FundRobot » Mutual Funds » What should I invest in?

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Old   #1 (permalink)
 
Posts: 2,512
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Background:

1) Planning to go travelling for a year or so.
2) I have a full time job making only okay money.
3) I would like to save for travelling but also have some money for longer term savings/retirement.
4) I have a student loan of 5k with a 6.4 interest rate.
5) I have about 8k in the bank

Should I invest in stocks, bonds, cash or a mix?



I presume I should first pay off my student loan as I am unlikely to earn more from investments than I am charged in interest on my student loan, correct?
PC_4Ever is offline   Reply With Quote
Old   #2 (permalink)
 
Posts: 2,639
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You are asking the wrong question. You should be asking about how to budget your money so that you have some left over after a year to travel. Investing is a long term thing---you put money in some investment and do NOT expect to touch that money for many years. As far a a budget goes-----your question includes a rudimentary budget. First you should be saving 10% of your income after taxes for retirement---preferably in a 401K if your company offers one----otherwise a Roth IRA. This is the money you invest---pick a good mutual fund company like Vanguard and open your Roth there and invest the money in their funds. Next you should have 6 months cash available to cover living expenses if something should happen---sickness, accident, job loss etc. *K is not enough. If you have a family you need some life insurance. Now do a budget adding up your monthly costs for all your activities---food, rent entertainment transportation etc. If you still have money after saving for retirement, building a 6 mo cash cushion and paying all expenses including the student loan THEN you put this money away as a travel fund. If there is no money left over for the travel fund you decide whether to cut back on something else so you can travel.
Smile.ToMe is offline   Reply With Quote
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