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Hi, I'm 17 and getting ready to go to college. I don't have a bank account yet, but I do have money that I want to start investing or putting into CDs that will give me the greatest returns. I have been doing some research and think I want an IRA, but I don't have a steady income, however I was wondering if I put some money into bonds (EE or HH which ever send interest earned to an account like every 6 months) if that money could be funneled into the IRA account? Or am I heading in the wrong direction? My parents are of little help and I want to try to keep them out of the process as much as possible. I have around $5000 or a little more to work with. Please if you could help, I am lost in the financial world and want to start saving for my future.
Getting a college education is one of the most important steps you can take in building a secure financial future. College graduates earn almost twice as much, on average, than those with only a high school diploma. Developing the habit of savings regularly is another important step. Right now you have a chunk of money to work with. So, how do you decide where to put your money? That depends on several factors, such as what you need the money for, how soon you will need the money, and whether you will have other income.
A general rule of thumb is that you should have 3 – 6 months income in an emergency savings account before you start investing. (Your situation may be different if you are receiving financial assistance from your parents.) But there are a number of different savings vehicles available. Rutgers Cooperative Extension offers an on-line publication called “So Where Do I Put That $2,000?” that I think you would find useful. You can download the publication by going to: www.rce.rutgers.edu/pubs/subcategory.asp?cat=7&sub=56
Many colleges have a credit union associated with the campus. Check to see if your school does. This is a good place to start asking questions. However, be sure you compare interest rates and fees from other local financial institutions before you deposit your money anywhere. The credit union will be able to provide you information on IRA’s. If you are working, you can put up to $2,000/year in an IRA. You can do this at any financial institution or brokerage firm. You must remember that this money will be locked up until you are 59 ½. There are some exceptions to this—you may be able to use the money to pay for college expenses or to buy your first home. Before you put your money in an IRA, be sure you understand the rules and limitations.
I hope this helps you to feel a little more comfortable with the financial world. Start saving now and build a strong financial foundation. You are on the right track!
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