I just won a scholarship in college -- can this money be invested in an IRA?

Question

I'd like to begin investing in a Roth IRA, but do not have earned income as of yet. Can I apply $5000 in scholarship money I recently won?

If not, what are alternate options for investing this money? I'd like to think short term (some money to access when I graduate college in two years), a few years down the road (some money to access after I graduate from medical school in the next 6-7 years), and long term. Additionally, what are other smart long-term investment strategies to consider once I begin earning money (stock market is a given)?

Thanks much!

Answer 1

Do you mean you've already got enough money to pay for 100 percent of your tuition and fees, and you won another $5K on top of that?

Did you ever consider rejecting that particular scholarship and turning it back to the agency that awarded it to you, so they can pass it on to some student who actually *needs* the money?

Answer 2

You can only contribute to an IRA if you have earned income.  A scholarship is not earned income.

Answer 3

it's a scholarship - just use it to pay for college!

that's what it's for, anyway.  and if you don't need the money, you should have refused it.  that would have been the honorable thing to do, anyway.