I really appreciate all the advice and feedback. Thanks so much. I'll try to respond a bit to some suggestions and questions:
Why don't you pay for your own college? If your parents had plenty of cash to finance your education that would be one thing, but you are going to let them go into debt when you can pay for it yourself???
My parents have told me that the debt they are incurring is manageable and they expect to pay it off without hardship, so there is no pressure at all that I contribute. In the past I have volunteered about 30% of my earnings, but I was also making fairly little then (so the other 70% was my personal allowance for going out and textbooks and things like that).
Without disclosing too much about the financial state of my parents, they have said they have the investments to provide me with a college education and retire comfortably, and I have no reason not to trust them. If they need my help in the future I fully intend on being in a position where I can do so comfortably. I'll definitely talk to my parents on whether they think it's wiser I contribute to my college costs or wiser to invest. In any case, I could probably split it and max out a Roth IRA contribution and then put the excess towards tuition costs?
Since you're in a low tax bracket now, you'd probably be wise to max out a Roth IRA. Open a Roth IRA with Vanguard and invest the money in a target date fund. Something like year 2050 should be fine.
While you're at it, you might as well open a taxable investment account too (also with Vanguard). You can invest your residual money in another target date fund.
Would you mind explaining why the target date 2050? What do you consider when picking a target date?
Anyways, I definitely appreciate your advice on picking up some books and learning more. I'll try to scour the forums/blog for resources to do so over winter break.
ETFs are where beginners should start. Look for expense ratios <0.2%, I think VTIX is like 0.12, and iShares S&P500 is like 0.09. Mutual funds tend to be more like 0.8%.
Thanks. I don't know anything about ETFs so I'll look into them, and read more about purchasing all at once vs. over time. I appreciate the suggestion.
If it's "the big one," definitely work your ass off this summer. This is a big leg up towards landing a long term position with them, and if you want to really supercharge your savings and show gratitude to your parents, landing a lucrative job with this company would likely allow you to do so. Make it clear (assuming the following is true) that you are a tireless worker and would like to be considered in the future for full time employment.
Again, if this is who I am thinking of, you will also be surrounded by MASSIVE lifestyle inflation both amongst your peers and full time employees-- resist!
You're probably thinking of the right place. It's a fantastic opportunity and I am really, really committed to doing my best and working hard. I feel this is a good chance for me to put myself on solid professional/financial foundations for my early 20s.
And I will do my best to avoid lifestyle inflation! Hopefully spending time around here will help with that. I really like the idea of being FI and intend to aggressively pursue that.
I'd say focus, and learn to do one thing at a time. There's a lot to take in as a new investor...
To me, the best approach would be to concentrate on maxing out an IRA…Any investing mistakes won't be a big deal in the long run, so be fearless and just jump in and learn by doing…Learn the basics of reporting your new income and taking the usual deductions on a standard 1040 first. To figure out what your taxes will be, plug $20,000 of income into a 1040 and try to calculate it through. It will take forever, but becoming your own tax expert will save you a ton of money over the years.
Thanks, and good advice. I'm embarrassed to admit I still don't know how to do taxes on my own, so this year will be the year I learn, I think.
Thanks again everyone. I really appreciate the thoughtfulness and helpfulness around here.