I'm 19 with $80000

[Spaidenbeta]

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.

[disneysteve]

Welcome. I agree with getting rid of the student loan debt. What school are you attending? My daughter is a college senior and will be applying to college for engineering shortly.

You are a sophomore so you have at least 2 more years of school remaining. How will you be paying for those? If the answer is more loans, use this money instead and minimize the amount you have to borrow.

Beyond that, what would be the purpose of this money? And do you have any other savings? What about any other debts? Any credit card debts or car loan?

[Spaidenbeta]

It's a school in Georgia called mercer, I think it's ranked 7th in the south. I guess the purpose of the money would be just to give me a head start in life if that makes sense. It would put me out if front of the average college graduate, since I assume the average person come out of college with a couple thousand. I have no other loans or debts or savings for that matter.

[Miz Pat]

to 19 with 80000

I think you should throw as much as is allowed into a Roth IRA for retirement NOW. You may have to speak to a Tax Person about whether you can also start to fund a regular IRA.

I also suggest talking to a company like Vanguard about investment. Putting a portion of your funding into a money market fund for investment at this stage of life is a good idea.

Keep out $1000 in a regular bank account as an emergency fund.

I hope you go far!

[disneysteve]

I think you should throw as much as is allowed into a Roth IRA

Keep out $1000 in a regular bank account as an emergency fund.

How are you planning to pay for the remainder of your education?

Do you have any earned income? If so, funding a Roth is an excellent suggestion.

I would keep more than $1,000 for an EF. I'd advise 6 months worth of living expenses.

[riverwed070707]

Do you work? Doesn't do any good to invest if you plan on racking up a bunch more debt before you graduate. You don't have to finance your education with student loans. I strongly suggest working to pay most or all of your tuition cost and using loans to supplement books, etc. Then you can actually put this money to work for you and you will definitely have a solid path to get started after college.

Younger people who have more money tend to spend more money (that goes for cash and credit -- student loans, etc). If I were in your shoes, I'd put the money in a safe place that isn't accessible with a debit card and live like I didn't have it. Pick up some books from the library or start reading some blogs on investing for beginners. The Roth is a good place to start. Look at Vanguard or Fidelity. Those are the two I see recommended here most. Best way to learn is to do it. You can start by just investing a small amount and add to the account as you learn. Doesn't have to be all or nothing.

[feh]

How are you planning to pay for the remainder of your education?

Do you have any earned income? If so, funding a Roth is an excellent suggestion.

I would keep more than $1,000 for an EF. I'd advise 6 months worth of living expenses.

I agree with Steve - determine what your short term (3-5 years) expenses will be. If necessary, earmark that portion of the money now and keep it in a CD or money market.

The rest should go to a Roth IRA, and then a taxable investment account if there's any left over. We can help you with fund choices when you're ready.

[Petunia 100]

Opening a Roth is a great idea IF you have earned income. "Earned income" means W-2 wages, net self-employment income, and/or alimony.

If any part of this money will be needed to pay for school, do not invest that part. Just park it in an online savings account.

Definitely begin learning about investing. A good place to start is: http://www.morningstar.com/cover/Classroom.html

[disneysteve]

"Earned income" means W-2 wages, net self-employment income

This is not correct. You do not need to have W-2 wages to contribute to a Roth. My 17-year-old daughter funds her Roth with money she makes babysitting.

As long as you earn income you can contribute to a Roth. No W-2 is necessary. Self-employment income definitely counts.

[Petunia 100]

This is not correct. You do not need to have W-2 wages to contribute to a Roth. My 17-year-old daughter funds her Roth with money she makes babysitting.

As long as you earn income you can contribute to a Roth. No W-2 is necessary. Self-employment income definitely counts.

If you would read what you quoted, I think you will see I said W-2 wages, net self-employment income, and/or alimony.

[disneysteve]

If you would read what you quoted, I think you will see I said W-2 wages, net self-employment income, and/or alimony.

Oops! My apologies. I thought that said "not" self-employment income.

That's what I get for not wearing bifocals like I'm supposed to.

[Spaidenbeta]

Thank you all for the information so far. I do have to pay for my own education which is going to amount to about 65k when I finally graduate. So I should have at least 10k when I get out. On average I will probably make 3000-5000 a year with tutoring and internships. So to me it sounds like I should put money aside that I am going use for my education in a savings account and put some in a Roth IRA as soon as possible. And with money I earn each year take some that out to save for my retirement too. Is that right?

[Petunia 100]

Oops! My apologies. I thought that said "not" self-employment income.

That's what I get for not wearing bifocals like I'm supposed to.

No problem.

[disneysteve]

I do have to pay for my own education which is going to amount to about 65k when I finally graduate. So I should have at least 10k when I get out.

Just to be clear....

You currently owe 30K and have another 35K to go for a total of 65K. Is that right?

You have 80K to work with and have 5K in anticipated expenses leaving 75K to work with.

If you pay off your education of 65K, that leaves 10K. Your question is what to do with that 10K.

You also have annual income of 3K-5K so 6K-10K over the next 2 years.

I'd go ahead and fund your Roth for $5,500 each year and leave the rest in your money market account. I wouldn't worry about any other investing at this point. Once you get out of school, you will have new expenses like rent, saving for a home, maybe moving to a new location, etc. You want to keep your money accessible for things you don't yet know about.

[Mesem]

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.

First of all, nice. Secondly, if you want to invest in something, does that mean you want to put money into an account and forget about it?