Investment question

[Goodnews]

I have grinded enough winnings to want to invest. I am currently a student and will rack up about 30k of student debt in roughly two years after I graduate. Right now there is no interest on my student loans (as long as I am a full time student).

Of this 30k, roughly 18k is left for me to invest. What should I be looking for in terms of investments with this money? Please note that my first priority is to pay this laon off asap, and I can generate my tuition and book money over the course of the year, so its not like I need it now.

note that my risk tolerance is on the lower side of moderate.

[adios]

I notice you're from Canada but I doubt if the following advice would make a difference though. I would stay in something like 1 month CDs as surprising as that may seem. The Fed is tightening and short term interest rates will continue to rise. I saw in todays WSJ that you can get something like 4.05% on 1 month CDs. Might have to shop around a little to get it. But what I'm thinking is that as short term rates rise just go along with it. Given your time horizon and risk tolerance (at least what I perceive them to be) I wouldn't go near stocks or longer duration bonds. Why even go out 2 years when short term interest rates are on the rise?

[buffett]

what adios said

[Goodnews]

please explain the CDs and such as I am interested in how to obtain them. sorry if i am asking you to hold my hand but I really don't want to pay a 'tuition' in these matters (like i did with poker).

[DesertCat]

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please explain the CDs and such as I am interested in how to obtain them. sorry if i am asking you to hold my hand but I really don't want to pay a 'tuition' in these matters (like i did with poker).

[/ QUOTE ]

Banks sell CD's. They are a way of locking up your money for a lmited time (1 month to years) in exchange for a higher interest rate than you can get from a money market account.

Go to bankrate.com. It should show you where the best CD and money market rates are so you can compare options. Right now it looks like Andy Beal is offering a nice deal (3.75%) down in texas for one month CDs

And I disagree very slightly with some of the advice here. You should keep your money safe and short term. But one year CD's offer about a 1% higher interest rate than one month. Beyond that (i.e. 2 year, 3 year) the extra interest is minor. So you should consider a "ladder" of one year and less CD's.

A ladder is buying a group of CDs of different durations, so that you have them regularly maturing and can "roll them over" into longer term CDs.

An example in this case, you could buy a one month, a two month, a three month, a six month, a nine month, and a one year CD to make up your ladder. The one month CD pays 3.7%, the one year 4.7% and the others in between, pay something, well, in between.

One month from now, your first CD matures, and you replace it with a one year CD. Two months from now you do the same with your 2 month CD. Three months ditto with your three month CD, until at the end of the year all your CD's are one year CD's with different end dates.
Essentially you are increasing your yield to the 1 year level, but always have a new CD maturing every 1-3 months for emergencies or to be re-invested. In the end you have much of the financial flexibility of short term CD's, but the yield of a longer CD.

[Sniper]

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Of this 30k, roughly 18k is left for me to invest. What should I be looking for in terms of investments with this money? Please note that my first priority is to pay this laon off asap, and I can generate my tuition and book money over the course of the year, so its not like I need it now.

[/ QUOTE ]

I will approach this from a slightly different perspective, and ask... why is your first priority to pay off the loan asap???

It is likely that you student loan is at a very low interest rate... and that you could perpetually outperform that rate by even conservative investing. In general, you would want to pay thoe types of loans off as slowly as possible.

CD's are not a bad choice especially considering the low risk...i think one of the best equities you can put yourself in is google (goog)as long as they can continue its revenue growth....if you look at what the stock is trading at (89 times earnings), which is high compared to the avg. trading mulitple of stocks in the s&p 500..but if you look at it against its earnings in two, three, four years, it's a bargain...that is why sergey brin and larry page (the two founders of google) are growing their money the fastest out of anyone in the world..currently worth $12 bil or so, they are expected to become worth $20-$30 bil in the next couple years....and how are they making all that money, google's stock...i am only a 20 year old college sophomore and i have and continue to put every dollar i make in that stock...actually, i just lied b/c i picked up SIRI at $5.90/share and am riding that until after they blow away earnings est. for the fourth quarter b/c mel karmazin is an f-ing brilliant ceo...after that, i jump back into google until they fail to grow theyre revenue...just my two cents...

[CD56]

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Right now there is no interest on my student loans (as long as I am a full time student).

Please note that my first priority is to pay this laon off asap,


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i think its important for you to realize that simply being in debt is not a bad thing

if you have no interest on your loans and you pay them off immediately you are actually losing money that could have been earned in interest

as long as the rate you can earn by investing is greater than the rate you are paying, only pay the minumum on your loans

bad advice

[DesertCat]

[ QUOTE ]
i think one of the best equities you can put yourself in is google (goog)as long as they can continue its revenue growth....if you look at what the stock is trading at (89 times earnings), which is high compared to the avg. trading mulitple of stocks in the s&p 500..but if you look at it against its earnings in two, three, four years, it's a bargain...that is why sergey brin and larry page (the two founders of google) are growing their money the fastest out of anyone in the world..currently worth $12 bil or so, they are expected to become worth $20-$30 bil in the next couple years....and how are they making all that money, google's stock...

[/ QUOTE ]

Horrible, horrible, advice. First, it's earnings in two, three, and four years haven't happened, so it's hard to say it's a bargain, esp. when those earnings are at risk. I prefer to take my google advice from Sergey Brin and Larry Page, who think GOOG is over priced and at risk. You know this because they sold a big chunk of the company in a secondary. They are giving up a big chunk of that future fortune to have more cash in the company now.

Few if any equity investments fits the risk profile the OP described. If the OP decides to keep the loans open, and wants to invest over longer periods, he'd be best off with an index fund.