I am young and want to invest my money. HELP!?

Question

I am 19 and still live at home with my parents. I pay for a lot of my stuff. I do not pay my parents rent or anything like that. I have the following things I have to pay for:

Car Insurance- $1,200 a year

Gas- $140 a month (roughly)

Food- $40 a month (at a high)

Nails- $30 a month (at the moment, probably won't last long)

Savings- $300 a month (average)

Misc.- $130 a month (at a high)

Income- $10,000 (last year)

Income- $400-$800 (monthly-depending on school)

I just opened a ROTH IRA and I am going to try and put $1,000 a year away. I am looking for a way to invest my money and help me put more towards savings. I currently have $2,500 in savings, $5,500 in a CD, and $1,000 in a ROTH IRA. Does anyone have any investment ideas for me with low risks? Thanks!

Answer 1

Do you have transportation alternatives where you live? I rely heavily on public transportation and it saves a lot of money. In terms of investments, you could always try government bonds. The great thing about bonds is that after a given period of time the value of the bond goes up due to inflation, and at the rate the economy is going, there is definitly going to be inflation over the next couple of years. But i think your doing a pretty good job, you have a CD and a savings, most people are struggling to have what you have right now.

Answer 2

You are doing a very wise thing but saving now.  You are taking advantage of compound interest.  I would suggest watching your expenses - they are on the high side.  In terms of investing you may want to consider a mutual fund - depending on your tolerance for risk either a stock index mutual fund (S&P 500) or a bond fund.  Otherwise keep putting money in IRA and savings.

Good luck.

Answer 3

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Answer 4

First. Congratulations, you are so far ahead of you peers.  With $2500 in savings you have enough to open a Money Market account with a brokerage firm like Edward Jones.  You'll earn a better rate of return.

When the CD matures, consider putting more into your Roth.  Unlike a traditional IRA you can withdraw the principal in an emergency.

When you have the chance work toward putting in the maximum into your Roth.  The tax free growth will be awesome when you get ready to retire, and if you keep being this responsible, you'll get to retire before you turn 60.

Answer 5

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Answer 6

the biggest suggestion i can make is to advise you to put as much money in your roth as you can (income & savings).

this will pay the largest dividends of all, because while you're only making 10k/yr now, your tax rate is nearly guaranteed to skyrocket in the future, so putting away after-tax money in a tax-advantaged account now will do wonders for your future.

as far as investments, your age allows you to take as much risk as you can stomach.  higher risk means higher returns.  but, if you have a really low risk tolerance, you should be able to find a mutual fund that invests in fairly safe (though not completely risk-free) corporate debt.  you can reasonably expect a high-yield corporate debt fund to average about 6-8% returns annually, which should beat what you're probably getting in your CD (though the price won't just go up in a straight line, it should go up fairly consistently).