You're 18 and have 2 grand to invest. What do you do?

Question

I'm 18 and going off to college for 4 years. I want to make my money work while I'm away, and work hard. What can I do with it?

Answer 1

Are you going to need this money while you are in college or will you have another source of income? If you absolutely don't need it, your next step will be to decide on the level of risk you are willing to take.

Savings - almost no risk - very little return

Bonds - low risk - low return

Stocks - higher risk - higher return

You may want to split it up between the three - You could put some in savings for those rainy days - unless you have other savings besides this $2000

Bonds - put some in there to lower your risk of losing your money - rates are really low right now, though so try to find the best rate around

Stocks - this is a touchy topic right now with the volatility of the market. You may be able to find a good mutual fund. This would offer easy diversification to minimize your risk of losing your money.  You will probably need to work with someone who knows what they are doing. Then you will run into fees. A good site to use is morningstar.com to research mutual funds. I am not a stock or mutual fund expert so my advice ends here :)

Answer 2

As you don't need the money right away, consider a CD. Banks are competing like crazy these days to get new CD accounts and are offering some of the most excellent promotional rates.

For all the pesimists out there, FDIC insures money up till $100,000 so people who have less than $100,000 in FDIC insured deposits need not worry.

Answer 3

Invest it in something that gains the most interest.

I wouldn't advice putting it on the stock market at all.

Bonds take a really long time to gain the smallest amount. I'm not too sure about CD.s though. They MIGHT be better than bonds,  but like I said, don't take my word on it.

I've put all of my money up in a savings account. But I can't say that's the best way to go either.

Your best bet is to do some research on all the different types of savings. There could even be more options than I've listed.

My only suggestion would be not to give yourself easy access to it. If you do, it is really easy to spend!

Good luck and I hope you find the best option for your situation!