Author Topic: How Should a Student Best Prepare for the Future  (Read 2882 times)

Church713

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How Should a Student Best Prepare for the Future
« on: December 12, 2013, 11:24:33 AM »
Hello mustachians!

I've been following Mr. Money Mustache for some time now and have been interested in following his footsteps in terms of financial planning.

However, I've been trying to weigh how best to use money I have now to make life easier in the future. From savings accounts to using Vanguard, I've found myself overwhelmed with all the options. I thought I'd just ask here to see if there is a general opinion on what the best plan of action would be given my situation:

As of today, I am a student who will be in school for quite some time to come. However, I do have a part time job at the moment that allows me to put money away into a checking account I have. I also don't have to worry about living expenses too much at the moment, so the majority of paychecks can go into the account.

Given that situation, what would be the best way to "make money work for me" as they say? With the intensity of future schooling, I don't know if I'll be able to keep a part time job at the same time so I'd love to be able to put the money in a place where it won't stay stagnant if that's possible.

Would it be best to put it in a savings account, despite low returns at the moment? Or would investing through means such as Vanguard be the smartest?

I realize I'm rambling now, I just wanted to get it all out to provide the most detail I could.

Thank you!

TL&DR: I'm a student who will be in school for awhile, how can I best out money to use to provide security in the future?

grantmeaname

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Re: How Should a Student Best Prepare for the Future
« Reply #1 on: December 12, 2013, 11:27:46 AM »
Savings account. You may need the money soon, so you don't want it to lose 45% the year before you need it (yes, that happens in the stock market). It'll earn a measly percent, but it'll be safe.

Church713

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Re: How Should a Student Best Prepare for the Future
« Reply #2 on: December 12, 2013, 08:49:42 PM »
That makes sense, I figured it would probably be the smartest option.

I have one other question:

Ι know we both realize the the returns from savings is pretty low, somewhere below 1% at the moment. Is this account similar to a savings account? I can't remember how I found this, but with a 5% that's just a little but better than the savings account.

https://www.everbank.com/banking/money-market

Are these two comparable or is this a different beast entirely?

Thank you!

Russ

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Re: How Should a Student Best Prepare for the Future
« Reply #3 on: December 12, 2013, 09:12:26 PM »
http://www.thesimpledollar.com/personal-finance-101-money-market-accounts-versus-normal-savings-accounts/

The 5% you see doesn't mean the account has a 5% return. It's saying that the account's return is in the top 5% of all "Competitive Accounts" whatever that is, and actually works out to be something around (probably below really) the 0.86% in that orange chevron in the upper right.

Church713

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Re: How Should a Student Best Prepare for the Future
« Reply #4 on: December 12, 2013, 09:18:50 PM »
Ah, this is perfect. Thank you so much, I've been try into figure out how a money market account works for the longest time.

I really appreciate it, thank you.

 

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