Hey, i got a savings question?

Question

hi, im 19 and have saved about 11,000+ from working practically my whole life. I have about 9000 scattered in different 12/9 month CD with a reasonable interest rate. Can i be doing more? Any ideas? I also have about 2,500 additional invested in various stocks and i like to think they are diversified. any ideas?

Answer 1

Congradulations on a excellent start. You are doing better than 90% of the people your age.

The key to your answer is risk. Keep in mind that at 19, you can afford to invest in risky (though that doesn't mean stupid) investments because you will have plenty of time to start again even if you lose it all.

Generally, the riskiest investments give the highest return, but risking everything is probably not a good idea, so you do something in between.

1. Buy insurance to cover the major disasters, and keep enough money in cash (including very safe, very liquid investments) to cover emergencies such as losing your job.

2. Keep money that you intend on spending in the next few years in low risk investments. If you are saving money to buy a house, you don't want to lose that money. This money also gives you a cushion so that if even if you lose all the money in your high risk investmests, you have money to start over with.

3. Diversification is good, but $2500 is not enough money to diversify in individual stocks. Consider investing in a mutual fund for better diversification. A stock index mutual fund is usually the best choice in your situation.

4. Don't forget about retirement accounts. The best return is generally made through retirement accounts (because of the tax-free and tax-deferred aspects), but keep in mind that the money won't be available for spending for 40 or so years.

Answer 2

have you considered T-Bills?

Answer 3

We can't make proper suggestions without knowing your goals (time horizon) for the money.