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Investing Tips for College Students? 740

GenKreton asks: "I am a rising junior in college and decided to take out loans to cover all my costs so I could graduate with money in the bank. My tuition bill is minimal as I have a nearly full ride, but living is always expensive. With that said, I feel like my thousands sitting in the bank could be doing work for me instead of collecting dust till the day I graduate. I have been researching how I could best invest my money so I have immediate access to it if needed, but still do better than a mere savings account. There seems to be a lot of mixed advice and some obvious scams out there. So I ask Slashdot, what is the best plan for a college student to do with his money?"
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Investing Tips for College Students?

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  • Live frugally first! (Score:5, Informative)

    by BWJones ( 18351 ) * on Wednesday July 26, 2006 @09:37PM (#15788128) Homepage Journal
    The *first* thing I would encourage you to do is live frugally. You don't need a car for many places in the country you would go to college. You don't need the latest and greatest computers or TVs or goodies and the more money you can save now, the more it will help you out. It was tough while I was an undergrad, but everything I could was saved and invested in some stocks which over time have paid off.

    For most folks, I'd have to say mutual funds or real estate right now although the stock market usually performs at about 10% or better depending....

    • by cloricus ( 691063 ) on Wednesday July 26, 2006 @09:49PM (#15788204)
      No. The stock market performs around 10% on a rolling average of several decades...In the short term your returns can be anything from 300% to losing all of your money. Even a diversified fund in low risks stocks can lose you money rather quickly. For example a close friend currently has several hundred thousand dollars in a spread fund and last month was upto 22% return but this month is all the way down to 6% return on his rolling average. This is not the sort of worry a uni student really needs...Secure low risk returns are always good and I do agree with you about real estate - well chosen investments there always return good rewards.
      • The idea with the stock market for me has always been long term investing, but I do agree with you that there *are* risks. For instance, the first three stocks I invested in were CSCO, AOL and AAPL. CSCO and AOL performed astronomically well until March of 2000 when I lost my ass of them. AAPL was so so until they sorta bottomed out a few years ago when I bought at a low. Since then, AAPL has performed better than most tech stocks. My problem early on was lack of diversification, but a properly balance
      • I do agree with you about real estate - well chosen investments there always return good rewards.

        What you should be saying here is "the entire time I've been watching, real estate has had a good return". Talk to someone who was active in real estate during 1989 (which has an uncanny resemblance to real estate action in 2006) about that lovely time and come back to me. There's a great little chronicle of that based just on the headlines of California newspapers at []
      • You won't lose your money if you invest in oil companies. You won't lose your money if you invest in tabacco companies. You wont lose your money if you invest in alcohol companies. You wont lose your money if you invest in surveillance companies.

        There are some companies which are guarenteed to make money simply because the federal government spends billions of year giving money to companies to defend the country. You can bet phone companies won't be losing money, banks won't be losing money, most hedge fund
        • You won't lose your money if you invest in oil companies. You won't lose your money if you invest in tabacco companies. You wont lose your money if you invest in alcohol companies. You wont lose your money if you invest in surveillance companies.

          What about the opposite? Surely there are some companies that are good investments AND don't leave you with a guilty conscience from sponsoring people that are profitting on the misery of others. (Or am I living in la-la-land again? ;) ).
    • by akratic ( 770961 ) on Wednesday July 26, 2006 @10:21PM (#15788387)

      This loan money is money you're going to need to repay in a fairly short time, right? The stock market is volatile. When you need the money a year or two years from now, the stock market could be way up from where it is now. It could also be down--possibly by 25% or more. And that's just the market indices. If you invest in individual stocks, rather than index funds or other diversified mutual funds, your investment's value could fluctuate even more.

      Better options:

      • A high-interest savings account
      • A money-market fund at a major brokerage (keep in mind that these are not FDIC-insured)
      • Six-month Treasury bills or a two-year Treasury note. You can buy them directly from the government at Treasury Direct []
      • Pay back the loan

      Finally: have you thought about the ethics of using your student loans in this way? Were the loans given to you in order to help you pay for your expenses as a student? Do you think it's okay to ask someone to loan you money for one thing and then use that money for something else? Isn't that a form of lying?

      • A money-market fund at a major brokerage (keep in mind that these are not FDIC-insured)

        Also keep in mind that money market funds can go down. Say you buy one that represents a selection of normally reliable stocks and then the stock market declines as a whole (like it has been recently). Money market funds are generally a good choice, but you still have to consider overall market behavior if you aren't interested in long-term investing.

        Six-month Treasury bills or a two-year Treasury note.

        Threasury bonds a
        • A money market's rate of increase can go down with the stock market, but you won't lose your principal. Basically it protects you from inflation.
          • A money market's rate of increase can go down with the stock market, but you won't lose your principal. Basically it protects you from inflation.

            You certainly can loose your principal. Money market funds are sending your money out somewhere, and if it doesn't come back, you're screwed. Weren't you around for the S&L bust during the 1980s? Millions of folks would have lost their principal in that fiasco if it wasn't for federal insurance bailing them out. Almost all money market ads have big bold print

      • Are you serious? If he can get a better return on his investment than the loans cost, and didn't misrepresent his financial situation, then that's just good business. It's similar to financing a car at a very low interest rate so you can invest your cash at a high interest rate. It just makes sense, so long as you watch what the heck you're doing and don't spend the payoff money out from under yourself.
      • by ScottSCY ( 798415 ) on Wednesday July 26, 2006 @11:29PM (#15788733)
        Finally: have you thought about the ethics of using your student loans in this way? Were the loans given to you in order to help you pay for your expenses as a student? Do you think it's okay to ask someone to loan you money for one thing and then use that money for something else? Isn't that a form of lying?

        It's more ethical than downloading music from the internet without paying for it, which most people here on slashdot seem to think is ok.
      • Finally: have you thought about the ethics of using your student loans in this way? Were the loans given to you in order to help you pay for your expenses as a student? Do you think it's okay to ask someone to loan you money for one thing and then use that money for something else? Isn't that a form of lying?

        You must not have ever been a college student. Currently I'm maxing out all the loans I can get. Weed may grow on trees, but who has the patience and privacy to grow their own? And have you seen t
    • If you are going to need that money at the end of college (say 4 years) mutual funds are dangerous. Overall they do 10% or better, but over the course of any given time they may lose money. Index funds are a little safer and generally they out perform most mutual funds (since there are no brokerage fees).

      CDs aren't bad either, they are safe and do better than most savings accounts, but they tie up your money. The best option I've found is hsbc online savings [] accounts. I don't work for HSBC, but at a
      • The HSBC account can have an ATM card (I have one myself) but the other online savings cant (ING, emigrant, etc). I'm not sure how you go about adding it but I know that I am currently pulling in 5.6% AND have an ATM card (just signed up 2 months ago so maybe its a new thing)
    • I'd strongly suggest taking a glace at this thread [] on fatwallet.
      Avoid the hot deal's forum - you'll be broke and in debt - some of the deals are really tempting ;)

      Some of the better banks have options that pay 4-6%, ing direct is probably the most popular one, but there are others.
      If you can (new college student, so probably not), get a credit card with 0% interest on balance transfers for 1 year, take out a bundle and then toss that in as well. Not fucking up your credit is probably the most important.
    • by kingkongrevenge ( 588009 ) on Wednesday July 26, 2006 @11:24PM (#15788709)
      Real estate, mutual funds, and the stock market are the worst possible investments you could make right now.

      Real estate is caught up in a speculative bubble that will probably pop in the next couple years, bringing terrible pain. 1705/image010.gif []

      The stock market is highly overvalued. Stocks have only ever been a good buy at PE ratios of about 10 or less. The US market is at about 21, and profits are at record lows as a percentage of GDP. A cursory examination of the equity price cycle says now is a terrible time to buy. The typical bull market lasts about 15 years and the typical bear market lasts almost as long. Stocks went way up in the 15 years leading up to 1965. Then stocks did nothing until the early 80s. Then they shot up for 20 years. We are in a bear market now (inflation adjusted stocks are 20% below the 2000 high and still dropping). The historical pattern suggests stocks might be a good buy around 2015.

      The claim of 10% historical returns from the stock market is complete garbage. Nobody invested at an "average" time. People invest over the course of a 45 year career. If you break the last 150 years down into every possible 45 year investing period and then take the median return from all those periods you get a typical return barely better than bonds. The 10% claim is also complete garbage from the get-go because it ignores taxes and fees.

      If you want to buy stocks anyway, mutual funds are the worst possible way to do it. Fees and active trading will kill you. Mutual funds are obsolete now that we have ETFs. The advice someone posted elsewhere to consult with a professional is bogus. Professionals will steer you into their comission generating products like mutual funds. You have to research this on your own, and most of the popular literature is basically industry propaganda.

      Someone else criticised you for even taking out student loans. They are wrong. Student loans are free money right now, assuming your income is negligible. The interest rate is way below inflation, which is understated by as much as 5%.

      My money is on commodities. I think we're on the brink of a 10 fold gain in things like oil, metals, grain, gold etc. All the major currencies are being rapidly debased and an industrializing world is creating materials shortages. The case is so easy to make, while people selling stocks can only cite historical returns.

      If I wanted to make a high risk play, as I might if I were in college and just playing with the money, I would short the NASDAQ.
      • KingKong's post... (Score:5, Insightful)

        by Brickwall ( 985910 ) on Thursday July 27, 2006 @01:00AM (#15789044)
        Please mod this up. I've already posted, so I can't. But this post accurately encapsulates what's happening in the markets. I have managed a low 7 figure account for my wife's family for the last 12 years. I missed the wild ride at the end of the 90's because I didn't trust it, but the good news is I maintained my capital. I bought gold, oil, and money markets in 2000, and they have all done well for me.

        I also agree it's probably going to take another few years before stocks are a good investment - say, 2012-2015 - and we're going to need a major market dump before that happens. As one market analyst remarked some 30 years ago "You can't breathe in all the time; at some point, you have to exhale". It's just so with markets - the cycles the poster above referred to are the result of new technologies changing societies and markets, and then a sort of 'resting period' while they digest all those changes. The bull market from 1916-1929? Society was investing in cars, telephones, and radio. A bear market while that was digested. The bull market from 1949-1966? Television, jet travel, mainframe computing. Then a pause from 1966 to 1982 while they were digested. The bull market from 1982 to 2000? PC's, internet, cheap telecoms, broadband cable, etc., etc. We're still digesting those changes.

        My guess is the next boom will be fueled by major advances in biotechnology, natural language speech recognition and synthesis, and, of course, pr0n and anally implanted RFID's.

      • Holy crap, slashdotter's must not know the first thing about investing as they are modding this parent "insightful." P/E ratios have been declining over the past 4 years, as stock prices have not increased as quickly as corporate profits. Companies like Exxon have recorded the second highest and highest quarterly profits ever. In fact, Exxon recorded the second highest quarterly profit for the 2nd quarter 2006 tax year.

        "Real estate, mutual funds, and the stock market are the worst possible investments you

  • Talk to the pros (Score:4, Insightful)

    by macx666 ( 194150 ) * on Wednesday July 26, 2006 @09:37PM (#15788131) Homepage
    Don't ask slashdot. Or any other IT geeks.
    Go ask a financial professional. There are tons that give free first time consultations.
    • Re:Talk to the pros (Score:5, Informative)

      by WhiplashII ( 542766 ) on Wednesday July 26, 2006 @09:47PM (#15788194) Homepage Journal
      Although be careful - the financial professional's first obligation is to enrich himself, otherwise he is self-selecting to not be a finance professional.

      I recommend getting an online brokerage account, and investing in an index ETF (many boring technical reasons for this). The one I like most is SPY (the spyder fund), which tracks the SP500. Once you have invested whatever you want, ignore the money. It will go up, it will go down - but over 20-30 years it is a very safe investment.

      For every $1 invested:
      after 10 years, you have $2.60
      after 20 years, you have $6.70
      after 40 years, you have $45
      after 55 years, you have $190

      So assuming that you are 20 and retiring at 75, every dollar you invest now is about $200 at retirement (or, seen another way it is $20 per year at retirement). Invest early! (And ignore what people say about the markets - it is a proven fact that you cannot make money listening to others, except for insider trading...)
      • Not so fast (Score:3, Insightful)

        by Mille Mots ( 865955 )

        So assuming that you are 20 and retiring at 75, every dollar you invest now is about $200 at retirement (or, seen another way it is $20 per year at retirement)

        Considering the state of the US economy, the demographics of the US population (hint: it's aging fast) and, perhaps most important to this discussion, this publication [] (warning: .pdf) by the St. Louis Federal Reserve Bank [], that $200US at retirement might have the same purchasing power as that $1US now.


        The usual disclaimers apply

    • by megaditto ( 982598 ) on Wednesday July 26, 2006 @09:51PM (#15788214)
      Spend it on merry girls, hearty wittles, and fine wine.

      Get rid of the savings account and do not invest: this way you can file 1040EZ instead of 1040 to the INS; as a college student this will save you money.

      Start your own business and become a consultant. Claim beer etc. as a business expense.

      Buy gold. That keeps going up, plus will keep its value when the Revolution comes.

      Get a PhD in chemical engineering; you will be raking in 250k+/year if you are any good.

      Become a Canadian citizen; with your IQ you will qualify for disability payments.
  • by Anonymous Coward
    Some of the online ones like ING Direct are paying close to 5% interest now, and if you got your loans when they were at super low rates, it might be a fairly safe and convenient way to make some money.
  • It's a sure thing.
  • (Score:3, Informative)

    by The Rizz ( 1319 ) on Wednesday July 26, 2006 @09:39PM (#15788145)
    Try []

    Your best bets if you want no-risk are probably money market accounts and CDs.

    CDs will give you a higher interest rate, but will not allow you to take the money out early without forfeiting some or all of the interest you've gained.

    --The Rizz

    "Money is just something to make bookkeeping convenient." --H.L. Hunt
  • Mutual fund (Score:2, Informative)

    Walk into your bank and invest in a mutual fund. It's easy and free to do, you will get plenty of advice, and there is someone managing your investment for you. Best of all, you can pick a mutual fund that is more aggressive or steady depending on your willingless to possibly lose some to gain more.

    And to boot, you can withdraw your investment at any time. Usually takes 1-2 business days to take effect.
    • Re:Mutual fund (Score:2, Interesting)

      by Fishbulb ( 32296 )
      Even better, depending on the mutual fund and the institution you got it from, you can take setup a margin loan against the fund, which is usually charged prime + 1.5 % interest. Not bad, if your fund is doing well. It's more-or-less a loan to yourself, and if you eventually pay off the margin loan your mutual fund is stil in tact and preferrably made a better percentage than what you paid on the loan.
      Though you can only "borrow" up to about 60% and if your fund drops, they will call the margin and sell y
    • Re:Mutual fund (Score:5, Informative)

      by sickofthisshit ( 881043 ) on Wednesday July 26, 2006 @11:04PM (#15788591) Journal
      Most banks will offer you some fund with a huge sales load or marketing fees, because that's what pays the bills for the bank. They generally don't get the management fees (the managers of the fund do).

      I.e., the banks will get you to pay them (indirectly) a commission, so you start out a few percent poorer than when you walked in the door, and they don't really care if the fund performs well or not, so who knows if you'll ever make that back or when. Or they'll sell you some stupid annuity with a multi-year lock-in. Either way, you'll almost certainly pay them some nice percentage for lousy advice.

      This guy will need to pay back his loans (which, most probably, were only authorized for qualified educational expenses, in order to qualify for various governmental guarantees needed to get the interest rate for student loans, even in the absence of a good credit rating, but that's a whole other line of criticism) within six months or so after graduation, or at least will start racking up interest unless he keeps in school or makes some other sacrifice that persuades the goverment to keep paying the interest for him. At which point, any volatile investment has a good chance to be down when the loan payments start.

      This guy should not have maxed out his student loan debt if he didn't need to. Using them to invest on margin, even if the interest for now is zero percent, is idiotic, except in something liquid and low-risk.
  • by mr_infiniti ( 577800 ) on Wednesday July 26, 2006 @09:41PM (#15788150)
    There is no future - drink all the beer you can now!!
  • Right now the stock market is not good because we are pobably at a market maximum. Plus you will probably want that money in a few years for a car or downpayment on a house. I'd suggest a good money market fund such as those offered by Vangaurd. They will pay a bit more interest than other cash investments plus your money will be liquid.

    Once you graduate and get a job your priorities should be starting a 401K, paying off loans and building a rainy day fund (6 months income) as a cusion in case of unemployme
  • by arthurpaliden ( 939626 ) on Wednesday July 26, 2006 @09:42PM (#15788161)
    Why pay intrest when you dont have to and realize that you do not neet to buy all the toys now.
  • by psoriac ( 81188 ) on Wednesday July 26, 2006 @09:43PM (#15788164)
    You don't provide enough information about the kind of loans you have taken out. Do you really need to have "thousands in the bank" to live? Perhaps you could try to reduce your cost of living instead.

    The biggest issue in my mind is that by taking out loans, you now owe interest. Depending on what kind of loans they are, the interest rates, and the repayment schedules, this may not be the best thing to do. In the long term, unless you're able to achieve a higher rate of return on any investment you find, you'll be losing money.

    If you financial situation is stable, and you have some sort of fallback plan (i.e. family), or you can look forward to finding a good job when you graduate, the best thing to do may be to just pay off those loans right now.
  • by cloricus ( 691063 ) on Wednesday July 26, 2006 @09:43PM (#15788165)
    Really you are stuck as you wont make a lot of monies no matter what you do. I recommend against any high risk investments; they are 15-20% return for a reason and it's a simple one: you may not get your money back. Also compounding is out of the question as you need access to it. So out right I'd suggest finding a short term investment (with a bank is best) of six to twelve months and put 80% of what you have into that. In Australia, where all of my advise is customised too - I believe the UK should be almost the same though the US may differ (do you guys trust your banks?), at the moment you can get a very nice deal around the 5 to 20k deposit for six months to a year for 6 to 8.5% interest depending on who you go with and the term. Note that the penalties for withdrawing money within the time frame are huge which is why you keep 10 to 20% of your capital out of it for that Just In Case situation.

    Hope the above helps and I can provide more accurate advice if you need. Also time for a new acronym...I Am A Investment Geek Though My Advice Has No Warranty So Don't Sue Me If You Fuck Up...IAAIGTMAHNWSDSMIYFU :)
  • Are you really going to need immediate access to all your money? Normally I'd recommend you keep about 1/2 your money in a high yield saving account and/or short term cd, you'll be able to get 5% or higher right now, and the other 1/2 in mutual funds. The problem though is if you need immediate access to your money you might end up losing some money that you have in the mutual funds depending on the current market.
  • Get out of debt (Score:5, Insightful)

    by miracle69 ( 34841 ) on Wednesday July 26, 2006 @09:45PM (#15788181)
    You borrowed money to invest. Think about that for a minute.

    Then you borrowed money to invest and you don't even know how to invest. Think about that for another minute.

    Give the money back to the bank, pay your stupid tax, and go to and get My Total Money Makeover and learn how to use money.

    Or, continue to be financially brainless and wander around borrowing money for no good reason and wonder why you retire broke and bitch about Social Insecurity.
    • BZZZZZZZT. Student loans are typically interest-free until you graduate.

      Thanks for playing, please try again.
    • Re:Get out of debt (Score:5, Insightful)

      by GenKreton ( 884088 ) on Wednesday July 26, 2006 @10:09PM (#15788330) Journal
      I would agree with you except for two things

      1) My loans aren't gaining interest now, the federal government is handling that for me.
      2) I want options when I graduate to move to where I need to or whatever. I don't want to live in my parents' basement till I am 35.
      • Re:Get out of debt (Score:4, Insightful)

        by miracle69 ( 34841 ) on Wednesday July 26, 2006 @10:57PM (#15788552)
        Investing with federally insured loans is illegal.

        Your parents basement is better than the federal pen.

        If you learn how to budget and live beneath your means, then you will not live with your parents unless you are just afraid of work.

        Loans represent risk. Unmanaged money leaves.

        99% of people in your situation blow the money they didn't need and then end up paying back the student loan over 20 years. Oh, and Student Loan rates are now 7%. It's too late to consolidate at the 4.whatever rate that was the second lowest in history back in June.

        Go read the Millionaire next door. Millionaires don't borrow money. The middle class borrows money.
      • Re:Get out of debt (Score:5, Insightful)

        by serutan ( 259622 ) <(moc.nozakeeg) (ta) (guodpoons)> on Wednesday July 26, 2006 @11:04PM (#15788595) Homepage
        1) My loans aren't gaining interest now, the federal government is handling that for me.
        2) I want options when I graduate to move to where I need to or whatever. I don't want to live in my parents' basement till I am 35.

        When I graduated from college I got a job and moved out of my parents' house in 6 months. If I understand you correctly:
        1) You're borrowing money you don't need from the taxpayers so you won't have to do that, and
        2) You're asking those same people to tell you how to make more money.

        Suck it.
      • Re:Get out of debt (Score:3, Insightful)

        by corbettw ( 214229 )
        This is the only truly insightful post in this entire article. The kid who posted this question needs to ignore all the other "advice" and remember that nothing is worth jail time.

        If you absolutely must have the money set aside for something, just put it in a savings account that's FDIC insured and leave it alone.
      • Re:Get out of debt (Score:3, Insightful)

        by freeweed ( 309734 )
        Nothing personal, but people like you are what ruin the student loan system for those that actually need it.

        Get a part-time job during classes, get a summer job for the 2-4 months you have off. If you live in your parents' basement, your expenses should be practically nil. I did the same thing and came out of school with thousands of dollars in the bank, and I didn't have to cheat the system to pay for it.

        Besides, on the less harsh side: nothing, and I do mean NOTHING is as satisfying as not owing a single
      • Re:Get out of debt (Score:3, Interesting)

        by shess ( 31691 )
        2) I want options when I graduate to move to where I need to or whatever. I don't want to live in my parents' basement till I am 35.

        So, you know, get a job. If you don't have a job, then you shouldn't waste your savings just to move out of your parent's basement. The goal isn't to move out of your parent's basement, the goal is to be a contributing member of society. Manage that and moving out of the basement should follow. The shame is in living in your parent's basement because you blow all your incom
      • Normally I wouldn't comment unless I have something useful and productive to say, but on behalf of all people paying their student loans back for years and years, what you are doing is LAME. If you don't need the money (and if you are thinking about investing it you clearly don't) you should not take the loan. Taking an unneeded loan just pushes up the rates on all the rest of us who do (or did).

        If you really are living on this loan just leave it in the bank. You are not going to get much more interest o
  • Not rocket science (Score:4, Insightful)

    by The-Bus ( 138060 ) on Wednesday July 26, 2006 @09:46PM (#15788184)
    I have been researching how I could best invest my money so I have immediate access to it if needed.

    One concept I've heard of that I liked combines liquidity (access to money) with a high return. Say you've got $5000 you can put away. Divide it by five and put $1000 each into a 1-, 2-, 3-, 4- and 5-year Certificate of Deposit (CD). At the end of the first year, when the first CD matures, roll that into a 5-year CD. (The longer the time, the higher the interest rate is you earn, usually). Lather, rinse, repeat. Every year, 20% of your investment becomes available without penalty and you're earning a high rate of return on your money due to the longer term and interest rate averaging over the time period.

    That, or find a financial advisor you can trust. A good one will value your relationship and look forward to making you money for many years. A bad one will want you to trade stuff in your account often (earning them high commissions) and leaving you in the poorhouse.

    That, or invest in mutual funds that cover a lot of type of investments: some index funds, some international/European funds, a few bonds here and there. It's very easy to avoid scams and beat your savings account rate. Optimizing that is what is a bit trickier.
  • If you've got any loans that aren't deferred, they're probably charging you a higher interest rate than the bank is paying you for your deposit. If you don't find an investment that grows your money faster than the loans' interest rate is growing your debt, you're better off paying off the loan rather than investing the money.

    The stock market hasn't been the sure thing it used to be [] of late.

    Use this advice at your own risk; I'm not qualified to give it, and when your lawyer sees my net worth he'll laugh at
    • > The stock market hasn't been the sure thing it used to be of late.

      Sorry, I linked the log-scale version of the plot. You can click their link to get the linear-scale plot.

      Also, if you shorten the period to 5 years you'll see that the market is finally showing some signs of life, though IMO the growth isn't convincingly stable yet.
  • by heldlikesound ( 132717 ) on Wednesday July 26, 2006 @09:47PM (#15788193) Homepage
    ...there are some really amazing oppurtunities for investing in Africa. I just sent a cashier's check for $12000 to Prince Oolando Bothsqanta to pay the minimal fees needed to free up his vast fortune from Swiss banks. In return, I will earn approximately $4 million dollars in the course of the next 12 months.

    I'll let you know how it turns out!
  • by thedogcow ( 694111 ) on Wednesday July 26, 2006 @09:48PM (#15788195)
    First off, get over yourself. Brandishing about the fact that you have a full ride and that your tuition bill is minimal is load of self-important horseshit.

    Secondly, get in touch with reality. College is hard work... I have learned that you don't go to college for money. You go to college to learn. With that learning (not just academically, but about life in general) you learn that life does not come delivered to you on a silver plate. *Most* college students have loans. Unless you're some rich trouser stain who doesn't have you be bothered by reality (i.e. the submitter) you'll probably be working shit jobs at a shit wage living in a shit apartment trying to get your degree.

    This sense of entitlement is beyond infuriating. I experienced this kind of crap in college all the time. Life does not owe you anything and there is a high likelihood you'll be in debt. Just be happy that it is another day and leave it at that.
    • by Black Parrot ( 19622 ) on Wednesday July 26, 2006 @10:08PM (#15788319)
      > First off, get over yourself. Brandishing about the fact [...] is load of self-important horseshit.

      That's almost universal on Ask Slashdot articles. Most of the "questions" should be posted to Brag on Slashdot instead.

      Fertile ground for parody, though:

      "I've been sleeping with seven beautiful women for the past five years, but now some of them are hinting that they expect me to marry them. Are there any good IT jobs in Utah?"

      "My IQ is so high that I have trouble comunicating my ideas to ordonary programmars. Is there an open source tool to help me?"

      "I invented an incredibly programming tool, but my boss won't make everyone use it. Please tell him he's wrong."

    • by Clover_Kicker ( 20761 ) <> on Wednesday July 26, 2006 @10:10PM (#15788333)
      > College is hard work

      You're doing it wrong!

      Go to all your classes, do all your assignments, get Bs.

      That leaves lots of time for partying.
  • by KingOfBLASH ( 620432 ) on Wednesday July 26, 2006 @09:48PM (#15788197) Journal
    To invest your student loan proceeds until you can use them.
    • It's not a Stafford loan. If his tuition is paid and he could afford his housing already, he would not get a surplus loan unless he fabriacated information on his FAFSA, which is a federal offense and could cost him the remainder of his education. So surely he is talking about some other kind of loan.
  • If you want access to pull out your money at any time, take a look at some online savings accounts. There are several banks that give 5% interest which beat the 1% interest of most brick and mortar banks. Fatwallet's finance forums are a great place to learn about all the options out there.
  • Disclaimer, I am in Australia so I don't know the exact circumstances

    Look very carefully at how much interest you're paying on your loan and how much you're making on your investment. If you can't make enough to cover the loan interest, paying off the loan is the "best investment" - it's not a sexy answer but it's the truth. Oh & for deity's sake don't run up credit card debt.

  • But total networth. If you have money in the bank, and a student loan, then you are donig something wrong. The first, and best investment is paying off loans (or having smaller ones).
  • I jsut finished paying off all my student loans a year ago, along with a car payment. in retrospect, i would have gotten a crappier car. its amazing what a diference another 500 bucks a month in you pocket make for your life.
  • Financial advisors are there for a reason. You wouldn't ask one of them for advice on buying a computer, why are you asking slashdot for financial advice?

    There's a few obvious answers of course. You shouldn't be putting your money in anything where you're risking losing it. You're a poor college student right now, and risk is not something you can afford. That rules out things like mutual funds and stocks. You also need to make decisions about what portion of your money you need immediate access to. A
  • ... the simplest is to buy a house and rent it out to your fellow students. You take advantage of your social connections and don't pay rent.

    However, unless you can get a small business loan, you're going to need a hand from somebody who can back the mortgage. The banks don't consider potential rental income when calcuating what you can afford.

    If the local real-estate market is too high for you to enter, and you're not entreprenural in nature, then I'd say there's not much you can do with your money w

  • by Kohath ( 38547 )
    Invest in beer. Stay away from the name-brand American beers. You can afford good beer.
  • Sounds oxymoronic to me....

    Most college students can't even afford dog poop...even if it came with a free car wash (and the dog)....

    What about investing in a startup? It's high-risk...but hey....
    Or invest in something that's bound to do well....oil stocks for one (unless they pull an "enron")
  • It sounds like you've borrowed money you don't need for a year or two, and now you want to invest it. That can be risky. Some conservative principles:

    Risk. Don't invest more than you can afford to lose.

    Time horizon. If you really need the money within a year or two, do not invest them in anything riskier than a money market fund, a bank CD, etc. The market can fluctuate abruptly. Over the long run, you can get good returns, but in the short run you can lose a lot.

    Diversify. If you want to be in the st
  • by colman77 ( 689696 ) on Wednesday July 26, 2006 @09:56PM (#15788250)
  • You're in luck, asking this today! Coincidentally, I just received in my email information about an unusual investment opportunity. It is a company called RWGI which is "an explosive pick for our members", according to the email. The email says the stock is selling for $0.32 but I did some research and it is actually only about $0.20, so it is an even better deal now! Imagine if this stock went up to $20 a share, which isn't all that much for a stock, and you put $1,000 into it, you would be worth $100,000!
  • Better interest rate than a typical savings plan, and you still have access to your cash.

    I got mine thru CitiGroup.
  • ....go to a Casino and put it all on Red!

    Hey, it's as good advise as any thing else your likely to get here :-)

  • Here's a better plan...

    Figure out your monthly nut (living expenses, ie. food, rent, medicine) and then set yourself up a salary from your cash. Invest in something liquid and safer... A large portion cash (ie. Money Market,) maybe as much as 33%; some in a stock index mutual fund, maybe a third, and the other third in high-quality bonds. This is a fairly conservative investment strategy, and you probably won't be a millionaire at graduation, but you'll spend less of your original capital by having steady income streams from your conservative investments, and some protection against inflation from your stock-based mutual fund.

    The bottom line is you might be able to get ahead by buying stocks and taking loans out for school... But US Dept. of Ed. loans have gone up drastically in the last couple years--into the 6% range. This means you'd have to have a pretty good year on your stocks--every single year you're in school--or you'd end up paying more in student loan interest than you would earn from your stock investments, especially after you adjust for inflation... That 10% avergage on Large-Cap stocks over time is fine, but after inflation is factored in your margin gets pretty thin before you're upside down.
  • My Advice (Score:5, Insightful)

    by vorwerk ( 543034 ) on Wednesday July 26, 2006 @10:08PM (#15788318)
    I've been a university student for ~11 years (bachelor's, master's, and finishing up my PhD). As university students, we tend to have little income and fairly regular (tuition) payments. (Although, scholarships and occasional co-op work terms/internships can produce "spikes" of surplus cash, and the question then becomes how to manage this influx optimally.)

    Here's some brief advice based on my own experiences... I don't have the willpower to go into lengthy explanations for each point, so the first thing that I can recommend is that you start by doing some background reading. (Also, I'm skipping all of the mundane advice like "live frugally" because you've probably heard most of it before, and you want a non-bullshit answer.)

    0) Pick up the "Intelligent Investor" by Graham, revised edition with commentary by Zweig. Then, read everything at: [] When done, read everything at: [] Once you have established this basis, you will probably understand & agree with my following comments more closely.

    1) Pay off your debts first. Do not invest money while you still have debt -- paying off a 19.75% credit card balance will reap you more money than any average investment. Let me repeat that, because most people are retards and don't get this point. Do not put a cent of money into a mutual fund or stock until your debt level equals $0.00. Capiche?

    2) Open an ING Direct savings account. It's free, it pays high interest, and it's secure. (I've been a customer with the Canadian version of ING Direct for more than 7 years.) Keep your spare cash there. This includes any money that you make on co-op work terms (or summer jobs, etc.).

    3) Build up a sufficient supply of cash in your ING account -- enough to pay for the next 2-4 terms (or whatever you feel comfortable with). This is your "margin of safety" cash -- don't touch it. It's used in the event that you lose your job, crash your car, etc.

    4) At this point, you have no debt, and you have reached your "margin of safety" amount. Once you have built up an additional $3k to $5k on top of your margin of safety, open up a discount brokerage account (e.g., E-Trade).

    5) Now, start to build a "couch potato portfolio". Buy an S&P500 ETF (called a "SPY"der, in the States) from iUnits/iShares. (I recommend waiting until you have $3k to $5k to minimize the effect of brokerage commissions, as a percentage of the amount invested.)

    6) Every subsequent $3k to $5k that you save is then used to build up a diversified portfolio of (a total of) 3 or 4 ETFs covering the S&P500, the NASDAQ, MSCI EAFE, and possibly a Japaense/European/Canadian index. Over time (as the evidence suggested at [] would suggest), your low-cost ETF portfolio will outperform a vast majority of actively-managed mutual funds, and it requires relatively little maintenance on your part. This is exactly the kind of portfolio you want to build as a student -- you want an investment platform that you can put on "cruise control" while you focus on more important things (like studying, partying, getting a girlfriend/boyfriend, etc.).

    By the time you're ready to move on to more advanced stock/bond investing, you will probably know that there are better forums for these kinds of questions, and you will go there. Good luck.
    • Re:My Advice (Score:3, Insightful)

      by Bill Walker ( 835082 )
      I'd like to disagree on a couple of things. (BTW, the following statements are for informational purposes only, and should not be construed as direct advice nor as a solicitation)

      Firstly, I don't think a savings account is particularly good at its stated purpose. Given that you don't intend to need the money in the account at the drop of a hat, you could put the same amount in a money market fund (low to no commission if you go directly through the provider) and earn a couple points more per year. The do

    • Re:My Advice (Score:5, Informative)

      by greg1104 ( 461138 ) <> on Thursday July 27, 2006 @12:32AM (#15788950) Homepage
      I wanted to add some confirmation and some slight different suggestions to this excellent set of advice.

      I've also dealt with ING Direct for a number years (and in real US dollars even!) and they were the first thing that came to my mind as well for the situation asked about here. You can move money in and out of the account as fast as your bank will clear the transactions, making it fine for use as backup cash, and the interest rates soundly thrash most other savings vehicles.

      Comments about clearing debt and such before investing are spot on, but I think the timeline outlined here is a little conversative. It's not that hard to extract money from the stock market when it's in a liquid stock like SPY, where you don't lose much in the buy/sell spread to enter and exit the transaction. If you needed emergency money, you can get it out of a good brokerage account in a few days by closing your position and wiring/ACH'ing the proceeds out. As such, waiting until you have lots of money on top of a large safety net may not be necessary for those willing to tolerate some additional risk. If your debts are paid off, you have a full term worth of cash, and another $3K on top of that, putting that $3K into a relatively safe stock market investment instead of a savings account would be aggressive, but not crazy. Stashing 2-4 terms worth of money probably makes sense to a really long-term student like our poster here, students doing a shorter tour of duty will have graduated before they meet that standard.

      That said, I'm a little torn on the subject of investing in ETFs like SPY right now though. If this were early 2003, where the stock market was fairly priced by historical standards, then I'd say jump on that. But the current S&P is showing a lot of the signs of a peaked market right now; it's been going straight up for over three years, it's already recaptured most of the lost ground from the .com bubble bursting, and there have been some sell-offs on massive volume this summer. There's certainly some room for it to keep going, but I'd hesitate to recommend that as a passive investment vehicle at the moment--there are a lot of signs the best part of the move is now history. You don't want to be one of those people who buys into the stock market just as it hits its peak, only to watch your money get chipped away for years by a bear market.

      It's also worth noting that while Graham's "Intelligent Investor" is a great book, it's hard to follow some of its principles while trading ETFs. Compared to the relatively easy way you can characterize the intrinsic value of a regular stock, it's not as clear what the intrinsic value of a an ETF like SPY is.
  • by melted ( 227442 ) on Wednesday July 26, 2006 @10:36PM (#15788471) Homepage
    It won't be as easy or cheap to do later in life, especially the second part.
  • by pimpin apollo ( 664314 ) on Wednesday July 26, 2006 @10:53PM (#15788539)
    This is probably the wrong place to be asking this question, and the advice being given on these boards are enough proof of that (e.g. "walk to your bank and invest in a mutual fund" - first banks don't administer mutual funds - they can't legally do so - and third, mutual funds are not risk-free investments).

    First, you should buy a book on investing. Not some get rich quick book, but a real investing book. I have no suggestions here.

    Second, what you seem to be looking for is a nearly 0 risk investment that yields better than a bad savings account. You should contemplate US treasury bonds.

    Right now they yield around 5%. These bonds are typically considered "risk free" in that, as long as the U.S. government is around, they will print you dollars to pay you back. Of course, if there's lots of inflation that money they print for you will buy a lot less, but then again, you have the same exact problem with your savings account. You can do practically the same thing with a bank issued CD, but treasury bonds are fungible on the open market, unlike CDs. That means, if you have a 5 year note treasury bond, you can sell it on the open market before it matures, or you can wait for it to mature. With a CD you will pay a penalty (which will negate the benefit of having had it in a CD) if you try to cash out early.

    Last I checked, you can buy the bonds in $1000 lots from the fed government. In short, you buy the bond for some amount less than the face value, (e.g. $950) and then in a defined amount of time (based on the maturity you select (3 month, 6 month, 2 year, 5 year, 30 year) it will pay you the face value ($1000). You should check out the Treasury website. This is extremely easy for US citizens, and I think it's still doable for those outside the US.

    Either of these options though is substantially safer than investing in stocks, mutual funds, private bonds, etc. Of course, as always, you should be wary of what you read on a message board, and no investment is 100% safe, and that includes savings accounts. I'm not a professional and I could be wrong about anything I just said.
  • Buy and Sell (Score:3, Interesting)

    by Darth Cider ( 320236 ) on Thursday July 27, 2006 @12:58AM (#15789035)
    Forget paper investments. Buy underpriced goods and resell them. Sidestep eBay type items, mailable things, and look for "motivated sellers" who need cash fast. Develop an eye for spotting bargains. They're not rare. (Example: giveaway or cheap furniture listed every day on craigslist, always at a premium in college towns first day of school.) People who are moving usually just want a quick sale. Haggle for a lower price when you're buying, refuse to haggle when you're selling. Do 3 deals a year making 25% profit and you can nearly double your money. What do you think banks and brokers do with your money? They buy and sell and give you a cut.
  • Aim for stability (Score:3, Insightful)

    by mertzman ( 87638 ) on Thursday July 27, 2006 @02:33AM (#15789274) Homepage
    I found myself in much the same conundrum--overall, I needed to finance my education with loans, however I knew I would need to have a small contingency fund for when I graduated. Many people can't rely on just moving back home for a few months while they look for a job. Alot of students count on having that rainy day fund.

    Basically, since you're dealing with a short term investment, you want to aim for stability, but since a student's financial situation is also topsy-turvy, you want flexibility too. With that you really have a limited set of options. Here are the four best, in order from lowest return to highest:

    1) conventional savings account -- maximum flexibility, minimal return.

    2) high-yield savings -- something like an ING Orange account, which places minimal limits on transactions, is FDIC-backed, and has a respectable interest rate compared to a regular savings account.

    3) money market account -- not federally insured, but higher returns and most let you make a few withdrawals without penalty, so you can get at some of your money if you need it earlier than planned.

    4) certificate of deposit -- returns at about the same level or slightly better than the money market option, but your money is locked in for the length of the CD, unless you want to pay a hefty penalty. This is your best option though if you know for sure that you won't need the money until a given time.

    Realize that all four aren't exactly lucrative options... right now the max you'd probably get is between 4.5 to 7% interest on the latter two options. And the savings account option is barely an investment in terms of return... I get a paltry 0.55% on my savings, but hey, it's stable and I can get at my cash whenever I want.

    I noticed alot of people were critical of trying to invest while taking out student loans. As long as you're not taking out the loans for purposes of investing them, there is nothing wrong with what you're doing. The federal financial aid process is designed to take into account your existing assets and projected earnings during the school year you are receiving a loan for. If you already have or earn funds that you would like to invest, there is really no restriction on this, so long as you can prove that the balance of your loans was applied to legitimate educational and living expenses as defined in the terms of your loan.

    I also fail to see why some people consider the possibility of investing while taking out student loans to be illogical or unethical. It's financially prudent to at least retain a reasonable sum of reserve funds at all times, especially if you know you will need that money later, for when you can't rely on loans to help cover your expenses. It's really just a question of finding a reasonable balance between holding on to money now and saving yourself from later costs from interest on your loans.

    To those who think it's unethical to retain funds in a sound investment while taking out taxpayer-backed loans, it's quite clear that these people don't understand the basics of how loans work. When you buy a house and get a federally-backed loan, they don't expect you to empty your entire checking and savings account, 401k, and kids' college fund before giving you the loan. That would obviously be counterproductive, as you'd simply manage to send the person careening into an instant bankruptcy. So why should you have to completely bankrupt yourself to pay for your education? Clearly anyone who makes such a criticism does not understand basics of how things like student loans, credit and mortgages work--and clearly you shouldn't listen to their advice!

    And BTW, "federally backed" loans does not mean taxpayer funded for the most part. The system of loan guarantees is funded with seed money from the federal government--thus from the taxpayers--but once the money is placed in the system, it is recycled into new loans over and over again, and the default rate is sufficiently low so as not to trigger growth in the federal inputs into
  • by cfulmer ( 3166 ) on Thursday July 27, 2006 @08:16AM (#15790045) Homepage Journal
    So, first thing is to pay off credit-card debts. You don't get a deduction on the interest and it's hard to beat a sure 9%-21% return on your money. If you take care of your credit score, then you will be able to borrow the money back later when you need it.

    Second, recognize that an investment's risk is proportional to its expected return. You can make just a little bit in a savings account (check out ING direct, which is paying around 5% right now), with no risk to your principal. Or, you may make a lot by speculating in stock options, but you stand an enormous risk that you'll lose everything. You can solve mucch of the risk problem by diversifying, but you cannot completely cure it. It's hard to diversify without a lot to invest.

    Third, look at your time-horizon: how soon do you need the money? Over the long-haul, the stock market will out-perform "safer" investments. A broad-based stock mutual fund with minimal expenses will allow you to at least track the market. The Vanguard S&P 500 index is very low-cost and tracks the S&P 500.

    Ignore advice about whether the market is in a "Bubble" or not -- if there was a general consensus that it was true, it would cease to be true because everybody would sell.

    Fourth, DON'T, whatever you do, DON'T buy an insurance product like whole-term life insurance, universal life insurance or annuities. Insurance sales people take massive commissions straight out of your payments. And insurance companies, by law, are very limited in what they can invest in. As a result, you throw away a big chunk of money and then don't get a great return. If you need life insurance, buy a level term life policy from a financially sound company and invest the remainder. Doing that will give you the same insurance benefits, but a better return.
  • Five Things (Score:3, Interesting)

    by N8F8 ( 4562 ) on Thursday July 27, 2006 @08:31AM (#15790084)
    • 1) Subscribe to Kiplinger [] magazine and read it every month
    • 2) When picking investments you must balance time,sinze of the investment, rate of return and risk. If you have the choice between paying off a 10% credit card or a 6% CD the choice is obvious. If the choice is between a 4% student loan and a 10% stock investment the choice should also be obvious. Ideally you should be saving at least 1/3 of your income. Take that money an invest it to make some sort of decent return. In school this will be painfull but you will thank yourself later. Spending money on your education is an investment.
    • 3) Debt is not your enemy. Learn to manage your debt. Borrowing money to earn a higher rate of return elsewhere is often the smart way to go. If you never take a loan or use a credit card you will find yourself in a tough position if you eventually want to borrow money. You have to have a credit history to have good credit.
    • 4) Tax implications can influence you choice of investment. For instance, that 7% homeloan is not as bad as you think becasue you can deduct the massive amounts of interest you pay in the first half of the loan from your taxes. Maybe not too much of an issue when you are only making 20K/year going to school, but it quickly becoems one one you graduate and get that $40K job.
    • 5) Ask and you shall receive. Students and young folks will spend endless hours filling out forms for $2K student loans or grants but don't bother to spending a few minutes to ask family members. The same goes for anything else you need. If you need help don't be afraid to ask for it.
  • by raal ( 14531 ) on Thursday July 27, 2006 @08:36AM (#15790103) Homepage
    If you have the money I would say pay the tuition. Less debt you have the better off you are.

    Check out Dave Ramsey he has some great ideas about debt and never having them again. My wife and I started the plan this year and it is a great feeling to be paying down debt and getting rid of payments. Its amazing how much we are paying in interest that would could be using for something else.

    His plan is pretty simple. Get on a written budget and STICK TO IT. You have X dollars comming in budget them ALL and dictiate where it goes. Use all cash! We put money in envelopes and when the cash is gone we are done with that catagory for the month. This usually takes up to 3 months to figure out what you are doing and to get it right.

    Cut up the credit cards!
    Save 1000 dollars in the bank for an emergency fund.
    Start listing all your debts smallest to largest and pay off the smallest ones 1st. This helps with a mental good feeling of getting rid of payments. It worked for us! We feel great when we pay off another one. The car should be payed off in 2 months.
    Don't go out to eat, don't go on vacations till you get the debt taken care of.
    Once you are out of debt then you start saving for a house, retirement, etc. Check out his website he lists it all. We are very happy and hope to be out of debt within about 2 to 2.5 years INCLUDING all the stupid stuid loans... Then off to save for a house...
    • There must be a bunch of DaveRamsey crasies with mod points. His central tenet is potential suicide in modern banking. Yes, live on a budget. Yes, live within your means. Yes, pay off most of your debts.

      NO, do not cut up all of your credit cards.
      NO, do not avoid loans like the plague.

      Here's where his philosphy falls flat: Many insurance companies and all financial institutions need a FICO credit score to put in their system so they can evaluate you and produce a rate. If you don't have a credit score, you m
  • by tinkerghost ( 944862 ) on Thursday July 27, 2006 @09:35AM (#15790375) Homepage
    I would suggest talking with someone who will help you do some long term as well as short term financial planning.
    Check out Primerica [] they do a free Financial Needs Analysis (FNA) for you and will come back with a long term (retirement) as well as short term (what to do with what's in your bank) assessment. They also base the recomendations on things like - when you want to get married, own a house, retire etc. It's tailored to you not to some actuary table.
    Things to note:
    1. I am biased, I'm an agent (part time)
    2. Primerica is Citigroups middle income investment/mortgage/insurance/financial planning branch.
    3. 28K in a mutual fund by 30 w/ 12% return is almost 2 million by 66 with no other money added. (Invest early, invest often)
      • It's 56K by 36 for the same effect.
      • The rule of 72 [] is your guidline here - every 6 year delay doubles the amount of money needed for the same effect.
    4. Burn all but 1 of your credit cards (keep the citibank one - see 1 & 2 above ;) )- and only use that one in a true emergency.
      • CC debt is one of the biggest causes of bankruptcy
      • Credit cards/ buy on credit - is contrary to a sound investment strategy - unless you pay every bill in full as soon as it comes in. (Using it as a simplified check)

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