Friday, January 31, 2014

Graduate School Finance 101

Dear Diary,

It has struck me recently that I am no longer an undergraduate.  I earn money for work.  But what is the money for?

I suppose I could go blow it on the slots, but the odds are not in my favor there...and if I start winning then I haven't solved my problems at all.  Now, let's pretend that I have a car (or any recreational activity...I don't) and could get out of here on the weekends to go camping and recharge my batteries.  I suppose money would go to that, but surely there'd be some left over (?).  Right now, the extras are placed securely inside my mattress (SHH!  Tell no one!), but what should I do?

Well, the folks on the internet tell me there are a few options that I'll discuss here.  Principally, one can invest money now for use later.  A novel concept! There seem to be mutual funds where stocks and bonds are bundled together.  Two types of companies can handle these for you: one is speculative and the other is indexed.  In the former, the company alleges that it can consistently find stocks that beat the average. The latter actually consistently outperforms the former by just matching the stock market day in and day out (there's also less hidden fees in this second option).

So, I went with the second option.  I put some money away in a Roth IRA which allows me to pay taxes on it now while I'm earning basically nothing.*  The other type of IRA makes you pay taxes when you withdraw (but you'll be earning more).  I also put a little into a regular mutual fund (why not?).

Oh, and I'm going to start looking for a leisure hobby.

*-An oxymoron considering the subject of the post.

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