Reader Case Study: How to capitalise on amazing headstart

[kkcy]

Hi,

I am only a young reader (20 this year), but have a good base that many people would be jealous of. I'm currently in my first year of college, but have all my tuition, accommodation and meals paid for by a scholarship. In addition, I have $2000 coming in every month while in college, with about $20k in cash being eaten by inflation. No other liabilities or assets. I would have a stable job out of college, starting at about $50k.

What would you do? And should I look to investing my cash right now in this climate or wait for the indices to go down?

Thanks!

[beltim]

Invest.  Keep a cash cushion, but definitely invest.  And when the market goes down, invest more.  And when you start that $50k job, save more.

You've correctly identified your great head start–congratulations on getting where you are, and good luck!

[aj_yooper]

You are correct-you are in a great spot! 

Start reading about finance and investments; a good start is at Bogleheads:  personal finance-http://www.bogleheads.org/wiki/Getting_Started  and investing- http://www.bogleheads.org/wiki/Bogleheads®_investing_start-up_kit 

If you have employment income this year, I would consider opening a Roth IRA at a low cost firm like Vanguard; do the Roth every year that you are employed. 

[MrsPete]

#1 priority:  Keep your grades up.  Your scholarship IS an amazing head start on life, so be sure-sure-sure you're jumping through whatever hoops are necessary to keep it. 

I say this because my daughter has to send an official copy of her transcript every so often and has to do a few other small things to "stay current" with her scholarship.  I know one similar-aged student right now who ignored these small requirements . . . and now he's scholarship-less. 

After that, I agree with maintaining a cash cushion.  If you have some money at graduation so that you can afford to relocate for a job, purchase a work wardrobe, purchase a car, or whatever's necessary, you'll be ready.