I have 30K extra money, how should I invest it?

Question

I'm 24 & about to graduate college. I have around $10K worth of student loans, no credit card debt.

Answer 1

Congrats Redguard5 ! If you student loans are at 0% no rush to pay them off. Very proud of you for not running up credit card debt, Many students do. Diversify, put some $ in cd's such as $5 in 3 month, $5K in 6 month, $5k in 9 month and so on...in case there is a situation that you need $ you will have cash coming due. Look for a Money market and put a little there so some cash is liquid. Start building credit, get perhaps one credit card that has no annual fee and you can earn points for cash or trip or what ever...Pay the balance in full every month so your not paying interest...Only charge what you have cash to pay for each month. (in Full) When you have a job be sure to invest in the 401K the Max. amt. if they are matching..I could go on but this should give you a good start...then a good mutual fund. Talk to your parents if you can and see if they know of a good one to get you started.

Answer 2

In a nutshell: I would start a Roth IRA and invest in some Exchange Traded Funds, ETFs.

Best thing to do is what I am doing now that I am finishing up grad school: READ READ READ about it.

Secondly THINK about your goals. Retirement first and foremost, then things like houses, and vactions and such. You can't figure out a path until you know where you want to go.

Thirdly PLAN. A good reputable financial planner will help, but don't take their word for 100% gospel, second opinions are just as important in finance as they are in medicine.

I am not trying to suck up to the Yahoo people, but the yahoo finance section is outstanding for learning the basics. See link below, it also has a glossary that explains a lot of terms.

The Yahoo finance section also has some interesting calculator tools, including a handy one that estimates, very roughly, what you will need to save for retirement.

I will give you a basic primer:

Roth IRAs are good things to start when young and in a low tax bracket. You get all the money in the end tax free when you retire, i.e. the tax burden is upfront.

ETFs are basically like owning a little bit in every stock on a large exchange, giving an important diversification factor.

Diversification is important because if you have all your money in one stock, say Enron, and that company tanks, so do your retirement savings. Not only should you diversify when it comes to specific investments, you should diversify when it comes to TYPES of investments.

The basic tenet of finance is risk=return. Investments are divided up into classes, high, medium, and low according to risk.

Since you are young and have a long time horizon you can take on more risk than someone older and nearer to retirement, i.e. if the market tanks tomorrow, you still have 40+ years before you need the money, whereas someone at age 60 would be forced to work for an extra 5 years to make up for the losses of such an event.

Think of it in terms of ratios high:medium:low
Young people should have roughly 3:2:1 that is 3 dollars in high risk items, 2 in medium, 1 in low.
Middle agers 40-50 should have 2:2:2
Nearing retirement should have 1:2:3

Bear in mind that you will likely also be wanting a house at some point, so don't sink all your money into retirement accounts right away, as these accounts generally have restrictions as to how and when you can take money out.

That is the basics. GOOD LUCK!

Regards,
RG

Answer 3

Depending on the interest payments that you have to pay on the students loans you may want to pay those off first before you start investing. Then after you look at the loans the next question is if you own your own house or where you plan on living. Before investing in stocks you should take that into consideration. Then if you decide that you want to invest in stocks you need to decide what type of risk you want to assume. If you will be needing the money in the future to buy a house then you will want to take a more conservative root with the money.

Answer 4

Good on you to earn that amount of money!

What I can say it use some of it to get some books on 'getting rich', if you already haven't. Why do I say so is because knowledge is no.1. Also, these books are pretty general, in that they usually talk about ALL the things you can do with it and does not approve of one type and condemn the others. ie. Real estate investing is better than stocks.

I'd recommend Rich Dad's and Trump's series' of books. Even though they tend to lean on the real estate side of it, they do talk about the other ways of investing as well.

Whsts most important is that make sure you read up on whatever you are going to do before starting. Why investments are risky is because most people can't be bothered to through go through everything.

It's like driving. Driving is risky in itself. However, if you go through driving school, you'd come out a safer driver. Same for investing.

I do apologise if you were expecting a direct answer like - start a business! Coz I can't. Only you can answer that question. It I only made things more confusing for you..then I'm glad I opened up your world to realise just how much things you can do with it =p

Answer 5

Since you're about to graduate, you don't want risk of your 30k decreasing in value, especially since you'll likely be using the money soon(house, car, pay off loans, etc.). Try a money market fund or CD at the bank, you can get 5-6% guaranteed for that high of a balance.

Answer 6

Depends. IF you dont need the money for a year, take 5K and buy some tax certificates. Just for fun. Then, if you had income this year, earned, open a self directed IRA. From that you can buy the tax certificates, and it will come back to you tax free, as a profit not a contribution.

Buy things that if things go belly up, you still have something to show for it and not paper (stocks).
Good Luck

Answer 7

Buy Berkshire Hathaway B shares or look into trust deeds. I get a 12% yield on trust deeds with Consolidated Mortgage in Henderson, NV. $30k will get you $300 a month in interest

Answer 8

I have been having very good results in a conservative Forex trading strategy.

I would be happy to send you an actual analysis of the strategy over the past 10,000 hours and some further information.

Wishing you well.

Paul
925 236-1839

[e-mail]

Answer 9

You should invest it gradually in high quality common stocks and ETF's (Exchange Traded Funds). Diversify and do your research on each before you invest.Take your time.

Large cap stocks are probably best this year. Good Luck.

Answer 10

For a young age like yours, I will put it in one of the 5 star no load mutual funds then leave there and watch it grow.