Any advice!!!

[makaylam]

I'm 18, I have been in community college for one year, my parents are paying for my school, I have a good running car and I'm about to move out on my own. My sister recommended a ROTH Ira that I'll most likely be investing a small amount into soon but I don't want to just retire, I want to retire early and comfortably. I plan on going to medical school and getting a masters at the same time in Arizona which will take 6 years. I've considered rental properties but I need to learn about investing for an income so I don't need to work even though I will. I want my working income to be money I don't depend on and can continue to invest. I'd love to hear your stories or any advice you can give me


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[growing_older]

Save the retirement investing until AFTER you are completed with school(s). Your first priority should be graduation with your desired degrees, and having money available for that if needed is more important than starting an IRA extra early. There will be plenty of time to save larger amounts after you are successfully educated and launched in your career (however short it turns out to be).

 

[heeyy_joe]

Get started on that Roth with a small amount. Rental property management and medical school? - dude there are only 24 hours in the day!

 

[pb4uski]

Welcome. Good first post and congratulations on thinking ahead.

+1 to growing_older. One of my college professors framed it to us this way: College students are temporary leeches on society as they take more than they give and our job/responsibility was to work hard to prepare ourselves for the work world where we could reverse it and give to society rather than take from society.

Your sister's idea of a Roth isn't a bad idea, but may be a bit premature unless you qualify for the Savers Tax Credit (not a full time student and not another taxpayer's dependent). See http://www.irs.gov/Retirement-Plans...Savings-Contributions-Credit-(Saver’s-Credit))

If you qualify for the Savers Tax Credit for 2014 or for 2015 and later, it would be worthwhile to take full advantage of that since it is "free" money.

If you don't qualify, then stay with taxable accounts like a mutual fund account with Vanguard until you are working full-time because as a college student you might need access to that money and a retirement account constrains you.

 

[EastWest Gal]

Save the retirement investing until AFTER you are completed with school(s). Your first priority should be graduation with your desired degrees, and having money available for that if needed is more important than starting an IRA extra early. There will be plenty of time to save larger amounts after you are successfully educated and launched in your career (however short it turns out to be).

I agree. Don't start a ROTH IRA now.

Thinking about med school and a masters at the same time makes me dizzy. That's 10 years of school after high school; what portion is being paid by your parents? On top of that you will be poorly paid during residency, which can range from 3 to 7 years. You won't have time for property management or money for property during med school and residency. If your goal is ER, why the masters?

No guarantees in getting into these programs. You need to do very well in school and on your MCAT. Then the schools look at why you want to be a physician. One of my general goals in medicine was financial security but mostly I wanted to make a difference. Most of the time the work is mundane, but every so often I was able to save a life.

You are to be admired for thinking far ahead toward ER now. The main thing that will make a huge difference is living below your means and investing both before and after tax money once you have it to invest.




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[Gatordoc50]

Have you considered borrowing for your education and investing your parents contribution? Do you know what IBR is?

 

[growing_older]

Have you considered borrowing for your education and investing your parents contribution? Do you know what IBR is?

I don't know much about how IBR works, but I would guess that it would provide minimal or no relief for someone with substantial investments and intentions to ER through highly paid work. Is this not correct?

 

[latexman]

I'm about to move out on my own.

Can you expand on this please?

My kids lived at home and went to the local community college until they had taken about every course the community college offered in their curriculum that transferred to their desired college. This saved us a ton of $.

 

[Gatordoc50]

I don't know much about how IBR works, but I would guess that it would provide minimal or no relief for someone with substantial investments and intentions to ER through highly paid work. Is this not correct?

Correct. If you are highly paid, you may not qualify for IBR.

 

[EastWest Gal]

Are your parents forcing the issue?

I put up with my parents alcohol and marital discord because of school. Are they kicking you out on principle or are you going by choice? It's hard to go to school and support yourself. It's really hard to maintain the grades you need for med school.


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[makaylam]

Get started on that Roth with a small amount. Rental property management and medical school? - dude there are only 24 hours in the day!

Hahah I'm figuring that out!!! I just want multiple income streams and the medical school is because it is what I love. One thing at a time and I'll have it all


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[makaylam]

Are your parents forcing the issue?

I put up with my parents alcohol and marital discord because of school. Are they kicking you out on principle or are you going by choice? It's hard to go to school and support yourself. It's really hard to maintain the grades you need for med school.


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My dad got a promotion and is moving to Oklahoma and they're leaving me here basically. But they said they would pay for all of my schooling so I'm taking full advantage. The medical school has a dual degree program for the masters which will only take 12 to 18 months and I would love to have more after my name for people to see.


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[makaylam]

Welcome. Good first post and congratulations on thinking ahead.

+1 to growing_older. One of my college professors framed it to us this way: College students are temporary leeches on society as they take more than they give and our job/responsibility was to work hard to prepare ourselves for the work world where we could reverse it and give to society rather than take from society.

Your sister's idea of a Roth isn't a bad idea, but may be a bit premature unless you qualify for the Savers Tax Credit (not a full time student and not another taxpayer's dependent). See http://www.irs.gov/Retirement-Plans...Savings-Contributions-Credit-(Saver’s-Credit))

If you qualify for the Savers Tax Credit for 2014 or for 2015 and later, it would be worthwhile to take full advantage of that since it is "free" money.

If you don't qualify, then stay with taxable accounts like a mutual fund account with Vanguard until you are working full-time because as a college student you might need access to that money and a retirement account constrains you.

I agree completely but my family is pushing me to put my only savings in a Roth D:


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[makaylam]

Can you expand on this please?

My kids lived at home and went to the local community college until they had taken about every course the community college offered in their curriculum that transferred to their desired college. This saved us a ton of $.

My parents are moving out of state I am moving into a house with friends 5 mins away from my school and rent is 260 a month so for the next 6 months, while I have such cheap rent I plan on saving the majority of what I make and investing it somehow. I don't have a car payment or school to pay for, I just have a bunch of money I don't want to blow but I don't know how to get my money working for me securely :\


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[makaylam]

I guess I left out that my goal is to be financially free, so I don't have to work for a living, I choose to because it's what I am passionate about. I don't want anyone above me controlling whether I have a job or not, let alone me or my potential family having food and shelter. Mostly I don't want to be dependent on "work" but I plan to continue to work to make more money. Income investing is what I want to understand and teach everyone. We all deserve to be financially independent just in case!


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[meekie]

Being on your own for the first time, a emergency account is probably your number 1 priority. That said, putting money in a Roth, and knowing you can access contributions at any time is an ok way of creating an account that can serve as an emergency account.

Also make sure you have some padding in your checking account. It's hard to get started on a reasonable budget, and it's easy for a larger than expected bill to get you into trouble.

Worry about living within your means, track your spending, and save a little along the way. You'll have a lot more money to invest once you're making more.

 

[38Chevy454]

Although even a small amount put into a Roth and allowed to grow over 40 years will become a real nice amount. I assume your tax rate is pretty low now, so Roth makes sense. Even better if you can claim the saver credit!

Concentrate on getting out of school with no debt, and then once working LBYM and save 15% or more. You will do fine and be able to retire with little risk. Your definition of how much is needed and what level of risk you can tolerate. But essentially you should be great shape with what you have set for goals. Worry about getting through med school first, then you can do the other stuff.

 

[EastWest Gal]

My dad got a promotion and is moving to Oklahoma and they're leaving me here basically. But they said they would pay for all of my schooling so I'm taking full advantage. The medical school has a dual degree program for the masters which will only take 12 to 18 months and I would love to have more after my name for people to see.


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You are very fortunate to have such helpful parents. Good luck to you.


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[bad_LNIP]

I agree. Don't start a ROTH IRA now.

I think that is a terrible idea. They should start now, even if it is with a small amount of money. It is all fun and games with spreadsheets and charts until you have to manage your own money and see it rise/fall. I invested in mutual funds in HS and individual stocks later in college. It is exponentially easier to do it today then it was back then, so there is no reason to delay and you can gain a LOT of experience, getting dividends, understanding the market, learning more about investing, etc...

Thinking about med school and a masters at the same time makes me dizzy. That's 10 years of school after high school

It isn't that hard for those so inclined. It makes me think of the smartest person I ever met, 2 masters and a PHd in 3 years from MIT.

OP, I would suggest you look at commercial RE when the time is right or just buy some REITs and call it a day as opposed to investing in residential real estate.

 

[EastWest Gal]

The no ROTH IRA suggestions were made before OP stated parents were covering school. We gifted DS the beginnings of a ROTH IRA in 2013.

Also, the schools that offer combined degrees are very few and very hard to get into. You can score 99%ile on the MCAT, have a 4.0 at the top public university in the country, and if the interviewing faculty member has a bad day or doesn't take you seriously, it's over.


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[GrayHare]

Of all the plans you mentioned, the Roth is by far the easiest. Set it up, put some money into it (but don't starve yourself) then let it work for you for decades. "Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't, pays it." -Einstein

 

[Greencheese]

Def would go the ROTH IRA if you are able to have earned income. But don't forget to have fun in school too!

 

[Rothman]

I've funded Roths for kids, basically matching what they earn with the deposit, it gives them a good start, they are full time students so this is only a few thousand but starts the desired behavior and some investing awareness. Your life sounds great go for it, and enjoy


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[unno2002]

Medical school (I presume U of A in Tucson) is not going to be cheap, nor necessarily easy to get into. I believe there are particular courses that must be included in your undergraduate degree, check what they are at whatever medical program you intend to sign up for.


- If you are planning on Tucson, are you contemplating the dorms, or renting / buying (somehow) something within a short commute of the college? If renting/buying in Tucson, if interested I could refer you to our property manager, and/or the buyers agent we've used. Send a private message if interested.


In the event medical school doesn't work out, health care related may be a backup plan. Our daughter did the two year "community college" registered nurse program, passed the RN first attempt, and was working full time less than three months from graduation. She's now in an online RN to BSN program. Beyond the BSN there is the Doctor of Nursing Practice, or something like that, to qualify as a Nurse Practitioner.



The potential income is not bad.


It's a backup plan that potentially gets you working much faster, so you can get investments going, yet still advancing your "medical" education (maybe still paid by parents).