What should I do with $3,500
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Yes everyone can use google to look "smart", and it is a slightly controversial topic. I am saying that there is still risk, take the hyperinflation in Zimbabwe. The current political stances of many people including those in power are not looking good. The USD could collapse in a matter of seconds, stocks could plummet instantly. If Trump doesn't give up power peacefully as many are saying, that could be the end of the USD and the US economy altogether.Yes I have - And i’m actually saying exactly what Richard H. Thaler said in his book ‘Nudge’ it’s a very interesting read, maybe you should try it
Well, I don’t know how i would find one sentence from a book, but sure.
The US & Zimbabwe are two ENTIRELY different economies & honestly can’t be compared, one has millions of private companies and is one of the strongest economies, the other was a weak economy anyways. I’m going to leave it there, have a good day.
At this amount, I'd save it for a bit, not spending or even investing.
Stable investment plans usually get you between 2.5 and 4% interest per year, though some may promise more. If we assume 4% yearly and not touching it, you'd end up with about $4260 in 5 years. $760 over a period of 5 years isn't exactly much, and you may decide you have a more worthwhile use for it.
In addition, while I have no idea what age you are and/or if you're financially independent, I recommend having an 'emergency fund' of AT LEAST 3 months, and ideally 6 months. This should be based on your 'fixed costs', which is basically all recurring costs like rent, utilities, insurance, phone plan, car lease etc plus the minimum food (buy the minimum groceries you think you need for a week, then see if you can actually live off that and still feel healthy(so good nutrition balance for minimal cost). Then it's x4 and added on to the minimum costs.
If you're still living with your parents or similar support, I suggest assuming fixed costs of between $800 and $1000 per month, (as that's the absolute minimum you could probs live on, assuming smalltown rent). Meaning $4800-6000 worth of emergency funds is highly recommended.
Any excess above that could be poured into an investment plan of some sort. I'm very much new to those as well, so perhaps see if you can find an affordable and reputable financial advisor, and make a list of questions beforehand. Those often charge a lot per hour so keep a timer with you during the talk.
Personally, assuming I had $10K on top of my emergency fund, I'd put half of that into a 'low risk' plan, so something that'd net between 2 and 4% but was basically guaranteed to keep growing.
Then I'd split the rest 60-40 between 'medium' and 'high' risk. High risk would be investing in promising startups etc that might be the next Amazon or might flop spectacularly. I'd set a 'principal', a base amount of money that is used for investing and isn't taken out of the 'account'. Any excess would be funneled to either the other 2 plans or directly to my bank after a set period. Any deficit would be topped up from Medium's profit only, if that isn't enough then too bad.
Medium would generate somewhere between 7 and 15% profit, and would split its profits into 3, 1 part to the 'low', 1 part to stay and 1 part to go to 'high risk' if needed. If not needed, that part could be added to the other 2 parts or deposited into a bank account.
After 5 years, the $5K in the 'low' would become $6K at 4% (1K increase), which is decent, and ignores whatever Medium and High would put in, not to mention whatever else I might add myself.
After 5 years, assuming 10% rates on average, Medium would have gone from $3K to 4.8K (1.8K increase), which totals $2.8K total.
Sounds like it's nothing, and it IS very little if that's all you spend, but it's almost $50 per month straight up free money from your perspective.
'high risk' is impossible to predict but could go any way. Heck for all I care that'd be used on straight up gambling or crypto (aka gambling meets day trading but with fancy names).
But hey, this is just theorizing and i've never spoken to an actual financial advisor. I just recommend letting it sit for now, or at most put it into something low-risk that you can get it out of any time you want.
Stable investment plans usually get you between 2.5 and 4% interest per year, though some may promise more. If we assume 4% yearly and not touching it, you'd end up with about $4260 in 5 years. $760 over a period of 5 years isn't exactly much, and you may decide you have a more worthwhile use for it.
In addition, while I have no idea what age you are and/or if you're financially independent, I recommend having an 'emergency fund' of AT LEAST 3 months, and ideally 6 months. This should be based on your 'fixed costs', which is basically all recurring costs like rent, utilities, insurance, phone plan, car lease etc plus the minimum food (buy the minimum groceries you think you need for a week, then see if you can actually live off that and still feel healthy(so good nutrition balance for minimal cost). Then it's x4 and added on to the minimum costs.
If you're still living with your parents or similar support, I suggest assuming fixed costs of between $800 and $1000 per month, (as that's the absolute minimum you could probs live on, assuming smalltown rent). Meaning $4800-6000 worth of emergency funds is highly recommended.
Any excess above that could be poured into an investment plan of some sort. I'm very much new to those as well, so perhaps see if you can find an affordable and reputable financial advisor, and make a list of questions beforehand. Those often charge a lot per hour so keep a timer with you during the talk.
Personally, assuming I had $10K on top of my emergency fund, I'd put half of that into a 'low risk' plan, so something that'd net between 2 and 4% but was basically guaranteed to keep growing.
Then I'd split the rest 60-40 between 'medium' and 'high' risk. High risk would be investing in promising startups etc that might be the next Amazon or might flop spectacularly. I'd set a 'principal', a base amount of money that is used for investing and isn't taken out of the 'account'. Any excess would be funneled to either the other 2 plans or directly to my bank after a set period. Any deficit would be topped up from Medium's profit only, if that isn't enough then too bad.
Medium would generate somewhere between 7 and 15% profit, and would split its profits into 3, 1 part to the 'low', 1 part to stay and 1 part to go to 'high risk' if needed. If not needed, that part could be added to the other 2 parts or deposited into a bank account.
After 5 years, the $5K in the 'low' would become $6K at 4% (1K increase), which is decent, and ignores whatever Medium and High would put in, not to mention whatever else I might add myself.
After 5 years, assuming 10% rates on average, Medium would have gone from $3K to 4.8K (1.8K increase), which totals $2.8K total.
Sounds like it's nothing, and it IS very little if that's all you spend, but it's almost $50 per month straight up free money from your perspective.
'high risk' is impossible to predict but could go any way. Heck for all I care that'd be used on straight up gambling or crypto (aka gambling meets day trading but with fancy names).
But hey, this is just theorizing and i've never spoken to an actual financial advisor. I just recommend letting it sit for now, or at most put it into something low-risk that you can get it out of any time you want.
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If you're from the US, open up a Roth IRA and begin putting a few hundred dollars per month into that. Your earnings from this will be tax free. If you open it with $3500 and contribute $300 per month, or $3600 annually, if you retire at 65, you'll have $948,400 of tax-free savings to retire with. Over time, you'll have put a total of $169,200 into this account and you'll walk away with just shy of a mill.
If you're younger than 23, let's say 18, the power of compound interest means you'll have an over $1.35mil when you retire at the age of 65.
This goes to everyone, for every year you don't have a Roth IRA open, you're losing potentially thousands, tens of thousands, or hundreds of thousands of dollars.
Talk to a financial advisor to begin. For those outside of the US, there are equivalents such as a TFSA in Canada. Happy saving!
If you're younger than 23, let's say 18, the power of compound interest means you'll have an over $1.35mil when you retire at the age of 65.
This goes to everyone, for every year you don't have a Roth IRA open, you're losing potentially thousands, tens of thousands, or hundreds of thousands of dollars.
Talk to a financial advisor to begin. For those outside of the US, there are equivalents such as a TFSA in Canada. Happy saving!
buy stocks, try some index funds aswell. SPYD, SPHD, and VNQI are all good buys because of coronavirus. If you are looking for a really good buy in stocks I would recommend DAL. Dropped from a regular stable 55$ to 30$, pays a good dividend and overall Delta is a really good company.
I don't know too much about saving money when it comes to the USA but I can explain for the UK people and maybe someone can make a link as to the US equivalent.
Fixed Term ISA's were initially a great way to save money - they offered a great return of about 3-5% which is considerable for a savings account but due to COVID bank base rates have slashed and so have the interest rates we get offered. So ISA's are simply not viable.
If you have no knowledge of stocks and shares - Ignore EVERYONE who has suggested that because you're basically risking your money like at a roulette table.
In the UK we have something called Premium Bonds governed by the NS&I. Its basically a bond backed by the government which poses as a permanent lottery ticket? There a draws once a month and you can win between $25 and $1,000,000. And on the grand scheme of things it can be very profitable, ALTHOUGH there is a chance you can not win meaning you make no money on your investment.
However, 3500 - 1% is only $35 for the whole year. If you wont twice in a year (which is surprisingly common) you'd of made 15$ more. I've won 6 times this year already.
Maybe an option if the US does something similar.
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