I have 35k saved at 19yrs old, need help/advice..

[wes467]

College is paid for, no debt, reliable car.
Received 10k in scholarships that were refunded to me.
Earned 25k working as an engineer co-op last semester.

Lost 10k in stocks primarily in Twitter & Fitbit.. Thought I was good at playing the earnings game but I learned quickly the market doesn't give two sh*ts if the company beats earnings.

What do I do, the stock market is frightening, I want to put 20k into a high yield stock like GE, Ford, GM for two years and make around $2,000 but I am tad nervous.

I want to buy a C7 Corvette when I graduate. Looking at a price tag around $40,000.

I will be graduating Spring 18' with a degree in Electrical Engineering.

I was thinking about renting a place for the first year or two and then buy a house with a down payment of 50%. Is this smart/logical?

Please, any advice would be greatly appreciated! Thanks!

[DaveInPgh]

Did you sell your shares in Fitbit & Twitter or is the $10k loss on paper?

I would recommend going with a 20% down payment to avoid PMI. Above the 20% would be better off in Retirement accounts.

[Nutria]

College is paid for, no debt, reliable car.
Received 10k in scholarships that were refunded to me.
Earned 25k working as an engineer co-op last semester.

Lost 10k in stocks primarily in Twitter & Fitbit.. Thought I was good at playing the earnings game but I learned quickly the market doesn't give two sh*ts if the company beats earnings.

Youth is a time for learning...

What do I do, the stock market is frightening, I want to put 20k into a high yield stock

You're putting all your eggs in one basket, and can't even protect that basket.

Very, very risky!!!!

like GE, Ford, GM for two years

Good thinking.

and make around $2,000 but I am tad nervous.

You should be!! What if the market decides that Brexit is as good a reason as any for a 20% correction (aka "tumble")?

I want to buy a C7 Corvette when I graduate. Looking at a price tag around $40,000.

Young, dumb and driving a really fast car.

I will be graduating Spring 18' with a degree in Electrical Engineering.

For a spending target of 24 months, the place to put that cash is in a 24 month CD.

I was thinking about renting a place for the first year or two and then buy a house with a down payment of 50%. Is this smart/logical?

It is if you can save $200,000 in 2 years, after buying that Vette, and the super high auto insurance, and rent, and all the other accouterments of the young, hip, wealthy digerati.

I'm... dubious. Very, very dubious.

Besides, what if your job sends you to another city right after the housing bubble pops?

Unless you've got a fiance who's Jonesing for a home in which to nest, then I recommend renting until you do get ready to marry.

[dawnwes]

I would recommend:

Not buying the Vet until you have researched insurance costs. You will still be under 25, male, and in a very expensive and fast car, that often equates to double the insurance costs.

I had a friend with a Vet when I was younger. He sold it, got a Honda Accord, and his payments dropped from $500 to $350 and his car insurance went from $250 to $125. This was in SoCal.

I would wait on the house too. You are young, possibly mobile with job moves, and unattached. Enjoy it!

[ESMonitor]

I have a couple of suggestions for you below -

I would open a Roth IRA today with a notable IRA provider such as Fidelity or Vanguard and max contributions every year. Since you have the money and not even 21 yet, this I think is your best decision. The compound effect on this decision will be staggering once you get to be over 50 yrs old you'll be glad you did, and you can give yourself a well deserved pat on the back.

IRA Contribution Limits. For 2015 and 2016, your total contributions to all of your traditional and Roth IRAs cannot be more than: $5,500.

So opening up a Roth IRA online I think is a wise decision and your best decision right now.

I would pass on the corvette. Unwise decision (in my opinion). Not much financial peace (if any) with this decision at your age.

Buy you a camry or honda and grind it out for ten years. Pay loan off asap if you choose to finance. So you'll be driving a reliable and respected car for possibly a decade without car payments. Do you see the genius in that?

Lastly, you might follow Dave's baby step plan for financial peace over the years or modify as needed for you -

http://www.daveramsey.com/baby-steps/?ectid=gaw.daveramsey-babysteps2

I give big props to you for being in the position you are in and the maturity you are showing at such a young age to seek advice on what are your best options. There are a lot of veterans on this forum who will undoubtedly give you some very sound financial advice.

[GoodSteward]

Since you already have a reliable car, I would wait on the corvette. As others have stated, the insurance will be a big money pit. Owning luxury cars and sports cars are accompanied by more expenses by nature due to risk, and the level they are built for. My brother bought an older used Infiniti Q45 once, and we had to put high octane gas in it, and use full synthetic blend oil on it. It's just silly.

Others have suggested great ideas, and I also would hold off buying a home unless you are settling down for good. Even then I would wait a while to make sure. At your age, changes come often. Even at my age of 31, and having bought a house I am considering moving right now, and plan to go a different route next time. It's too easy to find yourself at a loss, even with a home, these days.

I would avoid individual stocks until you first have some safer investments. You might come off good, but at the same time(as you have already seen) you don't want to have everything tied into so much risk. Time is on your side right now with compound interest. The sooner you start, the easier it will be. However, if you stick all of it in high-risk stock you could potentially loose all this time. It's better to have something that is at least MORE stable to not have to worry about so much. After you have funded the IRA, then you could possibly proceed into more fun areas like buying specific single stocks. For me, I prefer to have some more guaranteed accounts to fall back on, and I use guaranteed lightly. lol

[rennigade]

Since you earned money I would suggest opening a roth ira with vanguard. Fully fund it every year for the next 30 years ($5500/year.)

Thats all I got. Chances are you're going to do whatever you want anyway. Most people do when it comes to finances. Good luck.

[snafu]

You are so smart to have no debt, college paid, 10k in scholarships, 25k saved working as an engineer in a co-op plan and reliable car. Your desires are totally understandable but I hope you'll recognize them as financially detrimental. You've already proved to yourself that you've not yet developed the knowledge and skill set needed to chose individual stocks. I suggest you set aside 3 months basic expenses as an Emergency Fund and follow the advice you asked for from SA participants.

'Investment' generally needs a 5 year window. Small time periods are mostly identified as speculation. Novices do well dividing their savings in percentages and investing into Index fund [Vanguard or similar with low management fees, or fee free Exchange Trading Fund (ETF)], Bond Fund [best 3 yr corporate], 10% International Fund. It's incredibly easy to create your own 'self managed' portfolios for separate streams like Retirement, ROTH, and Taxable accounts.

I plead you pay serious attention to 'advisor' charges and fees which have potential to seriously affect your bottom line. As you become more comfortable with the vagaries of investment, you can move your holdings to better match changes in the economy. Nothing is written in stone!

If you like risk, European Mutual Funds are so beaten down by BREXIT, they're likely to improve significantly over 5 years. When you are job hunting as a new graduate, understand the retirement benefits being offered.

I wonder if you'd be willing to read something quick and easy like 'The Automatic Millionaire ' [Bach]

[wes467]

I wonder if you'd be willing to read something quick and easy like 'The Automatic Millionaire ' [Bach]

So far, I have read a few of the classics:
- Think & Grow Rich ~ Hill
- Rich Dad Poor Dad ~ Kiyosaki
- How to Win Friends & Influence People ~ Carnegie
- 7 Habits of Highly Effective People ~ Covey
- The Compound Effect ~ Hardy

It is interesting to see the different approaches authors discuss in obtaining success. Napolean Hill focuses on being money-centered while Stephen Covey focuses on being principle-centered. However, I noticed the common theme is to work hard and have a strong desire by being passionate about what you want to achieve.

Next, I am looking to read
- "Millionaire Next Door" ~ Stanley
- "The Five Dysfunctions of a Team" ~ Lencioni
- "Ten Day MBA" ~ Silbiger

Do these books cover the same topics as in "The Automatic Millionaire"?

I am looking to pursue the business/management route as an engineer and want to obtain an MBA/Engineering Management degree upon 3yrs of work experience. I am trying to best prepare myself to be a strong candidate.

It drives me crazy seeing people so unaware of the opportunities they can seize. It seems like the vast majority of people have no sense of financial reasoning nor driven to make the best of themselves. Frustrating to say the least..

[Nutria]

It drives me crazy seeing people so unaware of the opportunities they can seize. It seems like the vast majority of people have no sense of financial reasoning nor driven to make the best of themselves. Frustrating to say the least..

The "average person" is not overly ambitious, and there are 3.6 billion people even less ambitious than him...

To use an old and "horrifyingly insensitive" phrase... "imagine a tribe with nothing but chiefs." IOW, society needs most people to be followers (or at least willing to go along).

[AJ444]

Congrats on the great head start! IMO don't buy an expensive sports car. You are way ahead of the game at 19, that will go a long way towards giving it back. I bought a 30k vehicle coming out of college and I wish I had kept my reliable 7 year old Honda instead and thrown more in my 401k.

Definitely rent for at least a couple years, you will want to stay mobile and the best advice I can give any college grad is to be prepared to job hop to get higher in the salary range earlier in your chosen field. Someone gave me the same advice 15 years ago and it paid off beautifully.

You learned a very important investment lesson, going forward make sure to diversify. I would post your situation on www.bogleheads.org, IMO they have great investment advice.

[Jluke]

35k may seem like you are on top of the world, but it really isn't a lot of money at your stage in life.

First, take 5500 and open a ROTH for 2016. Then earmark 5500 (or whatever the max is) for 2017; if you have earned income in 2017 too... poof - there goes 11k. The one thing I haven't seen mentioned is Bogleheads. you may want to do a quick visit to that website to see a simplistic approach to investing (3 fund portfolio, lazy portfolio, etc).

On the Corvette.... I want one too... but at this point again, it's not the best decision to buy one. I would also take it to the next level and ask if you feel comfortable leaving that in a parking lot if you are renting and don't have access to a garage. do you need to worry about snow in the winter? I'm also going to assume that you would keep the paid for car and now have 2 cars to insure, maintain, etc. Sounds like a lot fun... but it isn't.

So 35k-11k = 24k goes to capital one 360 MONEY MARKET and sits there until you graduate.

You don't know what you don't know yet. so stay in cash aside from the ROTH (invest that money in the market). You could have a great future ahead of you if you keep calm and don't let the $$$ go to your head.

[snafu]

Kiyosaki [Rich Dad Poor Dad] declared bankruptcy, his viewpoint was criticized by a lot of analysts. Hope you'll check out bogleheads.org

[DaveInPgh]

35k may seem like you are on top of the world, but it really isn't a lot of money at your stage in life.

He is 19!!!! I think that IS definitely a lot of money for someone at that age.

[Jluke]

He is 19!!!! I think that IS definitely a lot of money for someone at that age.

I didn't say AGE. It is a lot of money for a 19 year old.

But he is just starting out and there are a lot of big ticket items in his future.

go buy a house with 20% down (he even said 50%). Then furnish the house. Lawn equipment. Etc etc.

Travel, Wife, kids in the future?

Life is expensive.

That money will evaporate in no time.

Just trying to help him see that buying a corvette is not good use of this money.