Given a second chance...

**bishop** · 01-27-2008, 12:49 PM

have you looked into a growth mutual fund with no early withdrawal penalties? Find one with an average of 10%, and you could have about $25k after 3 years, if you save $600 a month...enough to buy a decent used car, and a down payment on a house.

As a tip, even when you have a car, pay yourself a monthly car payment, and put it in some sort of interest bearing account. Do it for 5 years, you'll have enough money and then some, to buy another used car for cash...keep repeating, and you'll always have money for a car, without paying someone else interest.

**maat55** · 01-27-2008, 02:21 PM

It's hard to know the future of this market, but I think it could be near it's bottom. Investing now into growth stock MF's could pay payoff well. You might want to look at international funds as well.

**jIM_Ohio** · 01-27-2008, 03:05 PM

Originally posted by rtmad21 View Post

Ok, I am 21 and for the last 2 years I have worked as an EMT in South Carolina and recently decided to go back to school for my nursing degree. My parents being totally awesome have let me move back in with them, in New York, while I go back to school full time. I am working part time and have a about $600-$700 a month available to save and hopefully more starting next summer, as I will be a Paramedic then. So, basically heres what I want opinions on.... It will take about 3 years for me to finish my schooling so i want to take full advantage of living with my parents during that time. My future plans are as Follows, when I finish school I want to move back to SC, buy a car, and have a good start on a down payment for a house. So, I am looking for advice as to what to do with my money...I always here people say they wish they would have done things different in their 20's, so I want to learn from their mistakes....

Davey

Assuming you have earned income, here is what I would do:

put $500 into a Roth IRA each month, Invest it with between 80% and 100% equities. Cap is $5000 each year. In Nov and Dec, put $500 into a savings account.

put $100-$200 into a taxable mutual fund (or funds). This is for the house. Assume you are 5 years from getting into the house.

Year 1, put 50% into equities and 50% into bonds or cash.
Year 2 put 40% into equities and 60% into bonds or cash.
each year closer to house purchase, have 10% more go into bonds
Year 5 would be 0% equities and 100% bonds/cash.

I would expect bonds to return around 6-7%. If you wanted one mutual fund for this, look for one which is 20% stocks, 80% bonds. RPSIX is a suggestion, PRPFX is another.

In 24 months you should have

a) 10k into a Roth IRA
b) 5k for a house

when you move, continue adding 5k each year to Roth and continue adding $200/month towards house.

In 5 years, you are looking at 30-40k in IRA
15k for house down payment

any investment horizon with less than 7 years should be in bonds or cash. The suggestion to use 50-50 equities/bonds assumes you will sell 10% of investment each year to bonds as a way of getting conservative. In event there is a bull market with 30%+ annual returns, you profited from that quite a bit in the IRA, and the house investment also grew some (but not nearly as much).

**zetta** · 01-29-2008, 04:12 PM

I second the advice from jIM_OHIO. He left out the plan for the car -- if you follow his plan, putting $500 into a savings account in Nov and Dec, and don't touch this money, in 3 years you'll have $3000 for a car. Search for MonkeyMama's post on how to buy a good car for $1000 (it may be in her blog), and you'll be all set.

For the investments, look for a no-load index mutual fund.

Given a second chance...