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Where put extra cash: $100 for 5 years and $50 for retirement

alfa147x

alfa147x

Lifer
Hey guys quick question:

Right now I have about $150 extra coming in every month. I would like to save up for a nice engagement ring + other related expenses in about 5 years. I would like to be able to put into this account $100 a month but that may fluctuate $50± depending on other factors. I also want to start saving for retirement. Right now I can afford to put $50 towards that cause.

How should I save my money? Right now my savings all sits in a savings account. I feel like there are better ways of saving money than that.

A little about me:
I turn 21 later this year

I pay for school off of a large amount of savings i pilled up through high school. <- saving account at credit union. This should be enough to last me through my undergrad.

Currently working an internship. I have $1000 in credit card debt but that's because the University had payroll issues and now instead of two checks I'm getting one large one :\. That should be payed off in full next month. Purchase APR on that card is currently 0% it will stay like that till June.

Let me know if I forgot something.

Thanks guys!
Alfa147x
 
alfa147x said:
How should I save my money? Right now my savings all sits in a savings account. I feel like there are better ways of saving money than that.
Click to expand...

With that amount of money in this economy, not really.

Don't worry, though, inflation will ensure that by this time next year, you're going to find yourself not having an extra $100/month...
 
What's your income from the internship, is it just a summer thing? When do you graduate? Are you planning on getting a job after or going to graduate school?
 
rcpratt said:
What's your income from the internship, is it just a summer thing? When do you graduate? Are you planning on getting a job after or going to graduate school?
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Current Spring Internship: $5000 + including housing
Graduate in May 2013
I want a job after college. After a couple of years of experience I want to get my MBA.

After this internship I go back to $14 per hour @ 20 hours a week + income from side jobs.
 
For just 5 years, you can't really do much better (safely) than INGDirect savings or similar.

At $50/month for retirement, you could put that into the same savings account for now, then start an IRA account in a year or two when you've saved up enough for the minimum.
 
I really wouldn't bother saving for retirement in your situation. With the amount of money you're currently talking about saving for the wedding-related expenses, there's not really any point doing anything fancy with it either. Maybe buy a CD once or twice a year as you save up the cash. Otherwise, high-interest checking account or something.
 
A standard online savings account sounds like your best route.
You can early withdraw Roth IRAs for certain reasons (buying house, medical, etc.), but not for buying an engagement ring for an imaginary girlfriend.
 
rcpratt said:
I really wouldn't bother saving for retirement in your situation. With the amount of money you're currently talking about saving for the wedding-related expenses, there's not really any point doing anything fancy with it either. Maybe buy a CD once or twice a year as you save up the cash. Otherwise, high-interest checking account or something.
Click to expand...

So not even a Roth IRA? The money I'll be putting in will change depending on how much income I have.

edro said:
A standard online savings account sounds like your best route.
You can early withdraw Roth IRAs for certain reasons (buying house, medical, etc.), but not for buying an engagement ring for an imaginary girlfriend.
Click to expand...

Well those numbers aren't set in stone. I like the idea of a Roth IRA
I might do that.

She's not imaginary 😉
 
I'm all for saving for retirement as much and as early as possible, I just think it's kind of silly when you're 20 and still in school. If you start when you're 22 with a good job, you'll be in fantastic shape.
 
It's so simple to start a Roth IRA, I would go ahead and do it now.
I set one up many years ago through INGDirect (Sharebuilder) and I am glad I did.
Its amazing how well $50/mo grows after a few years.

You get a ton of funds to choose from though. I just picked a high risk retirement blend and it has worked well for me. Yeah, it dropped out a few years ago, but it's back to where it was.
 
edro said:
It's so simple to start a Roth IRA, I would go ahead and do it now.
I set one up many years ago through INGDirect (Sharebuilder) and I am glad I did.
Its amazing how well $50/mo grows after a few years.

You get a ton of funds to choose from though. I just picked a high risk retirement blend and it has worked well for me. Yeah, it dropped out a few years ago, but it's back to where it was.
Click to expand...

I'll look into that. Any recommendations as to who to go with? is INGDirect still good?
 
rcpratt said:
I'm all for saving for retirement as much and as early as possible, I just think it's kind of silly when you're 20 and still in school. If you start when you're 22 with a good job, you'll be in fantastic shape.
Click to expand...

It's very tempting to spend the "left over" money :\
 
alfa147x said:
I'll look into that. Any recommendations as to who to go with? is INGDirect still good?
Click to expand...

Check out Kiplinger.com and/or money.com to review different mutual funds and their performance then see if you can set-up a Roth IRA with a $50/month EFT from your bank account to one of them.
 
Capt Caveman said:
Check out Kiplinger.com and/or money.com to review different mutual funds and their performance then see if you can set-up a Roth IRA with a $50/month EFT from your bank account to one of them.
Click to expand...

I have some cash floating around in some MF with charles schwab. I'll be sure to shop around.
 
I'd just stick it all in a savings account. You're not able to contribute enough to the IRA to really bother, considering it ties up your money more than a savings acct. being a student working part-time I think you'd appreciate the extra liquidity should something come up (car wrecks/breaks/bad sickness/blah blah. Its nice to start on your retirement early but you'd lose very little by waiting a couple years when you have a nice full time job with benefits and a matching IRA.

The common advice to start retirement early is mostly to get people to start before they're thirty, not to make people feel like they have to start before they really start their career.
 
Any online big name company that offers free Roth IRA accounts without fees will do fine.
None of us can predict which funds are better.
Schwabb, Sharebuilder, Vanguard, etc.

Most places require a starting account balance of like $500 or $1000.
 
dullard said:
Ignore my post for now. I didn't see you were a student.
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Noooo! I got my hopes up 😀


21996005.png


I think it still applies to me?
 
highland145 said:
I need a score card.😉
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ATOT 1, Dullard 0

I had a great post until I saw he was a student.

My advice now is to create an emergency fund. That way, he wouldn't need a $1000 credit card bill + interest every time the university forgets to pay him (my university did that to me twice a year). The next payment isn't double because they take about 3x as much tax out. Sure, it is corrected when you file for taxes, but that is a painful wait for a student.
 
yh125d said:
I'd just stick it all in a savings account. You're not able to contribute enough to the IRA to really bother, considering it ties up your money more than a savings acct. being a student working part-time I think you'd appreciate the extra liquidity should something come up (car wrecks/breaks/bad sickness/blah blah. Its nice to start on your retirement early but you'd lose very little by waiting a couple years when you have a nice full time job with benefits and a matching IRA.

The common advice to start retirement early is mostly to get people to start before they're thirty, not to make people feel like they have to start before they really start their career.
Click to expand...

How much would one need in an emergency fund?
This is what I have:
4 month's rent: $2000
Living expenses for 4 months: $800
Car fund: $2000


edro said:
Any online big name company that offers free Roth IRA accounts without fees will do fine.
None of us can predict which funds are better.
Schwabb, Sharebuilder, Vanguard, etc.

Most places require a starting account balance of like $500 or $1000.
Click to expand...

Easy enough. I'll just use some of my saving to "jumpstart" it. I like Schwab's customer service so I might just stick with them
 
dullard said:
ATOT 1, Dullard 0

I had a great post until I saw he was a student.

My advice now is to create an emergency fund. That way, he wouldn't need a $1000 credit card bill + interest every time the university forgets to pay him (my university did that to me twice a year). The next payment isn't double because they take about 3x as much tax out. Sure, it is corrected when you file for taxes, but that is a painful wait for a student.
Click to expand...

I could easily pay the CC of from my emergency fund. I wanted to build points on it.

Why do university fuck up people's pay so much? I remember freshman year not getting paid for 4 weeks. That really pissed me off.
 
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