So, here’s the deal: I’m almost done with school and working as a GA, making around $1,200 a month. By next summer, I should have a full-time job lined up in the 55-65k range. Not sure if I’ll still be living at home by then, but I’m thinking it’s a good idea to save some cash by staying put for another year or two.
Just started a Roth IRA with Fidelity and put all my money into FXAIX – currently about 7k in there. I maxed out for this year and plan to keep doing so for the next couple of years. I’m new to investing, so I want to diversify my portfolio down the line. Any cool tips on diversification would be awesome!
Now here’s where I need your help:
- I’ve got 18k sitting in a low-interest chase savings account that I want to move to a liquid cash account with a higher APY (4-5% range). What’s the best way to do this? Stick with Fidelity and open a brokerage account for MMFs? Should I dump all 18k into the brokerage account or keep some in my chase savings?
- My only debt is $7,800 in student loans with an interest rate of around 3.2%. I bought a car recently with cash and have no debt on that. Should I focus on paying off my student loans ASAP before diving into MMFs, bonds, or Roth IRA?
- I’m thinking of using Robinhood as a “savings account” to snag their 3% 401k match (once I get one) and take advantage of their high APY. But it looks like I’ll have to pay for Gold to get this deal. Is it worth the expense?
Any advice would be awesome, Money Minder. Thanks!
Response from THE MONEY MINDER:
Hello There,
Congratulations on opening a Roth IRA and being proactive about your finances! It’s great to see that you are planning ahead and considering different investment options. In terms of your current situation, it sounds like you have a solid plan in place to save money by living at home for the first few years after school.
Regarding your questions, here is a practical approach you may consider:
Firstly, for the 18k in your low-interest Chase savings account, it would be wise to explore options for higher APY. One strategy could be to open a brokerage account with Fidelity and invest in Money Market Funds (MMFs) that offer a higher yield. It might be beneficial to keep a portion of the 18k in your Chase savings account for immediate access to liquid cash and transfer the rest to the brokerage account.
Secondly, when it comes to your $7,800 student loan debt with an interest rate of 3.2%, it’s generally recommended to prioritize paying off debts before investing in other avenues. However, considering the relatively low interest rate on your student loan, you could focus on making consistent payments while also starting to invest in your Roth IRA and Money Market Funds. It’s all about finding the right balance that works for you.
Lastly, regarding Robinhood’s 3% 401k match offer and high APY through their Gold plan, it may seem attractive, but it’s important to weigh the costs of paying for the Gold plan against the benefits you would gain. Make sure to carefully evaluate if the fees associated with the Gold plan would offset the returns you would receive from the match and higher APY.
In conclusion, continue to be diligent in your financial planning and investment decisions. Focus on building a diversified portfolio over time as you learn more about investing. Remember to assess your risk tolerance and financial goals when making decisions. All the best from THE MONEY MINDER as you navigate and grow your financial future.
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