Which Is the Best Option for My $2500 Savings as a High School Senior?

[nicknaq]

I'm 17, entering my final year of high school in the fall. I worked a bunch this summer and have roughly $2500. With this cash I could:

1) Invest in stocks- I'd buy a decent book on investing and educate myself first, and then buy into the stock market.

2) Save for university - After my third year of (Canadian) university, I am responsible for paying tuition+books. Given that I plan on pursuing a Ph.D, I'm going to need as much $ as possible down the road. On top of this I will have small personal expenses throughout my university years (maybe $100 a month)

3) Buy a telescope- I love astronomy and have always wanted a telescope

I have no clue! I know it's hard to say for you, as you don't know me personally, but do you have any advise?

 

[CFDFEAGURU]

As a monthly payer of student loans to the lovely American Educational Services, I say save it for school.

Matt

 

[Topher925]

Stocks are still very risky right now, even if you know what you're doing. I'd say throw it in a CD or money market account but you don't have enough for it. I think your best option is probably just to put in the highest interest paying savings account you can find and just keep adding to it.

$2500 isn't a lot of money and doesn't go that far these days, especially when it comes to investing.

 

[turbo]

Save your money and try to leverage it. Is there some special skill-set that you have? When I entered college, I already knew how to perform basic setups/maintenance on guitars and amps, and college kids were selling that stuff when they found that they weren't going to be the next Hendrix wanking in their dorm-rooms. I'd buy some pretty nice gear at blow-out prices, refurbish it, with proper set-up, and re-sell to area musicians. My summer jobs paid for tuition, books, and apartment and food. My little side-line sent me back home with extra money every year. The trick was to always have ready cash to close a deal, and to know enough about the market to know when a deal was hot. What can you do as a side-line? $2500 is not much, but it is good seed-money if you are a worker.

 

[Moonbear]

Stocks are still very risky right now, even if you know what you're doing. I'd say throw it in a CD or money market account but you don't have enough for it.

$2500 is plenty to put into a CD. The interest rates get better with the more you have to open one, but it's better than just sticking it into a savings account. I agree with saving it for paying for school if you know you plan to go to college. Talk to the folks at the bank, find out what term CD has the best interest rates for the amount you have to put in it, but don't lock it up more than a year (I don't think they usually have terms longer than a year anyway). That way, next year, if you save more money from another summer job, you can combine it together and move it into an even better earning account.

Or, put $2000 into a CD or other good interest-bearing account, and keep $500 to spend now so you can enjoy some of your earnings now, but still save for your college tuition later.

 

[nicknaq]

Good advice. I think the consensus here is to save it.

 

[Astronuc]

Save the money. The stars will still be there.

 

[waht]

Save save save, and get in the habit of saving throughout your life. I know plenty of people who don't save, and constantly spend money on unnecessary things. Their lives are miserable.

You don't have to purchase the most expensive telescope, settle for a cheaper one, and get it on credit. Don't buy for cash. Pay it off from the money you will earn, not from your savings. You will build a credit history, which will be immensely useful in the future.

 

[Pinu7]

Do you like investing? The stock market isn't a liquid one, so you need money to make a profit if you are going to be a day-trader(which you are since it is addicting), Try to diversify a little. Save about half, and use the other half to invest in forex.

 

[rootX]

I asked a similar question few weeks ago and the answer was CD.

https://www.physicsforums.com/showthread.php?p=2297061

 

[Proton Soup]

start a checking account. never let the balance get below $2000. there will be much less stress in your life because of this, and you will thank me later. when you get out of college, work that balance minimum up to $5000.

 

[bleedblue1234]

Save money, but save in silver bullion...

the upside is HUGE (actually you would pretty much be maintaining your current purchasing power) and there is little downside...

 

[TheStatutoryApe]

A savings account or a stable investment that you can keep adding to sounds like a good idea. Some day it could be a down payment on a house. Maybe if you never really need the money for anything it could become a retirement account. You're young still and I'm certainly a ways away from retiring myself but I know that I'm quite behind on being ready for retirement. Getting ready for that now may seem rather premature but you never know.

 

[whitay]

Being a young person. I don't spend anything I earn. Well I spend a lot on food and beer. But other than that I only buy what I need and save the rest. I have grand plans for the future and I will need money for those.

 

[Cyrus]

I'm 17, entering my final year of high school in the fall. I worked a bunch this summer and have roughly $2500. With this cash I could:

1) Invest in stocks- I'd buy a decent book on investing and educate myself first, and then buy into the stock market.

2) Save for university - After my third year of (Canadian) university, I am responsible for paying tuition+books. Given that I plan on pursuing a Ph.D, I'm going to need as much $ as possible down the road. On top of this I will have small personal expenses throughout my university years (maybe $100 a month)

3) Buy a telescope- I love astronomy and have always wanted a telescope

I have no clue! I know it's hard to say for you, as you don't know me personally, but do you have any advise?

Remember, you can probably get free access to a very expensive telescope once you start school. http://www.astro.umd.edu/openhouse/gallery/telescopes.html"

These would cost much, much more than what you have saved up. Not only are they free, you will learn more about astronomy from the people you meet.

 

[cristo]

start a checking account. never let the balance get below $2000. there will be much less stress in your life because of this, and you will thank me later. when you get out of college, work that balance minimum up to $5000.

What's the point in having $2000 in a checking account? That money's making no interest for you.

 

[daveg360]

Invest it - your young and have plenty of time to recover. It'll go one of 3 ways:
You make a decent amount - Great!
You roughly break even - no harm done
You lose it all - You learn a good life lesson. It's a lesson that I'll bet a few recent retirees wish theyd learned at 17.

On a less cynical note - put it somewhere safe where it'll make a modest return.

 

[S_Happens]

There are purely online banks that offer CD competetive interest rates on a savings account. You can make the same interest as a CD, but don't have to lock it up for X amount of months. It's not purely liquid as it may take a day or two to transfer to another account (which is the only way to get it out).

 

[Ivan Seeking]

What's the point in having $2000 in a checking account? That money's making no interest for you.

The last time I got a bank statement I had to doulble-check the interest. I kept thinking that can't be right! Yep, 0.25% interest.

 

[TheStatutoryApe]

The last time I got a bank statement I had to doulble-check the interest. I kept thinking that can't be right! Yep, 0.25% interest.

I always thought all checking accounts were 0 interest. Maybe they were just rounding down.

 

[cristo]

The last time I got a bank statement I had to doulble-check the interest. I kept thinking that can't be right! Yep, 0.25% interest.

Haha.. yea I think that's similar to my checking account. Still, my point stays the same: money in your checking account is making a lot less interest than it could elsewhere.

 

[bleedblue1234]

Please heed my advice and do not save in dollar denominated assets... you will get destroyed and your hard work will go for naught...

Silver is good, its cheap and you can buy bullion/bars in bulk and stash them somewhere safe... or you can look into the perth mint program...

Also you could invest in foreign stocks if you want to take a risk and ride the roller coaster...

 

[Proton Soup]

What's the point in having $2000 in a checking account? That money's making no interest for you.

the value of the liquidity and having an emergency fund is worth more than the pittance in interest he'd make at this point. you shouldn't be investing at all until you have a minimum amount of cash saved.

 

[cristo]

the value of the liquidity and having an emergency fund is worth more than the pittance in interest he'd make at this point.

That's just bad advice! You don't lose your money, or your access to an emergency fund, if you put your money in a savings account, and it makes interest for you. Given that the OP is a student, any amount of "free" money should not be laughed at.

 

[Proton Soup]

That's just bad advice! You don't lose your money, or your access to an emergency fund, if you put your money in a savings account, and it makes interest for you. Given that the OP is a student, any amount of "free" money should not be laughed at.

enjoy your cup of coffee.

 

[cristo]

enjoy your cup of coffee.

Sorry, is there a point to your comments?

 

[S_Happens]

the value of the liquidity and having an emergency fund is worth more than the pittance in interest he'd make at this point. you shouldn't be investing at all until you have a minimum amount of cash saved.

As I said, an online savings account will net both CD competetive interest rates and keep the money liquid enough to be accessible within a day or so.

 

[nicknaq]

enjoy your cup of coffee.

I totally agree. Intrest rates on $2500 are insignificant (correct me if I'm wrong)

Thanks for the responses (keep 'em coming).

I think I'm leaning towards just simple saving...For 3rd year university (when my parents stop paying) & needs (not wants) in the meantime. I'm naturally very frugal so this won't really be a problem.

Although...the telescope is still very compelling :p

 

[TheStatutoryApe]

I totally agree. Intrest rates on $2500 are insignificant (correct me if I'm wrong)

If you look for a good interest rate, the money stays in there for years, and you keep adding when you can it WILL add up. If you're only planning on saving for a couple years it certainly won't make much.

 

[rootX]

http://www.fxstreet.com/fundamental/interest-rates-table/

I noticed that some countries have really high interest rates... Is it possible to send money to those countries? (personally, I don't want to take risk)

 

[lisab]

Nicknaq, I say save it for school, but not in a place where the principle is at risk (i.e., don't put it in stocks). Even though interest rates are low now, an insured account is your best bet.

When I was your age, I also struggled with these kinds of decisions. The trick is determining a want from a need...needs must take precedence. You need to get through your last year of college; you merely want a telescope. But I think the mere fact that you're asking the question means you already know correct move.

And btw, good luck with your schooling .

 

[bleedblue1234]

Ok, I am going against the grain here and will probably get ousted for it, but in my opinion you need to realize that you are young. Your parents are still supporting you financially, and as such you are free to make risky decisions with potentially big rewards without serious risk to your own financially well being. You do not have to provide food/car/housing for you or your family, and as such you have no need for "emergency funds" or liquidity.

With current interest rates saving is just silly. You will get very little interest and inflation is sure to take its toll over the coming years... (Warren Buffet just has an op-ed in the WSJ on this issue)... now is the time to take risks (smart risks... research, do homework, get involved) and learn from your mistakes...

It's silly to park your money in a low yield savings or CD that could be sitting in the market and gaining money in several other ways (you could trade... there are many ways to make money in the market)... and you can do it all without the fear of financial difficulties...

If you truly want to be successful (well... define successful) "monetarily" you MUST take risks...

 

[S_Happens]

I think you exaggerate a bit, but typical investing strategy would agree with you. That's not to say that he should have zero savings either, or that there's not more value in a savings account than simple interest (learning to save itself is extremely profitable). As long as the research goes along with the investment at an early age, I think the payoff for a teenager should be becoming financially responsible, whatever the route taken. It makes life a lot easier when you learn early and don't have many of the monetary worries that the majority of society does these days.

Don't take that to mean I'm hardcore conservative with my money either. I started playing in the stock market when I was an early teenager, but I was willing to put in the effort. I also take plenty of risk in my investments now, but I had already built myself quite a bit of security before I started doing that.

In the end, I'd consider that learning (or simply getting used to it) to save at this point is more valuable than trying to make a minimal amount of extra return by investing.

 

[nicknaq]

Nicknaq, I say save it for school, but not in a place where the principle is at risk (i.e., don't put it in stocks). Even though interest rates are low now, an insured account is your best bet.

When I was your age, I also struggled with these kinds of decisions. The trick is determining a want from a need...needs must take precedence. You need to get through your last year of college; you merely want a telescope. But I think the mere fact that you're asking the question means you already know correct move.

And btw, good luck with your schooling .

Ok, I am going against the grain here and will probably get ousted for it, but in my opinion you need to realize that you are young. Your parents are still supporting you financially, and as such you are free to make risky decisions with potentially big rewards without serious risk to your own financially well being. You do not have to provide food/car/housing for you or your family, and as such you have no need for "emergency funds" or liquidity.

With current interest rates saving is just silly. You will get very little interest and inflation is sure to take its toll over the coming years... (Warren Buffet just has an op-ed in the WSJ on this issue)... now is the time to take risks (smart risks... research, do homework, get involved) and learn from your mistakes...

It's silly to park your money in a low yield savings or CD that could be sitting in the market and gaining money in several other ways (you could trade... there are many ways to make money in the market)... and you can do it all without the fear of financial difficulties...

If you truly want to be successful (well... define successful) "monetarily" you MUST take risks...

Wow, two very good posts arguing opposite points.

Thanks for the advice to you both!

 

[DaveC426913]

This is all terrible advice.

The safest place for your money and the place where it will do the most good is to send it here:

63 Third St.
Toronto ON
M8V 2X7