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How to proceed (student)?

4916 Views 10 Replies 9 Participants Last post by  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.

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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!
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