Saving all of my money for college or still putting some money into an investment portfolio?

[colemcak]

I’m 18. I’m planning on starting online community college for 2 years before transferring to a university. I have $5000 in my HYSA (that’s my only bank account.) I work a full time job making about $2,700 a month (after taxes.) with my bills taking about 70% of my income. Leaving me about $750 at the end of the month

My question is, should I be putting that extra money into my HYSA and saving it to pay for college in cash, because by the end of the 2 years I’d have a pretty good amount. Or should I still be putting some away into an investment portfolio diversifying capital across indexes such as a NASDAQ, S&P 500, and Dow Jones, Just for example. Because my futures important. I’d just rather take out the least amount possible for student loans putting me in debt. When I could possibly catch up on retirement when I have that degree.

What should I do?

 

[alexburke]

@colemcak Really not a wrong answer here. How much will you need from college? Is it more than how much you can save in 2 years?

If so, you could just park everything in an HYSA and then take out a few loans as possible. Others would suggest that you should open a Roth IRA and start investing in that. You could split the difference and save 250 a month in the Roth and 500 in the HYSA.

Point is, any option is going to help you be extremely financially successful. If I were in your shoes, I would probably split the difference and do my third suggested option. Dollars you invest between 18-22 will grow average close to 100x the contribution by age 65

 

[ilkao223]

@colemcak If your time horizon for using the money is in 2 years, leave it in an HYSA. Putting money into a brokerage account and investing in index funds, while a great idea (VOO and chill), it should be done for longer periods. If the market takes a downturn, you may not recover in 2 years. Your HYSA will give you relatively stable gains in the 4.5 to 5% range.

I would not start really investing until you are in the job world after school. Employers offer 401Ks which are great for investing and employers often match up to a certain percent which is free money. Try and maximize what you can put in to the 401K when you are in the work force. Try and pay as much as you can for college without taking loans and getting into debt.

What I didn’t hear you mention is an emergency fund. That is essentially what that $5K is for you. I keep my emergency fund money in my HYSA. My personal rule is to keep 6 months of pay in my emergency fund, but since you are a prospective student, it’s whatever you can put in it. Your emergency fund could pay for car repairs or other unexpected but important expenses.

 

[colemcak]

@ilkao223 This is exactly what I was thinking. Thanks bro

 

[hic_sunt_leones]

@colemcak What are you going to major in? You seem to understand the importance of investing in your future. Your choices in savings right now are going to have a lot less impact than your educational choices.

Right now we are standing on the cusp of a technological revolution that will almost certainly alter your late career prospects. With that in mind I would avoid jobs that involve you sitting at a desk for a large amount of your work. Im not saying those jobs wont exist, but I would put money on it that there will be fewer jobs in those categories than people with those skills. Jobs that require in the field type of work are likely to last longer. That can be on site engineers for various types of construction It could be geologists working for mining companies.

Alternatively it could be medical jobs of various sorts. Nurses, surgical techs, lab techs, imaging techs of various sorts, and of course doctors.

I mention this because Ive known a ton of people who get an education for one thing and end up doing another. We like to think its because of the individual but a lot of times its simply the number of jobs in a field are shrinking so they have to do something else. That happening while also having a lot of student debt is potentially crippling. I suspect that will be even more prevalent going forward.

Good luck.

 

[colemcak]

@hic_sunt_leones I know the field I want to go into. I’m just not 100% sure what I want to major in. It’s between finance, and economics. I also have a couple minors in mind like computer science or mathematics.

I understand that these jobs might be hard to get in the investing world. I’ve been working with my hands all my life, and I’ve also taken a gap year. I just don’t want to work with my hands for the rest of my life. I want to work with my brain, and be the thinker behind the whole show. I got obsessed with the financial markets and even a little bit of real estate, and business. I got myself in a burden of not feeling educated enough to pursue any of these things without the proper education, and degree behind my name.

Even if I don’t land a job in this field. I feel like I’d be able to work a mediocre job. I could save up capital while having a plan to either start real estate, trade on my own, or shit even start a hedge fund. Just some kind of entrepreneurial path.

I have a girlfriend that’s going to college to be a Physicians assistant. And she’s willing to sugar mommy me if shit goes south. But to be honest I don’t think it will.