Recently came into some money, 30K via inheritance, which I would like to invest. I Would like to put some if not all of it towards retirement, as I have no plans to touch the money for at least 10 years if not longer.

  • I'm a PhD student with a 30K/year stipend
  • Currently live in NYC
  • Have no debt
  • No 401(k) or IRA

I'm assuming I want to put it into index funds, I'm just a little confused on choosing index funds and how an IRA fits into all of this. I'm young so I was thinking 70% stocks and 30% bonds.

  • Should I put it all in an IRA or some mix of IRA and non-IRA index funds?
  • Can I even put it all directly in an IRA (I'm confused by the IRA contribution cap)?
  • Which type of IRA (Roth or traditional)?

Sorry for the ramblings, first hand evidence that a little knowledge is a dangerous thing.

  • 1
    Is the stipend taxable? If not, do you have any taxable income? Jan 22, 2014 at 23:23
  • Graduate student stipends are usually taxable.
    – BrenBarn
    Jan 23, 2014 at 19:07

3 Answers 3


I would definitely recommend putting some of this in an IRA. You can't put all $30K in an IRA immediately though, as the contribution limit is $5500/year for 2014, but until April 15 you can still contribute $5500 for 2013 as well. At your income level I would absolutely recommend a Roth IRA, as your income will very likely be higher in retirement, given that your income will almost certainly rise after you get your Ph.D. Your suggested asset allocation (70% stocks, 30% bonds) sounds appropriate; if anything you might want to go even higher on stocks assuming you won't mind seeing the value drop significantly. If you don't want to put a lot of energy into investment choices, I suggest a target retirement date fund. As far as I am aware, Vanguard offers the lowest expenses for these types of funds, e.g. this 2050 fund.


IMHO bonds are not a good investment at this present time, nor generally.

Appreciate for a moment that the yield of an investment is DIRECTLY related to the face/trading value.

If a thing (bond/stock) trades for $100 and yields 3%, it pays $3. In the case of a bond, the bond doesn't pay a % amount, it pays a $ amount. Meaning it pays $3.

SO, for the yield to rise, what has to happen to the trading price? It has to decrease.

As of 2013/14 bonds are trading at historically LOW yields. The logical implication of this is if a bond pays a fixed $ amount, the trading price of the bond has to have increased. So if you buy bonds now, you will see a decrease in its face value over the long term.

You may find the first tool I built at Simple Stock Search useful as you research potential investments.


If you want to invest in stocks, bonds and mutual funds I would suggest you take a portion of your inheritance and use it to learn how to invest in this asset class wisely. Take courses on investing and trading (two different things) in paper assets and start trading on a fantasy exchange to test and hone your investment skills before risking any of your money.

Personally I don't find bonds to have a meaningful rate of return and I prefer stocks that have a dividend over those that don't. Parking some of your money in an IRA is a good strategy for when you do not see opportunities to purchase cashflow-positive assets right away; this allows you to wait and deploy your capital when the opportunity presents itself and to educate yourself on what a good opportunity looks like.

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