I'm 20 years old and currently attending university for a double major in engineering and science fields. My college expenses are being covered. In addition to that i have worked for the past few years accumulating savings for myself. Out of my savings i'm willing to invest more than 5k. I have opened a credit card for myself to accumulate credit. Since i wont require much of my savings for at least 2.5 years i think it'd be best to invest it. I am currently considering choosing a mutual fund and then bonds after the interest rates are increased. I would like to ask for the community's advice on my consideration as well as any other options that would be beneficial for a person in my position. Thank you for your advice, i'm eager to learn any and all recommendations appreciated.

  • 2.5 years is short term. It's hard to get good returns reasonably safely with that close a horizon.
    – keshlam
    Commented Jul 19, 2015 at 21:06
  • 1
    what is the ultimate purpose of this money? day to day spending? down payment? Car? Retirement? Commented Jul 19, 2015 at 21:20
  • Well after college i will hope have an income so its safe to say i wont require this money for a longer period of time. 2.5 years is just how long i will be in college not requiring any additional income. i also have more than 5k that i intend to keep for savings. so considering longer term is fine. Also this money has no ultimate purpose. I'm sure in the future i will need a car, rent, eventually to buy a house. This money is totally excess that i dont need. Commented Jul 19, 2015 at 22:42
  • Welcome to money.stackexhange! I think its a great thing you are trying to invest your money. I only wish I was more like you when I was 20.
    – NuWin
    Commented Jul 20, 2015 at 4:44
  • A great way to start learning about investment is The Intelligent Investor. Read this many years ago. The advice still holds true today.
    – david
    Commented Nov 12, 2016 at 15:54

3 Answers 3


2.5 years is a short period in the stock market. That means there is a significant chance it will be lower in 2.5 years, whereas it is very likely to be higher over a longer time period like 5-10 years. So if you want the funds to grow for sure then consider an online savings account, where you might earn 1-2%.

If you want to do stocks anyway, but don't have any idea what fund to buy, the safest default choice is to buy an index fund that tracks the S&P 500. Vanguard's VFINX is one example.

  • what other investment opportunities are there other than savings accounts and stocks. I do currently have my money in a savings account actually that produces only 1%. Commented Jul 19, 2015 at 22:47
  • There are thousands of mutual funds, many of them specializing in a particular type of investment. What you need is to get yourself educated about investing. Books, magazines, morningstar.com Commented Jul 20, 2015 at 0:08
  • Any other online accessible resources you would recommend? Commented Jul 20, 2015 at 5:05

Put it in a Vanguard fund with 80% VTI and 20% VXUS. That's what you'll let set for 10-15 years. For somebody that is totally new to investing, use "play money" in the stock market. It's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on Twitter.

  • That is what im trying to avoid. That's why i considered the use of a mutual fund. What do you think of the idea of government bonds? Are there any other opportunities i'm failing to consider? Commented Jul 19, 2015 at 22:49
  • An ETF (The VTI and VXUS I mentioned) is basically what would happen if a mutual fund and a stock had a baby. You get the diversification/risk-averseness of a mutual fund but the liquidity of a stock. Regular company stocks can be a great investment if you're wise and can do a decent evaluation of a stock. Putting just a few hundred dollars in some stocks is a good way to incentives yourself to make wise decisions and properly research stocks. Commented Jul 19, 2015 at 23:31
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    You are too kind to ETFs. There are ETFs that are awful, and those that are excellent. Don't confuse the low cost S&P index ETF with the triple leveraged holy crap ones. Commented Jul 20, 2015 at 1:29
  • I also heard that an increase in interest rates will indirectly decrease the value of many stocks, should i wait until the end of the year for that to happen before investing? That would give me ample time to do my research as well. Commented Jul 20, 2015 at 5:09

Over a period of time most mutual funds do not perform better that an index fund. Picking and buying individual stock can be a great learning experience.

  • Sorry, david. I agree, over time, the pros (the fund managers) do not beat the averages, i.e. the index one can buy. So why advise a new investor to try to do what we agree is a losing proposition? With all the history we have, there's no need to throw money away to learn a lesson millions have already learned. Commented Nov 12, 2016 at 16:58

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