Options with $$ from MSTP stipend?

[Jadyn]

Advertisement - Members don't see this ad

My investing experience amounts to a $200 bond I got when I was 1 year old and a $1000 bond from bank of america after high school graduation. I've saved a couple G's through college, and now I want to really get into the market, but I am not sure what are my options/ what I am allowed to do with my stipend money. If I wait until January, I'll probably be able to put down $5K. What would you do?

 

[etf]

target retirement fund from fidelity, vanguard, or t. rowe. price. i personally invest in the t rowe one because it is the most aggressive (most allocation to equities). even if it's not a retirement account, the funds are great because you get instant diversification, and it can be something that you just put in $250 or whatever whenever you feel like putting some money in the market.

 

[karmega5]

I'm also a banking/investment noob, and was referred to Vanguard's Target plan. I would ideally like to take out the full loan amount at my school (I just started this summer), leave 2k in a high yield savings for a rainy day (I've heard HSBC is good...?), and invest 5-7k per semester- maybe a little in a long term (retirement) account, and the rest to pay off a bunch of loans right before graduation. I'm an MD student, btw, not an MDPhD.

1. Does this sound like an ok plan? I realize that investing anything is risky, but I have some help with living expenses now and am at a state school, and figure if I lose it all, I'd still be about on par with most med students.

2. Is the Target retirement plan decent for short term (4 years)? Or do I need to look into something different? I'm willing to go a bit risky, but I don't want to be up with heartburn all night either (that's what biochem is for).

Any advice at all would be appreciated...

 

[johnstoner]

I also got into the investment game in medical school. My first buy was ISRG and i'm still sticking with them. I bought at 18 dollars and now its at 141 dollars. I just wished I bought more shares...

not sure if you want to use your student loan money...but ultimately its your decision what you want to do with your money...as long as you can cover yourself in the end.

 

[etf]

2. Is the Target retirement plan decent for short term (4 years)? Or do I need to look into something different?

the second word in the funds name is retirement, so unless you plan on retiring in 4 years (in which case it's probably too late for you to invest in a retirement fund anyway), invest your money elsewhere. 4 years is pretty much money market/ high grade bond territory - yes, the equities markets have been on a tear of late, but can you afford to lose it all when the latest "correction" hits?

 

[QuantumMechanic]

the second word in the funds name is retirement, so unless you plan on retiring in 4 years (in which case it's probably too late for you to invest in a retirement fund anyway), invest your money elsewhere. 4 years is pretty much money market/ high grade bond territory - yes, the equities markets have been on a tear of late, but can you afford to lose it all when the latest "correction" hits?

I think its a Target as in "Target 2040" retirement fund where the allocation changes over the years for "lazy" investors. I still think its a bad deal since one can allocate across funds more efficiently if you invest in individual funds.

 

[etf]

I think its a Target as in "Target 2040" retirement fund where the allocation changes over the years for "lazy" investors. I still think its a bad deal since one can allocate across funds more efficiently if you invest in individual funds.

not really because when you use these target date funds you usually get access to the institutional share class of the respective funds that make up the portfolio, which are usually significantly cheaper. plus, if you buy the vanguard target retirement fund you get access to four vanguard index funds for $3000; if you tried to do that individually, you'd need $12,000.

 

[DrMD07]

target retirement fund from fidelity, vanguard, or t. rowe. price. i personally invest in the t rowe one because it is the most aggressive (most allocation to equities). even if it's not a retirement account, the funds are great because you get instant diversification, and it can be something that you just put in $250 or whatever whenever you feel like putting some money in the market.

FWIW, I also am invested in a T Rowe Price Retirement Fund as well as a couple of their managed funds. I've been very happy with their service and the funds have performed well.

 

[mark-ER]

Save your money in a money market account for a year and buy a house/condo. You'll be doing MSTP for at least 6, likely 7-8 years so that's enough for it to be worth your 'investment'.

 

[The White Coat Investor]

Why don't you spend your first $20 on a good basic investing book?

Consider one of the following:

1) The BogleHead's Guide to Investing
2) The CoffeeHouse Investor
3) Personal Finance for Dummies or Investing for Dummies

You won't regret it.

After you learn a bit more, you may want to determine whether your stipend counts as taxable income or not. If it does, you'll want to put your investments (assuming you're investing for retirement) inside a tax-protected vehicle called a Roth IRA. Starting in January, you could put up to $9K in there ($4K for 2007 and $5K for 2008) That'll make more difference than anything else. If you can save more than that, congratulations.

Hey ETF, aggressiveness of asset allocation isn't a reason to choose TRP over Vanguard. Just pick a date that's further away. I would only choose TRP if you preferred active to passive management and were willing to pay for it.

 

[etf]

Hey ETF, aggressiveness of asset allocation isn't a reason to choose TRP over Vanguard. Just pick a date that's further away. I would only choose TRP if you preferred active to passive management and were willing to pay for it.

i do prefer active management. vanguard's most aggressive target date fund, i.e. the one with the farthest date (2050) has 90% stock, 10% bond. first of all, if you really are going to hold until 2050, you should have 100% stock, 0% bond. Second, of that 90% stock, 70% of it is domestic equities. Considering such a long time horizon, I prefer something with a lot more international exposure, especially emerging markets.

 

[The White Coat Investor]

i do prefer active management. vanguard's most aggressive target date fund, i.e. the one with the farthest date (2050) has 90% stock, 10% bond. first of all, if you really are going to hold until 2050, you should have 100% stock, 0% bond. Second, of that 90% stock, 70% of it is domestic equities. Considering such a long time horizon, I prefer something with a lot more international exposure, especially emerging markets.

Per morningstar, the TRP 2050 fund is also about 90/10 and 22% foreign stocks. The VG 2050 fund is 90/10 and 18% foreign. Hardly a reason to choose TRP over VG. But if you prefer an active manager at the helm and are willing to pay 3 times as much for it.... 🙂

 

[etf]

Per morningstar, the TRP 2050 fund is also about 90/10 and 22% foreign stocks. The VG 2050 fund is 90/10 and 18% foreign. Hardly a reason to choose TRP over VG. But if you prefer an active manager at the helm and are willing to pay 3 times as much for it.... 🙂

i'll take your word for it; i guess i just don't like vanguard. i'm in the t rowe 2045, because for some reason wells fargo won't let me buy the 2050.