Ask HN: Financial advice for a graduate student

4 points by mawhidby 15 years ago | 5 comments

Hey HN,

I am 23 and about to start graduate school this Fall (Master's program). Since graduating last December with my B.S., I have been working full-time at a software company. It's allowed me to save a little extra money; money that I do not plan on spending during grad school that I can use to invest (~$5,000).

The problem is, I don't know the first thing about investing. I'm pretty open to all options, but I don't know if I should buy stocks, a CD, mutual funds, or if I should go ahead and start a retirement account, based on my age and the amount of money I currently have to invest.

I've noticed a few Ask HN threads about financial advice, and was wondering if anyone had any opinions on the matter based on previous experience, expertise, etc.

Thanks in advance!

istari 15 years ago |

The real choice isn't between stocks, cds, mutual funds, etc. It's between conventional and unconventional investing.

The conventional route is easy and standard. Emergency funds in a bank, set up a schedule to buy index funds automatically, put the rest into CDs.

The unconventional route is real estate or business. 30%, 50%, or more is possible, and even easy, once you discover the way. But you have to find the way yourself, overcoming obstacles, inertia, and common wisdom.

For example, I learned how to buy foreclosures at courthouse auctions and resell them. 30-50% in 6 months. People doing real estate transactions regularly pay out over 15% for hard money loans secured by real estate.

Hacker News is great for learning how to create a business. Go to biggerpockets.com for real estate ideas.

noodle 15 years ago |

is the $5k the only money you have in total, including savings? if it is, put it into a good online high yield savings account and keep that $5k for emergencies. having a supply of liquid cash on hand can literally be a life saver.

do you already have some emergency savings and you just have that $5k to throw around? then i would stick that $5k into a Roth IRA with someplace like vanguard. get it started now, and if you need that money back further in the future, you can pull out the original $5k after a few years. put it into a reasonably diverse set of investments, but heavier on the risk/reward side of things. look for funds with lower expense ratios.

mawhidby 15 years ago | |

I already have emergency savings, the $5k is for me to throw around. I'll check out both Roth IRAs and the savings. And do you have a recommendation for a good online high yield savings account?

noodle 15 years ago | | |

right now, ally bank and ing direct are probably the best all-around options (higher rates plus good reputation/services).

starting a Roth IRA early is a good idea for long-term investing. it won't get you rich quick, but there's not much you can do with $5k to get you rich quick. putting it away and crossing your fingers for 7-ish% average yearly return will take that $5k and turn it into $100k or so when you're able to withdraw. and as i mentioned, if you want the $5k back later, you can get it back, penalty free (though you can't touch anything more than the original $5k).

coryl 15 years ago |

Why not research a few stocks you like and divide the money up into a few companies? Might be a fun learning experience.