[FI] 25 y/o Grad Student, Almost no Savings, Investment Advice?

[lovenature]

I know this is a rather cliché question, but I'm a 25 year old graduate student and I'm a few months away from finishing my Masters here in Finland. If all goes well, I'll be offered a PhD position here, on completion. I'm only on a part-time contract and thus make close to nothing every month - barely enough to cover rent, subsidized food and transport and other expenses. I have a student loan too and I have to start paying it back in 2017. Housing prices here skyrocketing and if I see myself buying a home here I need to start saving as much as I can as soon as I can.

1. Are ASP loan/savings programs worth it? Banks like Nordea and Danske offer these and although the rate of interest is trivial (as compared to mutual funds), it does come with benefits in that it allows you to borrow a larger fraction of the price of the home you intend to buy.

2. If (1.) isn't worthwhile, are mutual funds worth it? Are mutual funds from banks (Nordea and Danske) in any way better than those by (say) Seligson etc?

3. Are there any other worthwhile options besides (1.) and (2.).

4. Any other advice related to investing or savings would be much appreciated!

Kiitos!

 

[thnkful]

@lovenature Honestly before you start looking at investing I think it is more important to build up a solid emergency fund. I know that you want to start thinking about the long term, but you also have to consider how you would be affected by a sudden expense (such as your laptop breaking). A lot of investment options will require a longer commitment in order to see the kind of returns that you would hope for, and if you don't have the emergency funds built up to protect you it could result in you losing money as you have to encash an investment too early.

 

[arhcc]

@thnkful This is excellent advice. You're in a situation where saving is much more important than investing. Your investment choices will become more important in the future, but right now they won't make much of a difference. Instead, if you're worried about your financial future, consider working just a little more. Eg working an hour extra per week will make much more of a difference than your investment choices.

So when it comes to investing, I'd recommend something with very low risk for now (bank account / money market acccount) In a couple of years once you've saved up some money you can look into riskier investment options.

 

[lovenature]

@arhcc Thanks for the advice! However, I'm here on a student visa and legally, I'm not allowed to work for more than 28 hours a week. I'm a research assistant and end up doing waaaay more than 28 hours a work (more like 50), not because that's what's expected of me, but because I love doing it. I can't bill the difference because I'm just not allowed to, legally. I'm not asking to be spoonfed, but is there anything I can do differently to ensure that I have a decent emergency fund?

 

[thnkful]

@lovenature This probably isn't the answer that you're hoping for, but based on what you've said about your current situation it doesn't seem like there is much room to save at the moment. Obviously try to save what you can, but from the sounds of things you are already living very cheaply and you should still be able to enjoy yourself (i.e. don't cut out all of the things you enjoy just to save money).

Once you finish your masters and begin your Phd I would hope that you would be in a position to save some money each month (even if it's just a small amount) if possible you could look at saving 10% of your salary each month - or if not try to work up to 10% over time.

As for your student loan, do you know if the repayment is income dependent? It may be different for you, but in the UK we didn't have to start making repayments until we were making over a certain annual salary - which may ease the financial burden a little until you are more financially stable.