What do u think of my plan?

Question

i am 19 right now and i will be 20 in sep 14.

right now i have $ 8151 in my saving account.

and my plan on my 21st birthday i will be having $ 13351 cause i am saving $ 400 every month.

so i will take that $ 13351 and put them in a CD account for 5 years @ midfirst bank with a rate of 4.498.

during that 5 years as i said i will be saving $ 400 every month so that mean i will have $ 24000 when i am 26 without the money that i put in the CD account. so on my 26th birthday when i finally can take my money from that CD account my $ 13351 will be $ 16711.06 add to that the $ 24000 , that mean i will have $ 40711.06 on my 26th birthday.

what do u think of my plan?

Answer 1

It appears to be a very conservative extra low risk plan.  Most Financial Planners are going to suggest you take at least 60% of the money and put it into something that will give you a higher rate of return. You don't state what your income tax bracket is, so it is difficult to determine your net gain after taxes, it is possible for it to be below the inflation rate. Sounds like you don't have any debt, which is very wise.

I am not keen on the stock market at the moment, with so many major events occurring that can affect it, though many people are going to suggest you invest in a mutual fund.  It has to be your decision on the amount of risk you are willing to take.  

Answer 2

It doesn't look too good.  You only save 40k in 7 years?  Are you putting money in a rrsp as well?

7 years of saving would probably be 230k-270k depending on your risk tolerances.

Answer 3

       i am proud of you.you are doing the right thing.you could save your money and collect intrest.or spend your money and pay intrest.you will do well in this system.good luck.