What should I do with my money?

I need some good advice. I have been working for a couple of years and have saved up what I consider to be a decent sum, approx. $6000 (to be honest it’s more money than I’ve ever had in my life).

Now, I have no business savvy whatsoever. I don’t understand how the money world works. Don’t know a thing about investments and the stock market, don’t know what type of high interest bank accounts there are, and who’s offering them. Heck, I don’t know anything. I wouldn’t even know how to go about finding a financial advisor.

Can anyone give me some advice or info on what to do. My money is sitting in a chase savings account earning 1% interest. I’m paying more in stupid Chase fees than I’m getting!

Should I try to hire a financial advisor? If so, how do I go about it? just pick out a name at random from the phone book? Should my bank offer this kind of service? what fees should I expect?
I don’t even know what questions to ask here. Anyone want to offer the Moester a little help? I would really appreciate it. (:

BTW, since I’m sure we are all passed the point of “give it to me”-type responses, more serious answers are of course encouraged. However, if you have some new brilliant slant on the joke that you just can’t bear to see go to waste, I guess you can throw it in here. After all, a question like “what should I do with my money?” seems to beg for it.


There are some questions you need to ask yourself before you go any further. Some of them are:

  1. What are your goals? Long term or short? Are you saving to buy a house? Do you need to save for retirement? Kids’ college fund? Vacation next year?

  2. Will you need access to the money in the next X months or years?

  3. What is your personal style? Would you be willing to risk the money in something more aggressive with the chance for higher returns, or do you need something more conservative, with smaller returns, but less risk?

These are some of the questions you really need to answer before investing anywhere. Without a clear plan, you could choose an investment that is totally wrong for you.

For starters, go to some web sites that give advice on money management ( http://www.fool.com ) is one that comes to mind right away.

Good luck,
Zev Steinhardt

For no-risk options, you should at least put it in a 3-month CD, so you can get 5 times or so the interest you are currently getting.

Also, if you want a “risk free” but longer range option, look up Series I US Government Savings Bonds. These are currently paying around 7% per year on a 3-year bond, and are exempt from local and State taxes (and Federal tax deferred). AND, you can even buy them on the Web, via a credit card!

If you want to look at investments with risk, you should definitely seek help from a financial advisor - $6000 is certainly a healthy sum that is not beneath their notice, if that’s what you are worried about.

Nonetheless, you still need to be able to answer the sorts of questions that zev_steinhardt posed.

To start with, move all your money to another bank. 1% is a lousy rate for a savings account. Most banks will give you 3%.

Also consider what debt (if any) you have and pay off the high interest stuff (Credit Cards, etc.) ASAP.

You can put your money in Stocks. The best way to do this is to sign up for one of the on-line brokers such as DLJDirect or E-trade. You can invest conservatively on the market if you spread your money out into 7 or 8 stocks. Also, buy only value stocks – stocks that have a good P/E ratio (the lower the better – it should be below 10 or so) and pay dividends (look for at least 5%). Also, read news online about these companies to make sure there are no major problems foreseen. Look for companies whose profits have grown in the last two years.

These stocks have the potential for growth. But even if the market nosedives, these stocks will continue to pay dividends (assuming the economy does not tank) and should recover their market price within a few years.

If you need access to this money very soon, you might want to consider avoiding the stock market, since the market might dive and you would not be able to pull the money out of the market without suffering a great loss. But if you are investing for the long term, the market is the way to go.

By the way, my money has grown over 12% since May by investing it in value stocks.

OK, a little more info about me. I’m 25 (this Nov.), about to go back to school for music. I have no wife or family, nor any other major attachments, well, except for the loans I’ll be paying once I get out of school.

  1. I’m not really sure what my goals are. I guess more long term. I’m not saving up for anything in particular (nothing like cars, house, family related concerns, etc.).

  2. I would certainly be willing to freeze up at least $5000 comfortably for a few years. I’ll have enough in loans plus earned wages while in school to be secure for a while. There’s nothing in the foreseeable future that I would need that money for.

  3. I do have a slight gambling side, and am not opposed to low-moderate risk investments. I would never want to put my life savings in a high risk situation, but I would like to gamble with some of it. But I have no idea how to do this.

Anthracite about putting it into a CD: do I just go to my bank and talk to them about it? Is there any resource (web sites or publications) where I can compare rates offered from bank to bank? or do I have to do the legwork?

savings bonds pay more & you can take them with you everywhere. Some are exempt from state txes.

It’s unlikely that you’re going to earn more interest off your money than you’ll pay on your loans. Best thing to do is to use that money for school so you don’t have to take out a loan in the first place.

Where’s that spoo-boy Coldfire when he’s really needed? He’s an investment banker-this should be right up his alley.

Is he really? I gotta get Coldy’s ass in here.

And thank you konrad for the advice but:
1)the interest on student loans is tax deductable.
2)the payments are generally very low and extensions are usually easily granted.
3)If I blow my life savings on my first semester in school, what do I do my second semester?

Start a Roth IRA. You’re allowed to put up to 2k a year into it and at your age you could probably start one and retire at 50 easily. That is, of course, if you dont plan on getting rich through your music. If you plan on getting rich through your music go spend it on heroin. Because everybody knows heroin makes good musicians

Well, I know you can find local websites here in KC that compare and contrast both loan rates and CD rates - the last time I found these sites by going to Yahoo and searching there.

Your bank will be happy to open a CD for you too - they can do it in about 2 minutes.

Also, there are quite a few e-banks, which are fully FDIC insured and offer CD’s that are as safe as the bank down at the corner. You set up an account online, mail a check to them, and when it matures, they mail a check back to you, with interest. Some e-banks have awesome CD rates I hear, but I don’t know for sure.

If you can get a good student loan then it’s better to invest your money, but that’s not a sure thing. In Canada not just anyone can get one. But then again, $6000 US will cover the tuition costs for the entire degree B.Sc. in Quebec assuming you don’t fail any classes.

The best thing to do is to talk to a specialist. Tell him how much flexibility, stability and profit you want and he’ll tell you what to do. It’ll probably be a mix of mutual funds and bonds.

Unless that six grand is enough to pay for the rest of your education, don’t spend it up-front on tuition. If you pay for your first semester witout a loan, it’ll be very difficult to get loans for subsequent semesters. Spread it out more-or-less evenly over the years that you’ll be at school, or if you can get good student loans (some don’t start charging interest until you graduate, for instance), invest it.

Your bank should be more than happy to help you out with choosing a CD or other risk-free options. On the other hand, you really should shop around for other banks in your area, if you’re only getting 1%, and still have to pay fees on a $6000 balance. I get free everything, as long as I maintain a minimum balance, and a 2.9% annual percentage yield. It might not be quite that good in your area, but it shouldn’t be that bad.

Park the $6,000 in a money market account and start your financial education.
One of my favorite places:


Take your time, at your age you have enough of it.

You might consider a SDIRA (self-directed IRA), which allows you to choose how the money is invested, meaning high risk, low risk, stocks, etc. You can find a financial advisor who can help you with this. I did it myself, through my bank. That way, you are not stuck with the “we pay X% return on IRA’s” thing. You determine the risk level, and therefore, the possible return. This should be thought of as a longer-term type of investment, however.

I think we should post lots of investment ways with lots of complicated math formulas until his head spins.

But seriously, pay off all your debts (or at least the high-interest ones like credit cards) first.

I’m assuming you are talking about interest-deferred loans. If so, go ahead and take out student loans as you need, and invest your savings. When time comes to pay the loans back, I would use some of your investment accumulation to pay off a chunk of your loans. This will reduce your monthly student loan nut.

I’m not sure how much loan debt you are talking about, though. If it’s only a couple thou, that monthly payment is more than manageable and you don’t end up being soaked on interest. If you end up with 10K or more, I would suggest using a large portion of your savings to pay them off. The interest over their long-term payback plan really adds up.

This assumes you have a job when you get out of school and that you can live off your salary. No sense paying a big chunk on the student loans if you then have to charge up your credit card for rent and food.