Buckeye(OH)

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My strategy for first year was this: I took the 38.5 and paid the rest through savings.

My strategy for second year: take the 38.5 and use my investments since my savings arent as big as last year.

This would take my investments to zero. I have been advised that despite the fact that this is more or less an 8.5% investment, it may not be the wisest decision....in that I would have zero funds if emergency were to strike (although my parents would likely cover me).

I guess my question is, would it be wise to leave my money where it lay, and go ahead and take 7-10k out via the GradPlus loans?

There certainly are advantages to both and I will definately be looking to buy a new car/house when I graduate in 2009 (read: down payment needed)
 

Jocomama

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Could you please provide more details?
Hard to weigh in without the full data
thanks
Buckeye(OH) said:
My strategy for first year was this: I took the 38.5 and paid the rest through savings.

My strategy for second year: take the 38.5 and use my investments since my savings arent as big as last year.

This would take my investments to zero. I have been advised that despite the fact that this is more or less an 8.5% investment, it may not be the wisest decision....in that I would have zero funds if emergency were to strike (although my parents would likely cover me).

I guess my question is, would it be wise to leave my money where it lay, and go ahead and take 7-10k out via the GradPlus loans?

There certainly are advantages to both and I will definately be looking to buy a new car/house when I graduate in 2009 (read: down payment needed)
 
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Buckeye(OH)

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ask and you shall receive. what details would you like specifically?
 
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Jocomama

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38.5 and paid what?

What loans, what rates? What savings types, etc.
The post is not clear on many points. Would love to help but, just can't make heads-or-tales of the income/expenditures, rates, etc
Thanks

Buckeye(OH) said:
ask and you shall receive. what details would you like specifically?
 
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Buckeye(OH)

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Jocomama said:
38.5 and paid what?

What loans, what rates? What savings types, etc.
The post is not clear on many points. Would love to help but, just can't make heads-or-tales of the income/expenditures, rates, etc
Thanks
Ok. I just finished my first year of medical school. I took the 38,500 stafford loan amount. The budget for my school is 55k. The difference between 55k and 38.5, I paid out of pocket....and without a private loan. So, after year 1, I only owe 38,500 + interest.

For year two, I was going to approach the financial situation in the same mode. However, its slightly different this time. Since I blew my savings on year one, I dont have quite as much savings built up to cover the remainder of the costs above the stafford max of 38,500. I do however have about 7500 wrapped up in mutual funds, which should be enough to cover me for the 9 month period leading into the start of year 3. In order to do this, it would require me to liquidate all of my investment assets, thus, leaving me with 0$ to my name.

I always thought this would be best, since Id be minimizing my loan amount. Meaning, not taking what I didnt need, since loan money isn't income. However, recently, many people have indicated it may not be so wise to use my investments in this situation, but rather, leave this money, and to cover the additional costs - take out a GradPlus loan.

so, in simpler terms there are two options

1. use my investment money in leiu of taking loans leaving me with 0 dollars in the bank

OR

2. take out a GradPlus loan at a fixed 8.5% + 4% fees at origination

Important to note: my investments traditionally beat the 8.5% interest rate however, they are at that or below right now.
 
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Buckeye(OH)

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The investments are a variety of money markets and mutual funds selected by my Edward Jones broker.

Funds:

AEGBX
AGRBX
OGOBX
LINBX

Stocks:

FITB

and as I said, about 3k in money market at 4.25% apr.
 

etf

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how did i know that a broker was going to put you into crappy american funds with loads and high fees...and one from jp morgan to boot. that said, if they've been doing good and returning the >8.5% average, i don't see why you'd want to sell. from what i hear, student loan money is one of the cheapest forms of money (although i don't know about 9%); plus you're paying it back with tomorrows dollars, something that is apparently good. i say go for the loans.
 

etf

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oh my, i just checked out the american funds website: they charge close to 6%? that's murder...
 
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Buckeye(OH)

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overall, im not that happy with edward jones. Im thinking of picking up LETRX, which seems like a beast of a fund.
 

Jocomama

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etf has a good point about the costs.
Despite the company name, the support is based on the individual broker. In terms of the funds, if your costs are high, and you are choosing load funds, then you have to look at the net profit/stats.

However, specific funds - probably not the place to get into this - I would suggest PM with etf or others.


Personally - I handled my own funds directly since 1993. Vanguard, Fidelity, T Rowe Price, etc. There is so much information through internet research (MorningStar, Marketwatch, etc) that you can deal on your own.

Unless you have time, I avoid individual equities. I did it when I was a banker, but now - I avoid it.

I will tell you that if I had money to invest, (tied up in Private equity and notes paying high yields) it would be going into some PIMCO bond funds.

Check out www.pimco.com and read Bill Gross' August commentary. It is not easy reading, but it definitely has some credible ideas.

However - I do diversify - so while my retirement is in a mix of 4 equity funds, I could put other money into bonds. I don't get heavy in any arena - too much going on to put full credibility in any Greenspan/Barnacke, Bill Gross or William O'Neal predictions alone.

Check out PIMCO, and I agree with etf on the cost issues.

PS MOney Market good if you are going to be using that cash.

Buckeye(OH) said:
The investments are a variety of money markets and mutual funds selected by my Edward Jones broker.

Funds:

AEGBX
AGRBX
OGOBX
LINBX

Stocks:

FITB

and as I said, about 3k in money market at 4.25% apr.
 
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Buckeye(OH)

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so was your advice to take loans and keep the money invested?
 

etf

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Buckeye(OH) said:
overall, im not that happy with edward jones. Im thinking of picking up LETRX, which seems like a beast of a fund.
be careful with country specific funds - past performance REALLY does not predict future results...
 

mark-ER

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Buckeye(OH) said:
so was your advice to take loans and keep the money invested?
You can do better than 4.25% apr on money market account. Off the top of my head Paypal (which is operated by Schwabb) pays a bit over 5.00% now, but just do a quick BankRate search, maybe there is even a better deal out there.
 
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Buckeye(OH)

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mark-ER said:
You can do better than 4.25% apr on money market account. Off the top of my head Paypal (which is operated by Schwabb) pays a bit over 5.00% now, but just do a quick BankRate search, maybe there is even a better deal out there.

Yeah, but I get reward points for one of my MMAs. I paid for two roundtrip plane tix with those points last week so IM willing to take the .25% loss.
 

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Buckeye(OH) said:
Yeah, but I get reward points for one of my MMAs. I paid for two roundtrip plane tix with those points last week so IM willing to take the .25% loss.
Please share the name of this MMA.
 
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