Ask HN: Financial advice for a graduate student | Hacker News Reader

Ask HN: Financial advice for a graduate student

4 pointsmawhidby5 comments

Hey HN,

I am 23 and about to start graduate school this Fall (Master's program). Since graduating last December with my B.S., I have been working full-time at a software company. It's allowed me to save a little extra money; money that I do not plan on spending during grad school that I can use to invest (~$5,000).

The problem is, I don't know the first thing about investing. I'm pretty open to all options, but I don't know if I should buy stocks, a CD, mutual funds, or if I should go ahead and start a retirement account, based on my age and the amount of money I currently have to invest.

I've noticed a few Ask HN threads about financial advice, and was wondering if anyone had any opinions on the matter based on previous experience, expertise, etc.

Thanks in advance!

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The real choice isn't between stocks, cds, mutual funds, etc. It's between conventional and unconventional investing.

The conventional route is easy and standard. Emergency funds in a bank, set up a schedule to buy index funds automatically, put the rest into CDs.

The unconventional route is real estate or business. 30%, 50%, or more is possible, and even easy, once you discover the way. But you have to find the way yourself, overcoming obstacles, inertia, and common wisdom.

For example, I learned how to buy foreclosures at courthouse auctions and resell them. 30-50% in 6 months. People doing real estate transactions regularly pay out over 15% for hard money loans secured by real estate.

Hacker News is great for learning how to create a business. Go to biggerpockets.com for real estate ideas.

is the $5k the only money you have in total, including savings? if it is, put it into a good online high yield savings account and keep that $5k for emergencies. having a supply of liquid cash on hand can literally be a life saver.

do you already have some emergency savings and you just have that $5k to throw around? then i would stick that $5k into a Roth IRA with someplace like vanguard. get it started now, and if you need that money back further in the future, you can pull out the original $5k after a few years. put it into a reasonably diverse set of investments, but heavier on the risk/reward side of things. look for funds with lower expense ratios.

I already have emergency savings, the $5k is for me to throw around. I'll check out both Roth IRAs and the savings. And do you have a recommendation for a good online high yield savings account?

right now, ally bank and ing direct are probably the best all-around options (higher rates plus good reputation/services).

starting a Roth IRA early is a good idea for long-term investing. it won't get you rich quick, but there's not much you can do with $5k to get you rich quick. putting it away and crossing your fingers for 7-ish% average yearly return will take that $5k and turn it into $100k or so when you're able to withdraw. and as i mentioned, if you want the $5k back later, you can get it back, penalty free (though you can't touch anything more than the original $5k).

Why not research a few stocks you like and divide the money up into a few companies? Might be a fun learning experience.

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