This year I’ve maxed out my Roth IRA (with employer matching): https://hellomoney.co/portfolio/6bad58-roth-and-401k

Aside from that, I’ve got $17k in a checking account that up until now I haven’t touched. I’ve thought I could put that into a 401K, or use it to pay for part of my master’s degree, which I plan on starting this fall.

If I put it into a 401K, it’d be in low cost index funds with a 0.24% expense ratio. I’d also need to take out loans, which look they they’d be at a rate of 5.84%. My feeling is that the portfolio’s growth would outpace the loan interest. If I look at 3 year historical returns, it’s 8.34%, certainly better than 5.84%.

Regardless, $17k isn’t enough to get me through the first year, so I’d need to take out some money anyway, and would need a few years to pay it off. I had planned on getting a TA position that pays for part of my tuition, but this isn’t looking likely. What should I do?

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    I assume you mean that you maxed out your Roth-401K with employer matching? Also note the 401K max doesn't include the employer part. The 17K would have to go into a 2015 IRA and a 2016 IRA unless you are married. I think you have the 401k and IRA designations backwards. Feb 5, 2016 at 12:02
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    Given that you're going after your masters, I'm assuming you'd have a fairly high paying job when you get out. If you expect that to be the case, then with this money, you may want to lay the foundation for EARLY retirement and not 65yr old retirement. I would consider investing long term in a standard brokerage account. mrmoneymustache.com/2012/01/13/…
    – pyInTheSky
    Feb 5, 2016 at 15:09
  • Thanks for comments. I meant to max out my roth/401K thanks for clarification. I didn't know that the 401k max doesn't include the employer matching. I'd look into both options. I appreciate both of your input. Feb 15, 2016 at 5:06

2 Answers 2


I'd use it to start paying for your master's degree. Each dollar you don't borrow for school returns 5.84% guaranteed. On the other hand, if you invest it in the stock market and get an average return of 8.34% a year you would both have to pay capital gains taxes on that money and expose yourself to the risk of the stock market disappointing you.

  • I like this idea. I will look into the capital gains taxes and do a napkin calculation how much I will get at the end of the day. Then I will be able to compare earnings to the interest. Thank you for bringing this up! Feb 15, 2016 at 5:09

IMO almost any sensible decision is better than parking money in a retirement account, when you are young. Some better choices:

1) Invest in yourself, your skills, your education. Grad school is one option within that.

2) Start a small business, build a customer base.

3) Travel, adventure, see the world. Meet and talk to lots of different people.

Note that all my advice revolves around investing in YOURSELF, growing your skills and/or your experiences. This is worth FAR more to you than a few percent a year. Take big risks when you are young. You will need maybe $1m+ (valued at today's money) to retire comfortably. How will you get there? Most people can only achieve that by taking bigger risks, and investing in themselves.

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    Much appreciated. Probably it's easier than ever before to teach myself new skills. I can find tons of free resources online and I can always enroll in a class. I'll try to learn something new which will help me become more qualified. I will keep this in my mind! Feb 15, 2016 at 5:14

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