[camhard]

So, I've been watching my money, and trying to invest for a number of years now, but thought I would ask your opinions on what to do.

I recently turned 19 and am going into my third year of university (plan on going on to do a master degree - probably 2-3 more years after undergrad). I live at home during the summer (have so far at least) but on campus during classes.

I have money in a few mutual funds (2 equities funds and one balanced), though was forced to take a significant amount out this winter, basically when prices were at their lowest, so I lost some on my initial investment. I took out $4000 of my total $7000 initial (total money put into all 3 funds). I do have the option to use some RESP money, though I took a bit of that out this winter as well and am now left with a value of around $11 000. I don't have a car, or anything else that really has a steady draw of money, aside from school.

How should I proceed to hopefully stay debt free, at least through undergrad, and be prepared for after school? I'm considering short term, or even intra-day trading, though I know this usually eats up a significant chunk of cash during learning, and is by no means a reliable way to make money (I figure it would be best to start learning asap though). Any suggested reading or other ways of learning? I also came up with the idea yesterday that it might actually be a good idea to apply for a student loan right now. The idea would be that I would still pretend that I was paying for school (i.e. put the entire cost away), but be able to keep as much money currently in investments where it is, in an effort to reduce impacts of the current lull, or maybe even continue to increase its value. It is my understanding that payments are not required until after graduation, so just before I start incurring interest, I could take all the saved money and pay off the entire loan (I have to look further into how payments/interest work with student loans). I'm also not sure if I would be able to continue having zero payments through my second degree, or if I would have to pay them off, then start again for the more expensive grad school (for which I need a lot, as I would like to study in the US).

I just feel pretty overwhelmed, as I'm barely covering my schooling without a loan, without money for travel or other programs, etc. Grad school will be even harder. Then, I would like to buy a home asap after graduation, but, especially wanting to live in Vancouver (or maybe New York), that doesn't even seem like something I could dream of affording for an extremely long time.

Any suggestions? Where should I focus my learning (e.g. day trading, real estate investment, etc. I don't know)? I'm guessing with my minimal capital, I can't really gain anything from trying to develop some passive income.

Thanks.

 

[el oro]

You should only be investing with $$ you won't need in the near future or else you'll be forced to do what you did and take a loss.

You definitely don't have the capital to be doing day-trading and, like you said, it can be an expensive learning process.

You make money by not losing it. I suggest putting your money into some guaranteed investment vehicle, even a savings account will do, while you learn about investing. The best investment is to educate yourself, especially at your age. A good trading book is "Trading for a Living" or "Come into My Trading Room" by Dr. Alexander Elder. I highly recommend one or the other.

Boo mutual funds, booo!

 

[ashby corner]

if you live in the town where you go to school, live at home. You can crash on your buddy's couch on the weekends.

save as much as you can, now.

Don't withdraw from your RRSP. Ti-iii-iiiime, is on your side, yes it is.

 

[Max]

Student loan for investment may be a good idea if you can get it. Government reduces the amount they give you based on your available savings and income, so may not be possible in your case.

I think one of the best investments you can make after graduation is a very modest used car. Unless you live in a metropolitan area with efficient public transit, or have a very liberal arrangement to borrow a car from friends and family, a car really expands the amount of jobs you can apply for by making it easier to attend interviews and get to/from work. Since the variable costs such as insurance and gas will eat through your savings quickly, buying a car is a gamble that you will find work quickly after graduation. In the current environment, I don't know if this is a good idea, but in 3 years, it might be.

You are already well ahead of the game, but at this stage, getting a good job is the most important investment you need to make. A career will generally provide you with well over $1 million in income over your career ($50,000 per year x 30 years), while $11,000 will grow to maybe $100,000 (if you are very lucky) if invested over the same period of time.

Don't be afraid to blow all your cash on expanding your opportunities to get that great job (good clothes for interviews, very modest car, even going out for a night of drinking with friends that know someone who can help you get hired). Once you get the job, the amount you have saved so far (while actually pretty impressive) will seem inconsequential to the amount you can put away over time from regular paycheques.

But if you can, keep a little in investments for fun and education to keep you interested in investing. Try and learn your lessons with smaller amounts, since the consequences will not be as great as they will later on. Save the day trading and more advanced strategies for when you can afford to lose the money, this is not the time as there are much more important things to focus on.

Good luck!

 

[PMREdmonton]

Apply for student loans - they are interest-free until graduation and sometimes a portion of them is forgiven.

Focus on education and try to choose a career with good income potential if possible - doctor, lawyer, accountant, engineer, computers, business, etc.

Don't risk money you need for school in equities. There will be plenty of time for that later as you save for retirement once you are done school. Put your money in GICs or a savings account.

When you graduate, don't be in a rush to buy property. Wait until you can properly afford it - that means 20% downpayment, no other debts, 6 months emergency fund and the house should cost no more than 1/3rd of your annual income.

 

[specialk]

Do not get a student loan or any kind of loan. You did not mention if you had an income...do you have a job? If not, I recommend finding one...even if it is tough with the hours with school etc. You do not want to get fresh out of school with loans hanging over your head like so many of us do these days...bad start in life. If you are doing fine without a car, just keep going even though it sucks right now. Remember, you are there for the education. Live super cheap, just enough to get by, then get the heck outta there, hopefully with the good job. Do not invest anything right now, you have nothing to invest, you are broke. If you are craving info in the mean time, find some podcasts and free books from the library. I know you are in a hurry to make a ton of money over night, but it will benefit over the long run to hang in there and just go one step at a time. Don't go deep into debt, or stuck in bad investments because you were "learning". That can come later with the great income you will be earning later with your education.

 

[dauphin]

It sounds like your about to try and get student loans by "pretending to be in school" which is probably not such a good idea especially if they audit you (and yes...it states on the application that they can). How much they give you is dependent on how much you make and how much you have.

I managed to get through undergrad and graduate school thus far debt free. It was not through investing and making a pile of quick cash because of my investments, but through working in the evenings while going to school and by saving whatever I could. I personally think trying to put money into the stock market when the money isn't even yours is a VERY bad idea as you may need that money for school, and if lost, will hurt you even more.

As someone else noted, and I agree with: money that is invested in the market should be money that you don't NEED until the long term.

 

[The_Number]

Like others have said, I don't recommend day trading as a side income. If you want to learn it, play it with fake money (I think there are a couple of universities that give you platform for this -- I'm thinking of the economics department from the University of Iowa, but I could be wrong.)

Graduate school should be debt-neutral (at least it was in my experience). I worked as a TA and had a couple of small jobs here and there and lived like a graduate student. I did, however, spend money on conference travels though.

I graduated debt free (3 degrees and one post-graduate certificate), but I "cheated" during the undergrad because my parents covered the difference between what I could make (without jeopardizing my studies) and what I needed to spend.

 

[PMREdmonton]

My only advice is to have a good understanding of whether it makes career or financial sense to pursue a master's degree in your field. It is often not worth it financially in many fields.

I started working on a Master's in Math and planned on doing a PhD. After my first year of grad work back in the mid-90s my future career prospects seemed grim so I switched to medicine. There was short-term financial pain but in the long-run I will be much better off.

 

[hardy]

During student life it's really very difficult to invest in any fund because I think you can not afford any loss during student life.It's really very difficult to start any business during student life due to lack of time.I think you just learn that how you can earn good money after completion of your studies.

_____________________________________________________
Investing in internet phone service and wireless internet providers

 

[camhard]

Thanks for the replies. I think I should clarify a few things; hopefully I don't miss anything.

"You did not mention if you had an income"
I do not currently have a job during the school year lined up. I would like to, though it is suggested by many that my program is one of/the most demanding, especially when it comes to time. I will have a full 18 credits each term etc. We'll see. I am guessing I'll work out a flexible job (e.g. sign up for shifts) or do some freelance design work. I will definitely try to fit in as much work as possible without completely consuming all of my free time.

I have always taken a hard line against loans. I've always taken the approach that I need the full cost of something before purchasing it (with the exception of a home probably, maybe a car, but probably not). After reading about so many people doing well, while paying loans, I thought it might be time to re-evaluate my approach.

"I know you are in a hurry to make a ton of money over night, but it will benefit over the long run to hang in there and just go one step at a time"
I'm not really concerned about short term. Of course it would be nice, and I am trying to see if I can make enough to cover both degrees, but I'm really thinking quite long term. The reason I'd like to get into riskier type investing with the potential for quick gains is not so much to make profit now, but to get the learning process out of the way.

Any money I put into any kind of investing, I more or less consider as spent money (in my budget, it is a cost, and while I check performance, I never let myself say that I 'have' that money... I know I broke that rule in the winter, and it's complicated to explain, but it shouldn't have happened exactly as it did). I realize that it is gambling, so I don't spend any money on investments that I foresee absolutely needing to get by for the next few years, at least.

Basically, the goal is to avoid huge debt/living too modestly and ideally have the begin savings within the first 5 years of graduation (10 years from now). Whether that means somehow making quick money, or putting whatever I can into some sort of fund, or into the learning process of investing is what I am trying to figure out.

"It sounds like your about to try and get student loans by "pretending to be in school""
No. I really am in school, and will be for a number of years to come. What I said was actually: "I would still pretend that I was PAYING for school". In order to ensure I don't spend money I don't have, within my budget/head, I would consider all of the loan money as 'tied' to my personal money. I.e. if I used $5000 loan money, I would put $5000 into some sort of medium risk investment. With a likelyhood for modest gains, though I would also recognize the possibility for loss. With a student loan, I would then take all of this money out after graduation and pay off the entire loan at once, without incurring any sort of interest. The income on the investment would then be profit for me. With a standard loan, I would only do it if I could put the money into something that I was relatively confident would return a higher percentage than interest on the loan.

I should be clear that I am not looking to lie, or evade any sort of laws. If I was, I would probably do so in ways, but I'm not that type of person.

"Graduate school should be debt-neutral"
Ya, that would be nice, and I could probably pull it off. However, I'm currently leaning very heavily towards studying in the US. I doubt I could get state tuition costs. Though I have dual citizenship, I've never lived in the US. So, I'm looking at a minimum of ~$16000 a year, though more like $30000 or so. I don't see any way of not needing a loan if I'm spending upwards of $100 000 over the course of three years (incl. food, housing, and such), while studying full-time in a very demanding program.

"My only advice is to have a good understanding of whether it makes career or financial sense to pursue a master's degree in your field. It is often not worth it financially in many fields."
I have a very good understanding of this, and yes, it is pretty much necessary. I am studying architecture, with the intent of becoming licensed, so a professional degree is essential. I also value education significantly, and would at some point like to continue onto post-graduate work.