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Currently the 10 year CD seems like a good idea. But you'll have to watch the market, but right now, it's the best way to go.

 

Also, stocks are very good way to go. If you know what you are doing (I know, not the best way for quick money) but it's very possible. I've got one, wish I had more money to invest, but it's gone up about 47 cents per share within a month. It hasn't shown a sign of slowing yet either. So there is a simple way to make a few hundred bucks.

Yeah, when you are young and have time to let the money grow, stock is the way to go. I would suggest mutual funds as they give you more diversity in your stock portfolio. Investing in one company or trying to buy and sell all the time usually isn't a great idea (unless maybe you do it for a living). The idea is to let money grow for long periods of time. However, if you don't have a sizable amount of money to invest then brokerage fees will eat all of your profit.

 

I'm in college right now and I think the most important thing is just to stay out of dept. Usually having college loans isn't so horrible because they are low interest. Credit Card debt is horrible (think 15-20% interest rate). I have seen people who have credit card debt try and go invest in the stock market and I just want to punch them in the face. There really isn't any excuse for doing something like that. The first step to saving money is making sure you have no debt to pay.

 

Why are you suggesting the 10 year CD? I'm not saying that you're wrong for doing so I was just wondering.

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LOL, to an 18 year old, 65 does seem pretty durn old, but that's exactly the point. You know what you're not going to want to do at 65? WORK! :P How do you plan to pay bills and keep health insurance and such if you're not working? 401k/IRAs. It's a retirement plan. The idea is that if you start early, you build interest on interest on interest and it ends up being a LOT of money. Like Lo said, if you start when you're 18, you will have put in about $200k but with the compound interest over 47 years, the account will have $2mil+. That's a killer deal. It's enough that most people could live a pretty decent life just off the interest that the money earns each year. I know I plan to not be working at 60, and that makes me very happy :)

Just as a note... if you have $2 million dollars when you retire (or even before) then even if you are only getting 7% interest rate that would be $140,000 a year to live off of. Doesn't sound too bad considering you don't have to do anything :D

 

That might be overly simplistic as there are taxes and other things to consider. I really don't understand how rich people who have over 2 million ever lose it. Oh wait... greed.

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How bad does the government punish you if you take out the cash say, at 45. Say by then it was up to 1 Million or so. If one was to take it all out, roughly what would you have left after uncle sam got done with you?

Edited by Lee3188

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after uncle sam you would probably have nothing...lol i dont know...

 

I have been thinking of setting a retirment fund up already, it seems weird to say and probably to hear coming from a 19 year old college kid, but securing the future is always a good and safe thing.

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How bad does the government punish you if you take out the cash say, at 45. Say by then it was up to 1 Million or so. If one was to take it all out, roughly what would you have left after uncle sam got done with you?

I think I remember seeing that it is around 10% penalty that they would take. Normally a Roth IRA grows tax free but when you take it out early you have to pay so it would depend on your tax bracket. Probably would end up being like 15 - 20% just for taxes. So you could lose anywhere from 20 - 40% of it depending on how rich you are. That is pretty much just a rough guess though, I don't work in the field or anything.

Edited by UMTopSpinC7

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While the money market account isn't a great idea if you want to see real returns, I signed up back when the rate was ~2.1% (around 2yrs ago) The rate went up to around 3.7 in the first year and has been steadily going up from there. While it's not much money, it is 100% ready to use anytime so compared to many checking accounts it's a much better option, of course you have to keep an eye on the rate when you have money in the account, if the rate was to drop it is VERY possible a loss can occur.

 

Either way I'm happy with the roughly $15 I've made by keeping money ppl pay me via paypal in the account until i use it. Sure as slow as the $15 came to me I never noticed, but It was still free money for doing zero extra work.

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thanks for the advice everyone! I'm really thinking about starting an IRA account, but jeez retirement is a long ways away LOL. Maybe I'll open up two different accounts, a citibank or ingdirect savings account and an IRA. I'll put $4000 to start, in the IRA and $1000 in the savings. I'll just slowly start adding money to both as I see fit.

 

Now, give me a quick breif on IRA's.. so I know enough to not sound like a complete idiot when I call the bank.

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Now, give me a quick breif on IRA's.. so I know enough to not sound like a complete idiot when I call the bank.

 

That's their job :lol:. Don't worry about sounding like an idiot. Just schedule a time to have a sit-down with one of their financial advisors about setting up an IRA and they will take care of the rest :thumbs-up:

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That's their job :lol:. Don't worry about sounding like an idiot. Just schedule a time to have a sit-down with one of their financial advisors about setting up an IRA and they will take care of the rest :thumbs-up:

Pay close attention to how much the fees are though. With $4000 you will probably be ok but once you know the interest rate calculate how much you are going to make the first year. If you end up paying close to that in fees then your money isn't going to grow much at all. There are a lot of people that just put money in an IRA because people told them it was a good idea (i was one of them for a while) and then don't realize that fees are eating all their earnings. You may want to shop around a little bit and find out where the fees are going to be low. With a savings or MM account it wont matter as much but with an IRA account it could because the money is going to be growing for such a long period of time. Also, there are limitations to how much money you can contribute to an IRA account. I don't think you can put more than $4000 a year (for 05 and 06) in or more than you made the previous year. Look here for some clarification. Your bank / financial institution should definitely know this stuff too. Just remember that banks may show you examples of how much your money will grow in 40 years to get you excited but keep in mind that their fees will be taking money from you the whole time. If they show you a projection (you should ask for one if they don't) make sure it includes the fees they charge. Good luck.

 

EDIT: You should definitely try to go meet someone at the bank in person. Putting $4000 dollars away for 40 years is a big deal and you should make sure you feel completely comfortable doing it.

Edited by UMTopSpinC7

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