MD & DO What is the best way to invest some money BEFORE medical school?

[exacto]

Everyone always talks about best ways to repay loans and save money after medical school with debt, but for someone who has about $10,000 in savings, what is the best way to invest this in order to make more money in the future to repay loans or do I even invest at all? Is it is wise to invest this money and take out slightly more in loans or put this towards my tuition and forget about investing till after?

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[InternistDO]

I'm not a finance expert, but I think the general idea would be that it's better used to pay off loans (or used instead of loans, really) because it's very rare to invest in something that will give you a better rate of return than your student loan interest (of like 6%) plus inflation.

If you were to invest in something, I think a passively managed mutual fund like Vanguard would be the best option.

As disclaimer, I also don't really know what I'm talking about. Just stuff I've heard from friends who invest/are in finance.

 

[ERDOC555]

Definitely use it for tuition. Loans are 6-7% and that 10k is much better being put there than anywhere else. YOu could risk it in a total market ETF/Mutual Fund but your returns would likely be the same or less.

 

[exacto]

Definitely use it for tuition. Loans are 6-7% and that 10k is much better being put there than anywhere else. YOu could risk it in a total market ETF/Mutual Fund but your returns would likely be the same or less.

Thats what I thought.

I'm not a finance expert, but I think the general idea would be that it's better used to pay off loans (or used instead of loans, really) because it's very rare to invest in something that will give you a better rate of return than your student loan interest (of like 6%) plus inflation.

If you were to invest in something, I think a passively managed mutual fund like Vanguard would be the best option.

As disclaimer, I also don't really know what I'm talking about. Just stuff I've heard from friends who invest/are in finance.

Haha, I don't know what I'm talking about either...

 

[SouthernGent]

Unless you have the time, training, and knowledge to manage your money through a mutual fund, ETFS, or medium/short term trading, save it for a rainy day or having a somewhat more comfortable life. The biggest thing you need to is long term cost benefit analysis. Look at how much paying off stuff with some of the 10k now will benefit you vs just dealing with it after medical school. And above all, talk with someone you trust that is a financial professional or financially smart.

 

[Hakuna Matata]

If it were me, I would keep it in your bank account as "just in case" money. Never know if your car is going to completely die or whatnot. If you're financing your education through loans, $10k is not going to make a difference in the long run when you may need the money more now. So I wouldn't put it towards tuition. Just my opinion.


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[Tenk]

Use it to avoid taking out higher interest loans. Very few returns are going to net you 8%+ (which is what you'd need to see any difference at all) unless you have prior experience or are ready to take bigger risks. Bigger risks for a few % is far worse than no risk for 7ish%.

 

[OnePunchBiopsy]

Save it for when you need it.

The amount of returns you could expect by investing now is not enough to justify locking away your cash. Medical school has a way of, well, draining your wallet.

 

[intubesteak]

My POS car is slowly but surely dying on me. I am really glad I have a chunk of cash saved in the bank for this purpose.

The last thing you want to worry about is medical school is money. I agree with everyone that said to keep it for a rainy day...even if it never rains, it is comforting to bring an umbrella.

 

[TooMuchResearch]

Everyone always talks about best ways to repay loans and save money after medical school with debt, but for someone who has about $10,000 in savings, what is the best way to invest this in order to make more money in the future to repay loans or do I even invest at all? Is it is wise to invest this money and take out slightly more in loans or put this towards my tuition and forget about investing till after?

Emergency fund. Put it in an Ally or other similar savings account with a reasonable interest rate and leave it alone.

 

[eefen]

^ This. Do this. And treat it as such. Not an "I want a burrito" fund. You'll be glad you did down the road.

 

[Gulliver Dark]

I suggest an I Bond, if you have more than a year until medical school. Tax deferred growth, mostly inflation protected. They can't be redeemed in the first 12 months, but after that are an EXCELLENT emergency fund. The per year purchase limit happens to be 10k. If you truly don't need the money for 12 months, they are an excellent way to have an emergency fund, and I have a few for a rainy day which makes life a lot easier during med school when a car breakdown happens, when I'm needing to buy some study materials, or whatever costs I don't expect (an away I have to travel to or something, I dunno) come up.

I also suggest bogleheads, and the white coat investor website, for any information about investing. Here is a good link.

I savings bonds - Bogleheads

 

[W19]

Invest in marijuana stocks and you will thank me 10+ years from now...

 

[deleted18755]

I just stumbled upon this thread and in case you want the perspective of somebody 10+ years out of medical school ...

Looking back, if I had $10,000 going into medical school and the perspective I have now I would keep half of it for emergencies ($5000 is either going to be plenty for something like major repairs on a car or $10,000 isn't going to be enough for some horrible catastrophe anyway) and enjoy the other half either spread out over medical school (depending on where you live adding $100/month x 48 months might actually get you a significantly nicer place or go get dinner/drinks with friends twice a month) or go on a nice vacation or three with old college buddies or family before you all start moving away, having families, and otherwise drifting apart.

When you graduate with $200,000+ in loans like I did you aren't going to think "I'm so much happier that it isn't $210,000+" and tens years later when you're in my position with loans paid off and way more than $10,000 in savings you will regret not having had more fun in medical school far more than you will enjoy an extra whatever return on investment that $10,000 will get you.

The only caveat to this is that my student loan interest ranged from 2.8-4.5% . . . is 6+% really the standard now?

 

[chizledfrmstone]

I just stumbled upon this thread and in case you want the perspective of somebody 10+ years out of medical school ...

Looking back, if I had $10,000 going into medical school and the perspective I have now I would keep half of it for emergencies ($5000 is either going to be plenty for something like major repairs on a car or $10,000 isn't going to be enough for some horrible catastrophe anyway) and enjoy the other half either spread out over medical school (depending on where you live adding $100/month x 48 months might actually get you a significantly nicer place or go get dinner/drinks with friends twice a month) or go on a nice vacation or three with old college buddies or family before you all start moving away, having families, and otherwise drifting apart.

When you graduate with $200,000+ in loans like I did you aren't going to think "I'm so much happier that it isn't $210,000+" and tens years later when you're in my position with loans paid off and way more than $10,000 in savings you will regret not having had more fun in medical school far more than you will enjoy an extra whatever return on investment that $10,000 will get you.

The only caveat to this is that my student loan interest ranged from 2.8-4.5% . . . is 6+% really the standard now?

Yep.

 

[Wjldenver]

I think you should keep the $ in an emergency fund. Vanguard Total Stock Market Index fund (VTSMX) would be my choice.


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[eefen]

I think you should keep the $ in an emergency fund. Vanguard Total Stock Market Index fund (VTSMX) would be my choice.


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I agree with the emergency fund sentiment, and that's a great fund for a long-term investment, but that's not something you really want to use as an emergency fund. What if the market bottoms out and your car chooses that moment (because you know it will) to break down, but now your emergency fund is cut in half? Better to keep liquid or in a low-return (but better than the returns from underneath your mattress) savings account/maybe a liquid bond as above so that it can be 1) there for sure when you need it and 2) accessible right away.

 

[Wjldenver]

I agree with the emergency fund sentiment, and that's a great fund for a long-term investment, but that's not something you really want to use as an emergency fund. What if the market bottoms out and your car chooses that moment (because you know it will) to break down, but now your emergency fund is cut in half? Better to keep liquid or in a low-return (but better than the returns from underneath your mattress) savings account/maybe a liquid bond as above so that it can be 1) there for sure when you need it and 2) accessible right away.

...A point well taken. If you are risk adverse, my recommendation for an emergency fund would be the Vanguard Total Bond Market Index Fund (VBMFX).



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[coldcase331]

Bet all of it on red


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[exacto]

Bet all of it on red


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50/50, i like those odds.