20 year old college junior majoring in computer engineering with a minor in business. I go to a really good school and have been blessed enough to not have any student loans. I have no debt at all. The only things I have are a car note that is $45/month and my phone bill which is $80/month. These two bills come out a separate account which I have 5k for checking and 10k for savings in. The only other thing I can think of is books and gas that I really need to pay for. How and what should I invest in so that I will be wise with this money. I don't want to look back a think that I made stupid choices with my money. Also if you could please tell me how much annual interest would be earned on average and how risky it would be. Thank you again.

[autoxer]

Here is a great primer on investing in the stock market.

http://jlcollinsnh.com/stock-series/

[Inigo_Montoya]

First, DO NOT go to a broker or someone who charges you to manage your money. First, get a Roth IRA. You're going to have to do the funds research yourself. Vanguard and Fidelity are the best as far as cost vs return on investment is concerned. Vanguard doesn't have offices around the country, they don't pound the pavement, they just make a good return and let people come to them.

Aside from a Roth IRA, I would set the rest aside in a money market with your bank to buy a house with. You can put it in the market, and it be gone or doubled tomorrow. That's the problem with the market - yes, it's booming right now - but, it also takes a nice dip every few months too. You have to do the research and establish your own risk tolerance on that one.

Never pay front loads to brokers. Never pay commissions up front. Never pay more than half a percent to anyone to manage your money. People will tell you I'm crazy, that it's standard practice to pay front loads and commissions up front and 1-3% for management fees. They're right - that is pretty standard, because people don't know better. But they also can't do math.

Compound interest is going to be your best friend. Say you get just an index fund. You're going to average 7-8% a year for the next 45 years. With Vanguard, let's say you pay 0.3% for them to manage your money and make 7.2% interest on your money and add $5,000 a year to it (your annual Roth contribution). 45 years from now when you're ready to retire, that money is going to be around $3.9 Million.

Now lets say you go to someone who sweet talks you into paying a 2% fee each year because they'll have a meeting with you once a month and have a big fancy dinner for all the stock holders once a year with executive chefs and you even get your own embossed leather portfolio with all your stocks in it and your name on it, etc. 45 years from now, that money is only going to be around $2.1 Million. That 2% fee will cost you half your value. Either they have to outperform Vanguard by a long term average in excess of 2% or you're just giving your money away.

[ua_guy]

It seems that your parents or someone else important in your life has set you up very well. May I suggest talking to them for how they might help/teach you how to invest and do financially sound things with your money? It's a good place to start, especially if they've done well for themselves through managing money wisely.

[Permanent Temp]

So you have done really well since your last post then?

Spaidenbeta
$ Saving First Grader

Join Date: Aug 2013
Forum Posts: 5
Default I'm 19 with $80000
Hey I'm new to this but I just really want to know what I should do. I have $80000 that I would like to invest so I can grow my money. I am a 19 year old college sophomore majoring in engineering with a minor in business. I go to a really good school but it expensive as crap. I have $30000 in loans. I would like to pay that off now before it starts to compound. I will probably spend about 5k on stuff that I want and need like books and gas. That leaves around 45k that I have. How and what should I invest in so that I will be wise with it. I don't want to look back a think that I made stupid choices with my money. Also if you could please tell me how much annual interest would be earned on average and how risky it would be. Thank you again.

[mo0n]

oh snap!

[Petunia 100]

So, where did the new 20k in savings come from? Are you working Spaidenbeta? Did you decide to not pay your student loans in full?

The IRA is an excellent suggestion, if you have earned income. For the rest, index funds are an excellent choice for a taxable account.

[Spaidenbeta]

I am not working was just making a worst case scenario prediction was all. I have researched and learned a lot since then. Thank you for your feedback.

[jamiesmoneyadvice]

Diversify it

You can invest 80% of it. Just make sure you diversify it into different things for safety. Stocks and stock market funds are the worst choice. All the rich people I know invest very little of their total cash there.

[cyreneq]

Where do you keep your money? Is it in a savings? CD? Money market? They don't earn much, but you should put a good amount in those.

I don't have 100k like you yet (I will in 5 months). I have mine in the Arvest money market earning 0.2% per year. It's like a checking account but earns interest. Not much risk, if any.

[corn18]

Yeah, it would suck to get an average return of 7% over the last 75 years and 26% over the last 3.

Come on folks, the stock market is neither the answer nor the enemy. If he put that $100k in the market and then saved not a single dime more, he would have plenty to retire on at age 65. Wouldn't have to save another dime. Heck, he could funnel jut the returns into an annual IRA contribution and start tax free growth.

Or he could start his own business and lose it all in 2 years.

Everything has its place. Blanket statements like "rich people don't put their money in stocks" are silly.

Tom

[jamiesmoneyadvice]

Misquoted

I never said that they don't put any in stocks, just small amounts of their net worth like 10-15% of total assets.

[Petunia 100]

I never said that they don't put any in stocks, just small amounts of their net worth like 10-15% of total assets.

You said stocks are "the worst choice". IMO, this is a wildly inaccurate statement. I agree that some have what it takes to start and run a successful business, and may even grow wealthy as a direct result. But the notion that EVERYONE can do so is absurd.