So Basically I’m an 18 year old college student soon to be 19. I have 10k saved up. I have made most of my money by small things and working at Amazon. I have about 600 invested in crypto. I have all my money in a checks account. Need advice thank you very much in advance.
Put it in ETFs and let it sit. You are young so should feel free to take risks.
https://www.reddit.com/r/personalfinance/wiki/commontopics
You should think ahead a few years when you plan for things like your emergency fund, and short-term goals. Most 18 year-olds find themselves with very different expenses and situations in 3-5 years, so make sure that you are thinking about how to be ready for that transition as you plan what to do with your money.
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Dont put it into stocks unless you are sure you wont need it for at least 5 years. Lots of things are going to happen in your life. Just keep it in savings or checking.
Assuming you have a good cash savings and no debt, I’d put it into SPY or VOO and let it sit. Maybe throw some in QQQ.
If you have debts, pay them off.
Normally I would say stocks if you had a high income too.
But the market is kinda crazy rn with tapering and inflation.
Looking back at my Roth IRA I wish that’s where I had been putting my money when I was your age. So that’s always an option: open a Vanguard Roth then put 6k in there to max out your 2021 contribution, and use it to invest in VTSAX or VTI or something. With a Roth if you’re ever in dire straits you can always withdraw your contributions (not earnings) tax free.
Build a business, sell something on internet
This depends on your situation and what you’d like to do in the next few years. Do you live at home with a support network? Are you living on your own? How are you paying for college (parents? Student loans?)?
I’m assuming you have no debt, because if you have any debt with interest, that’s the first thing I’d consider. Low/no-interest student loans are the only type of debt I’d keep and then pay back once you’re earning more.
Next, I would consider investing in yourself. You’re already in college so that seems to be sorted, but you could use the money to start a business if you have any good ideas.
After that (if you already have the “investing in yourself” suitably covered), have a think about what you might need that money for in the next few years. If you live at home and are able to save for a house deposit in the next few years, I would skip higher-risk options and opt for term deposits.
If you live on your own with not much of a support network to fall back on, I would keep ~10k as an emergency fund and then start investing anything over that.
So, yeah, I guess the answer is: it depends.
Whatever you do, I’d keep it accessible as its not a lot of money and you should use it for a safety net (6months expenses ) likely in a savings account.
The most accessible alternative to a savings account for a safety net (job loss, breakup and have to seperate from partner, student living expenses, etc.) at your age is a credit card which if you don’t pay the balance in full monthly, will cost you 16-30% interest loan. So just make your life easier and save it in a bank account, and only consider tying up your NEXT $10k in some “investment opportunity” most of which aren’t going to make you anywhere near the interest costs of another type of loan like a credit card, car, or even student loan.
Are you in an area where you want to stay after college? With high housing costs or lower housing costs? I’m a big proponent of investing in real estate, so if it’s reasonable in your area, I’d look into getting into property. You can get down-payment assistance and first time homebuyer perks.
If this interests you, find a property that is suitable to live in and make income from. Like a duplex or a well laid out single family. My home is a single family, but it has a split floorplan so I rent out/airbnb the other side. It’s been great for me. I like meeting new people and it covers half my housing cost every month.
If the money is truly just ‘sitting around,’ then your best bet would be to invest it. Age is on your side, as long you are asking these questions you’re winning. Find something that you understand and invest in it. Do not invest in things you don’t understand. To help, I recommend reading “the simple path to wealth” by JL Collins.
$6000 in a Roth IRA. $3000 in savings for emergencies. Treat yourself to something nice with the remaining $1000.
I haven’t seen anyone suggest this yet so maybe look into I bonds on TreasuryDirect if you don’t need to touch the money for at least 12 months, even better if you won’t touch it for longer by way of lesser penalties.
[https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm](https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm)
Some Notes:
1. This 7.12% rate on I bond is for next six months only (April 2022).
2. If, in April inflation is higher than today, they will earn higher, if inflation is less they will earn less for next six months, so basically rate changes every six months based on inflation.
3. You can keep these for 30 years or withdraw earlier (see #4 below)
4. You need to wait for 1 year before you can withdraw
5. If you withdraw between 1 yr and 5 yr, you lose last 3 months of interest (see #2 above, so if based on inflation if interest it was paying was reduced, you lose reduced interest)
6. After 5 year, no penalty so you don’t lose last 3 months of interest
7. No state taxes on distribution (as per my understanding)
8. If you used for certain causes (like education) and your AGI is below certain value, you don’t pay Federal tax as well (as per my understanding)
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