Hello Everybody,
I recently discovered this site while doing some stock market research, I am a teenager who would like some advice on long term saving. I have always been geared towards makings sure I have money for the future (College, family, and even retirement) but I am unsure of what is the best way to do this. I was thinking possibly a few 3-6 year CDs to ensure I have money for college which is less than 3 years away. I was mainly thinking CDs because the fact that they are guaranteed rates and I would be able to find one for the exact amount of time I need. Moreover, seeing as how the stock market is not looking to improve immensely in 3 years that kinda makes stocks a bad option for short term return. Furthermore, I was also thinking of investing in the stock market to ensure that I have money for things that are further away such as family, retirement, etc. Obviously retirement is a long way off for me (about 55 years) which is why i thought the stock market would be a perfect fit. Any advice would be greatly welcomed!

Hi Champion,

For your educational goals I would look into investing in I-bonds. These are government securities you can purchase through Treasury Direct. The rate on the bonds is indexed to inflation, and adjusts every six months. You must hold them a minimum of one year, but than can redeem them anytime there after. (But if you redeem them before five years you'll lose the last three months interest.)

The nice thing about I-bonds is if you redeem them for educational expenses, you will not pay any taxes on the interest the bonds generate. Nice deal if you ask me.

For your long term savings, I would look into opening a Roth IRA with a company like Fidelity or Vanguard. I personally prefer Vanguard but Fidelity is fine too. Vanguard's retirement life cycle funds are good to get started. You'll be invested in U.S. stocks, international stocks, and a bond fund. As you accumulate more wealth you can reallocate the funds if desired, or just let the life cycle fund take care of it.

Good luck!

Congratulations on your forward thinking! You are making good choices for your future.

A few questions:

First, what kind of income do you have? Or do you plan to have while in college?

Second, have you started getting on a budget? See ways to save money with this thread.

Third, do you have an emergency fund? Emergencies will always happen. It’s important to have some $$ stashed away for a rainy day.

Fourth, how much have you saved for college? Or how much have you saved in general? Have you considered looking into what would qualify you for scholarships and/or grants?

Fifth, have you considered going to a local Community College for the first two years of your university studies? Then transferring to a four year university?

Sixth, what degree do you see yourself pursuing? Marketing? Accounting? Finance? Computer Science? Engineering?

Seventh, will you have a vehicle while in college? Or do you already have one?


Hope this helps get you started. Once again, I wish I was thinking of some of these things at your age! Keep it up!

Sounds like you have a pretty good understanding of the relationship between when you need the money and how much risk you can take with it.

My only question/suggestion is, do you have enough money in the "college" bucket to pay for it completely? If not, where is the rest of the money going to come from? If I were you I would use all or most of my money to pay for college, rather than taking on student loans and leaving some money for a retirement. It's not the fact that retirement is 55 years away (since as you know, the sooner you start, the less you have to save.) Rather, it's a question of optimization, risk vs. reward. A student loan avoided is like a risk free investment returning, what, 7% or so?

I agree with stannius. Start making that extra money and pay for your education cash as much as possible.

Remember, you can either increase your income or cut your expenses to improve your situation.

What jobs do you plan on doing in the summer or even during the school year?

Here's a few ideas for making extra money this summer:

1. Mow lawns. The summer months are here (assuming you live in the U.S.?). Lots of opportunities with lawns out there. My uncle does this during the end of spring and summer. It’s a nice side business. You can use your own equipment or see if the neighbor may have it. An extra $20-30 a week per lawn would come in handy.
2. Freelance Writing. People will pay for writing articles. A blog is a good place to start.
3. Get a Newspaper Route. There is nothing like riding a good bicycle, having a good arm, waking up and working at dawn. Early risers would love this job. People with a determination to make some extra cash could enjoy this too. This job can generate an extra $500-$2000 a month easily.
4. Become a Dog Walker. People get paid every day to walk dogs. Lots of people have pets. Yet they work too much or just prefer for someone else to handle certain aspects of pets training. Why not offer this service to people in your neighborhood?
5. Sell stuff online on EBay or Amazon. Do you know a lot about some niche segment? Say baseball cards, comic books, specialty toys? Find a niche and start making a profit!
6. Become a mystery shopper. Mystery shoppers can work flexible hours. Sometimes you even get to keep your purchases! Note: Avoid companies that want you to pay a fee up front.
7. Babysit some kids. Know a family with kids? Baby sit them for cash! Parents are always looking to go out on a date or run errands. Sometimes even voluntary babysitting can eventually turn into money.
8. Write a Book or an eBook. Are you an expert at something? Are you a good story teller or good at poetry? My wife published a book of poems in 2010. Her first book and we broke about even. eBooks are really cheap and becoming more popular as well!
9. Tutor students. Do you play an instrument? Are your particularly good at Math, Science, English, History? If you speak any other language (Spanish, German, or French?) tutoring kids or even adults can be profitable. I did this in high school and made $10-15 an hour. My sister does this and charges $15 an hour. She’s a full-time student and not even 20 years old yet!
10. Run errands for the elderly. Get to know people in your community or church (if applicable) who may need to go to the bank or for you to get their groceries.
11. Fix people’s PC’s. Start out with family/friends. Computers are always breaking down or having viruses. I have a friend
12. Do consulting. Know some programming languages? Charge $50 and put a decent website together for a startup business. Web design or graphics design is always a good place to start. Start out cheap and build your reputation and portfolio. Businesses always need their sites updated, promos with graphics, etc. I have a cousin who makes about $1200-$2500 a month depending on the business on this. He has been doing this for a little over a year now.
13. Sell Digital Photos Have a decent camera? Offer to do some photo shoots for free. Then as word gets out you could start your own photography business.
14. House Sit Vacation season is upon us. This can be a great 1-2 week gig. I got free rent for a couple of months one summer by staying at someone’s house.
15. Join a Focus Group Google “Focus Group” and see how many hits you can get. There is always some company willing to pay a little something for your thoughts, opinions, etc.
16. Paint See a neighbor’s house that might need painting? Ring the doorbell and ask them if you could offer your services. They provide the paint and tools you provide the labor.
17. Sell Stuff From Home See what you can sell at Half Price Books or eBay. Then sell whatever else you can in a garage sale. Remember one person’s trash is another person’s treasure.
18. Clean homes. People don’t always want or (supposedly) have time to clean their homes. Not the most luxurious job but a great opportunity to make some extra money. My wife did this while in high school and even college.
19. Find Odd Jobs on Craigslist Neighborhood adds and word of mouth not working? People always need things done. Do you have a truck and are able to help some people move furniture? Or perhaps paint? Or de-clutter someone's garage? Or perhaps mow some yards?
20. Deliver pizzas at night. Tips, Tips, Tips! Even if it’s just for the summer it’s a great way to generate some cash.
21. Go back to school. Sometimes going back to school for certification or a BA in Business or other field can open up new opportunities. Getting a masters or a MBA could be a useful tool in making oneself more marketable. I did this and after hard work in almost 6 years of school landed a job making double what I used to make.

THE BEST THING YOU CAN DO IS TO GRADUATE COLLEGE, WITH A DEGREE WHICH WILL GET YOU A JOB (READ:ENGINEERING, SCIENCE, ETC), DEBT FREE. ANYTHING ELSE IS LAGNAIPPE.

I suggest I bonds as well. I bonds should be bought at the end of the month and redeemed at the start (technically, you only need to hold for just a bit over 11 months if you play your cards correctly). If you buy on the last day, the bond is recorded as the 1st of the month and you get all interest for that month. Inflation component adjusts twice a year, April and Nov. This is based on the March & September CPI-U (I think those are the months). Divide the month which occurred most recently by the later month. The interest (base) rate is set administratively, which means it's anyone's guess. I'd be willing to bet, there will be no interest rate component this Nov. In fact, you might as well take that as if Moses himself brought that down from the mountain carved in stone. Current composite rate is 2.2% if I remember correctly. That means, 2.2% simple interest for the next 6 months, which then gets capitalized and then it adjusts to something else (determined in Nov by CPI-U numbers and "administratively").

If you have earned income, a ROTH IRA is also an acceptable Vehicle to save money for college. You'll only be able to withdraw contributions tax and penalty free, but it will bank some growth. this is especially good if you think you'll have more money than your costs.

As you seem to already grasp, anything needed for college should not be in the stock market for your time frame (or any teenager who plans to go to college within the traditional time frame).

Thank You for all the replies. I will definitely look into I bonds!

And to Eagle

A few questions:

First, what kind of income do you have? Or do you plan to have while in college?
Right now all I have is a build up of years of christmas gifts, birthday gifts, etc. but I am certainly looking into getting a part time job in January when I get a car. I'm also currently working on an Android app that I hope to be able to sell in the future.

Second, have you started getting on a budget? See ways to save money with this thread.
I don't really spend that much besides little things because my parents pay for most of it( I'm still 15)

Third, do you have an emergency fund? Emergencies will always happen. It’s important to have some $$ stashed away for a rainy day.
I have about a thousand dollars currently stashed away in a savings account that I don't plan on spending anytime soon. And I also have a few hundred dollars for spending money (I don't spend it that much, just when I absolutely need something or when I REALLY want something)

Fourth, how much have you saved for college? Or how much have you saved in general? Have you considered looking into what would qualify you for scholarships and/or grants?
Right now with both my current savings and my parents (what they have in a separate account for my college) is about $6,000. I know this is NOT a lot but I am currently enrolled in the collegiate program which means that I will graduate high school with a 2 year AA degree for FREE!! Moreover, with the Collegiate program I am more likely to get a scholarship and I am also looking into programs such as Bright Futures, etc.

Fifth, have you considered going to a local Community College for the first two years of your university studies? Then transferring to a four year university?
With the collegiate program I will not have to worry about this because the state of florida pays for all the college classes I complete while in the program. Last year, some students even surpassed the needs for a 2 year degree before they graduated high school (free 2+ years of college education for FREE!!). Also the state covers all the costs for the students classes, books, etc while in the program.

Sixth, what degree do you see yourself pursuing? Marketing? Accounting? Finance? Computer Science? Engineering?
Right now I am really interested in a Computer Science / Computer Engineering degree.

Seventh, will you have a vehicle while in college? Or do you already have one?
I will be getting a car next year hopefully, used of course, and I hope to keep that car until I ABSOLUTELY need another one.

I wish I had this much sense when I was 15.

Shaun said just what I was thinking. Smart, very smart, to be thinking ahead.

The only thing I would add, because I also thought of a Roth, was for the OP to investigate whether money held in a Roth would be counted against the OP when it comes to various types of financial aid.

One quick question about the I-Bonds, I have a stack of old E-class bonds that were purchased right after I was born by family members, friends, etc. they're approximately 15 years old and I'm not the best at knowing the different kinds, classes of bonds so I was wondering if it would be best to exchange the old E class bonds for some I class bonds?

Wow Champion1229! And you're only 15! I'm impressed.

Start working early and save up for college. That's awesome about the collegiate program! Computer Science and Computer Engineering would be great fields to pursue.

Have you considered clepping out of subjects you are good at? I clepped out of 12 hours of Spanish by taking the CLEP test and stuyding for 1 hour

That's great that you have money stashed for a rainy day and a nice savings account.

Consider this thread and start setting goals for your life. It seems you are well on your way!

Be safe with on the East Coast with Debbie coming. Cheers!

If you go to the Treasury Direct website it should provide you with answers.

AFAIK, Retirement accounts (parent(s) or student) are not considered to be "an asset" as far as the FAFSA program is concerned. A 529, however, is considered an asset.



BTW, an education IRA is a coverdell, all other IRA's are considered to be non-education IRA's.

One thing you would need to be careful of. Even though the basis contributed directly to a Roth IRA can be withdrawn tax and penalty free at any time as far as the IRS is concerned, the FAFSA will consider any distribution from an IRA to be "income" in subsequent years. But, however, this is much better than having everything "out in the open" on day 1.

http://www.fafsa.ed.gov/help/fotw33c.htm

I would leave the e bonds where they are. They too can be redeemed for educational purposes without taxes.

you can use the TD calculator to figure out their worth.

https://www.treasurydirect.gov/indiv/to ... ndcalc.htm

I joined this forum just now, solely to agree with with toromos -- I-bonds for short-term and a Roth IRA (I use Vanguard) for long-term -- and commend you on where you are at (both monetarily and maturity-wise) in life at such a young age!