Hello, I am a college student and I work part-time. The money from this part-time job is all saved, and I do not plan on spending it any time soon. As I earn more, I would like to explore some options for putting this money into an account that would multiply it over time. I know there are many types of accounts out there, I just want to know which is the best for me...I am willing to keep the money in for a minimum of 5 years. Please help and thank you in advance. :)
I am a member of Bank of America, if this helps at all.
2006-12-12 16:31:23 · 7 answers · asked by ultra _ girl 3 in Business & Finance ➔ Personal Finance
As a fellow 19-year old, if you don't mind being a little risky and you're sure you won't need it- open up a Roth IRA.
This is a IRA that can be invested in with after-tax dollars (money you already paid taxes on) and once you take the money out, there are no taxes. Getting an early start on putting away just a little bit of money in this IRA can have it multiply into the hundreds of thousands by the time you retire and you don't have to pay a cent on it.
Also, with a Roth IRA, you can take out your contributions (the money you put in) at any time without penalty. You can also take the contributions out for qualified reasons (buying your first home) And you can invest in a wide variety of things (I'd go with mutual funds, stocks would probably be a little too risky)
2006-12-12 23:39:21 · answer #1 · answered by Vadalia 4 · 1⤊ 1⤋
First off, atta girl! Save! Does your school offer any classes on investing and/or personal finance. If not there are lots of good ones taught at adult ed centers. There are lots of good books on investing out there. Read 'em! Yahoo finance has a lot of good info too. Read it! Learn all you can and call your own shots. Don't invest in anything until you fully understand it. You're very young and that's the biggest plus of all. If you start now you can become very prosperous on even a modest income. If I may; you should devote 10% of your income to building lasting wealth.
You'll need the rest for current and short-term stuff. If I were you
I'd open a savings account with part of my savings and arrange to have the 10% directly deposited. Don't think in terms of 5 years. Think in terms of a lifetime. If you do this and invest wisely you will eventually have the means to do whatever you want. Time and a good head on your shoulders are your greatest assets. Use them and do great!
2006-12-13 01:07:59 · answer #2 · answered by Big R 6 · 0⤊ 1⤋
You are already wise when you know that you need to save for your future. I believe that buying an appropriate insurance policy is the first investment that everyone should make. Besides paying lower premiums when you are younger, you also have more time to save. Stocks, gold, real estate, etc should come after that. Always do your homework before you part with your money.
2006-12-12 17:46:50 · answer #3 · answered by Alfretz T 3 · 0⤊ 0⤋
Invest in a CD account. They ask you for a 500.00 to open the CD and you can seal it in for 6 months and gain profits on it
2006-12-12 18:15:00 · answer #4 · answered by Photographer 6 · 0⤊ 0⤋
put it in a interest baring savings account that's what i do and the money just grows over time
2006-12-12 16:40:22 · answer #5 · answered by Anonymous · 0⤊ 0⤋
even if you don't have enough for a down payment on a residence, you should buy one as young as you can. if only more women did this they'd create wealth for themselves way down the line.
first, a residence in the "right" location (yes, you can get an excellent real estate agent with many years' experience to tell you honestly what the "hot" areas are: those that are in upward expansion, though they may not look so good today) appreciates way, way higher than does any CD, note, bond, etc. it is all tied into location as well as into the amenities of what you buy.
this is what the purchase is going to do for you, at least this (if not buying the stock and proprietary lease of a "co-op"):
1. write off 100% of the interest you pay on your mortgage loan each year against your income taxes.
2. write off 100% of the real estate taxes you pay on your residence against your income taxes.
3. if you live in one out of two of a 2-unit residential building, you can depreciate what you don't use, i.e., you can use it as investment property, which means later on, if uncle sam does not taketh this away, which i doubt:
4. the depreciation would be put against any capital gains taxes that COULD exist when you sell, but as of now, if you stay single and gain $250k in capital gains on sale, that amount is not taxable and can be used towards another purchase or whatever you want, and:
5. investment property like i mention, upon sale, qualifies you to do what is called by the irs a "1031 starker tax-deferred exchange." now, then, know that there are very stringent rules that you must follow if you do one, but it gives you greater leeway to buy UP in the future.
fyi: this "exchange" must be for "like kind property," which means that it will not qualify as tax deferred income unless you take the capital gains and invest them into any type of investment REAL ESTATE.
i sort of envy you. my cousin, who owns many pieces of income producing real estate as well as a nice single family house, started investing in real estate when she was almost as young as you.
the one thing you must know about investing in any type of real estate is that it is not a fluid investment. i.e., if you needed money quick, imagine even the time it would take to pull it out of your equity in a second mortgage/refinance. or selling it too: it takes time. a money market fund, for example, will loosen up money for you immediately. that's the difference, but i still think you really should consider getting real estate. also, you can buy with no money down, but your mortgage payments will be higher. do not get into large debt!
2006-12-12 16:45:22 · answer #6 · answered by Louiegirl_Chicago 5 · 0⤊ 2⤋
just save it on food or supplies
2006-12-12 16:33:24 · answer #7 · answered by Anonymous · 0⤊ 2⤋