Bill wrote,
I’m going to try and sum up a lot of history really quickly, all while utilizing a very limited pool of financial knowledge (luckily, the history part is not really all that important). The important tidbits are in bold if you want to get this over with quickly.
My grandparents established a trust fund that they envisioned would pay for my college. When they passed, the money was then controlled by my parents who put it in the stock market. It grew to a respectable amount, took a bad hit some time ago, and was pulled out in knee-jerk fashion. My father then put it in a “credit line” (?) through Ford (he worked at a Ford dealership) that provided a decent interest rate (9%) until recently.
Fast forward to now: I am about to graduate with my BS, having used the money from this account for living expenses (rent, bills, food, car repairs, etc.) as the Army was kind enough to pay for my schooling. My Dad, worried about the financial situation at Ford, pulled out the money and gave it to me. Adding these savings to the little bit I had leftover from working, I now have approx. $20,000.
Wanting to keep half of that on hand to continue paying for living expenses (rent, food, bills, repairs, general living) and potentially helping towards paying towards grad school (looking at my future commitment with the National Guard and potential GI Bill assistance, the schooling my girlfriend has left, and the working both of us will be doing over the next few years, I am not worried about needing to use much of this money to pay for more school) I want to invest $10,000 of it.
Don’t recommend me the grand trip around the globe; it’s not that I disagree with that sentiment, quite the opposite actually: I just returned from a stint in Europe that depleted those savings by about $4,000.
I am solely looking for a way to turn this money into more money; I am pissing away dollars by having this sit in my checking account. And yes, it is in a checking account. My banking account offered a whopping .1, yes, .1, percent return if I put my money in a savings account and a whole 1% if I put it into a Money Market Fund.
So, money goons, what should I do with it?
Oops! I am willing to not touch this for 15-20-30 years if the gains were to be worth it. There are no short-term needs for it that I can see; I just want this to become a nice nest-egg for later in life. And while I am willing to tolerate some risk, I am likely a bit of a pussy when it comes to large dollar amounts.
Even if you are looking to settle down, ask what the likelihoods are that you might, say, get a dream job away from your area? A house is the biggest possible financial decision you can make in your life aside from taking out a business loan of sorts, it’s not something to take lightly whatsoever.
You don’t buy a house if just have money lying around, I’ll say that. Use it on something you just plain want with immediate gratification of sorts or invest it carefully. An emergency fund is a damn good idea in this sort of time period though, and $10k sounds right for most servicemen to shove into a high yield savings account. On the other hand, with only $10k and fairly good lifestyle security, I’d say to blow half of it on hookers, drinks, and drugs and save the rest. I’m in a serious relationship so I can’t do the former really, but if I came across $10k well… I’ll be coming across something else.