What to do with my money? (20 Year Old)

Are your student loans private?

It was a Federal Student Loan which I got when I attended a public state university last year but school didn't work out for me so I'm just working right now.

Quote from ReviveD : It was a Federal Student Loan which I got when I attended a public state university last year but school didn't work out for me so I'm just working right now.

OK, good. Keep paying on that as agreed without putting any extra into it.

Regarding your retirement:

First, read this easy-to-understand guide to investing for your retirement [clarkhoward.com]. This should answer most, if not all, of your questions regarding getting started.

Second, decide on which path fits you best: "Easy", "Medium", or "Advanced".

Third, post any question you might have regarding getting started down any of these three paths.

More than likely, a target retirement fund inside a Roth IRA at Vanguard is best for you right now, but that's a decision that's best made by you.

Thanks!

What are your career and family plans near term and long term?

Quote from vaultaddict : What are your career and family plans near term and long term?

If they include marriage, than double or triple all financial figures while you're still single and still have a fighting chance.

I would pay off the loan right away with your savings. You'd end up saving more in the long run if you have 4.5 interest.

Stay away from financial sales people, including those who say they're not sales people but tell you they're advisers, brokers, consultants, or planners.

Read the John Bogle (Vanguard founder) book Bogle On Mutual Funds.

Get some long term graphs (20+ years) of various types of mutual funds, to see how volatile they've been and what would make you nervous. For example, here are a couple of graphs that compare most of the US stock market to most of the bond market (actually Vanguard's GNMA fund, but it's tracked bonds closely), from 1980 to early 2012:



The top graph shows the share price volatility -- notice how much the stock market has bounced around, while bond prices have stayed almost constant. The bottom graph shows what an investor would make over the years, not just from the share price going up but also from the dividends, and notice this graph for stocks is smoother than the other one because of the dividends (about half the market's gains have been from dividends).

You have to explain to yourself why TTWO is a good investment, as opposed to just the inventor of very good games, and some companies with great products just can't make money. What do analysts like Value Line, Standard & Poor's, and Morningstar say about the company? Many libraries offer this information free, online or in print form.

As far as my future career goals, I haven't put much thought into that other than saving up money to start my own business. I don't have any visions of having a family anytime soon either. Thanks larrymoencurly for that information, I'd have to take some time to look into that if I want to make a sound decision. And I invested in TTWO in hopes of selling it when GTAV comes around as the releases of GTA San Andreas and GTAIV have shown a nice climb in the stock when those titles were released, as more people now have the next gen consoles I figured it would be a sound investment.

Another thing! My dad let me take over his lease for a 2011 GTI which I really like but what I don't like is that its lease and that its $300 a month. I was looking into buying my own 2004/2005 GTI which would run me around $7-8000 but I don't have that amount yet and my credit score is around 600-700 so I'm not sure how I would go about getting a loan for the car. Should I just keep the lease until I have enough to pay for the used GTI in cash? I was thinking I could use the money I am spending already on a car to pay monthly loan payments but have no idea if I would be able to get a car loan at a good rate. Thanks to anyone with any advice!

Quote from larrymoencurly : Stay away from financial sales people, including those who say they're not sales people but tell you they're advisers, brokers, consultants, or planners. Read the John Bogle (Vanguard founder) book Bogle On Mutual Funds. Get some long term graphs (20+ years) of various types of mutual funds, to see how volatile they've been and what would make you nervous. For example, here are a couple of graphs that compare most of the US stock market to most of the bond market (actually Vanguard's GNMA fund, but it's tracked bonds closely), from 1980 to early 2012: The top graph shows the share price volatility -- notice how much the stock market has bounced around, while bond prices have stayed almost constant. The bottom graph shows what an investor would make over the years, not just from the share price going up but also from the dividends, and notice this graph for stocks is smoother than the other one because of the dividends (about half the market's gains have been from dividends). You have to explain to yourself why TTWO is a good investment, as opposed to just the inventor of very good games, and some companies with great products just can't make money. What do analysts like Value Line, Standard & Poor's, and Morningstar say about the company? Many libraries offer this information free, online or in print form.

Your second graph is crap because of the scaling. It's meant to fool the average person who doesn't know how to read a chart. Stocks outearned the best bond portfolio by over 2.5 times, yet just glancing at the chart you wouldn't be able to tell that.

Quote from ReviveD : As far as my future career goals, I haven't put much thought into that other than saving up money to start my own business. I don't have any visions of having a family anytime soon either. Thanks larrymoencurly for that information, I'd have to take some time to look into that if I want to make a sound decision. And I invested in TTWO in hopes of selling it when GTAV comes around as the releases of GTA San Andreas and GTAIV have shown a nice climb in the stock when those titles were released, as more people now have the next gen consoles I figured it would be a sound investment. Another thing! My dad let me take over his lease for a 2011 GTI which I really like but what I don't like is that its lease and that its $300 a month. I was looking into buying my own 2004/2005 GTI which would run me around $7-8000 but I don't have that amount yet and my credit score is around 600-700 so I'm not sure how I would go about getting a loan for the car. Should I just keep the lease until I have enough to pay for the used GTI in cash? I was thinking I could use the money I am spending already on a car to pay monthly loan payments but have no idea if I would be able to get a car loan at a good rate. Thanks to anyone with any advice!

I'm sure you've heard this before, but VW has a poor reputation on reliability...I wouldn't touch a 7-8 year old VW with a 7k dollar pole

That being said, I almost bought a new tdi. Not as fast as a gti, but the torque in those diesel engines (and mpg) are amazing. They're also very expensive used.

And 600-700 should be fine for a car loan (especially from a dealer). I guess I would keep paying the 300/mo for the lease and then evaluate if you want to buy that outright when the lease is up. But that's just my opinion!

First thing, good job on thinking ahead and being proactive about your finances. That being said, I'm suspicious of your numbers:

Income:

With the spending you have above, you have $465-$1,065 after taxes/medical/rent/food/gas/etc. If you make plans to do anything with an additional thousand, you'll be in the red.

Spending: You're missing some things

1. Entertainment - You spend nothing on cable, movies, dates, bars (yeah, I know you're 20...that doesn't mean you don't know what bars you can drink at), netflix, video games, etc.?

2. Car insurance - Unless you have the lease deal of the century, I'm guessing that $200 is only the lease payment and doesn't include the full insurance the leasing company requires. I am also going to guess this is at least $100/month

3. Utilities - No idea of your apartment size, so I'll go low and guess $50/month.

I would double check your spending figures and then look into a targeted date retirement fund, probably an easy way to dip your toe into investing.

Quote from ReviveD : As far as my future career goals, I haven't put much thought into that other than saving up money to start my own business. I don't have any visions of having a family anytime soon either. Thanks larrymoencurly for that information, I'd have to take some time to look into that if I want to make a sound decision. And I invested in TTWO in hopes of selling it when GTAV comes around as the releases of GTA San Andreas and GTAIV have shown a nice climb in the stock when those titles were released, as more people now have the next gen consoles I figured it would be a sound investment. Another thing! My dad let me take over his lease for a 2011 GTI which I really like but what I don't like is that its lease and that its $300 a month. I was looking into buying my own 2004/2005 GTI which would run me around $7-8000 but I don't have that amount yet and my credit score is around 600-700 so I'm not sure how I would go about getting a loan for the car. Should I just keep the lease until I have enough to pay for the used GTI in cash? I was thinking I could use the money I am spending already on a car to pay monthly loan payments but have no idea if I would be able to get a car loan at a good rate. Thanks to anyone with any advice!

Also know that the average investor, even the well educated investor can not consistently make money buying small volume shares in single companies and time the market on when to sell. The average person does much better with a mix of mutual funds. Learn about how the fees are calculated though as some can be expensive.

When you started the IRA was it a Traditional IRA or a Roth IRA? Being in your position a Roth IRA probably makes more sense.