How to Save for Retirement With Unearned Income?
I am a graduate student, and I exist on a stipend from my university that covers my living expenses (I do not pay for tuition, I do not receive a W2). I pay taxes on the stipend, although they are not withheld. Since this is not earned income, I can't put any of it in a Roth IRA as I would like. So, what would you recommend as the next best option for saving for retirement? I would rather not wait until I receive my PhD in 5 + years to start saving, especially since at the moment I have few expenses and no family to support.
Public Comments
- get a second job use a credit card that gives cash back (preferably one that deposits the cash into a savings account) and deposit the interest into your retirement account. Use the credit card for all your expenses and pay it off every month in full. And who knows where the money you put into the account comes from?
- Put what you can in an after tax mutual fund, at very least you'll be ahead of the track. $100 / month FIND THE $100/month somewhere. Even if it means a part time job at a burger joint. http://kids.daveramsey.com/?event=displayContent&intContentId=4509 NEVER USE A CREDIT CARD!!!!! Check out Dave Ramsey's Website, the man knows his stuff. http://www.daveramsey.com You can catch him on Fox Business Network.
- Figuring you are too pressed for time for a 2nd job - so you could have earned income... Another option is try to find projects in your field of study during breaks that would be income - thus opening your own business - that is powerful but still time consuming. For the money you have now I would recommend a no-load index fund with low expenses (Vanguard has some nice ones - their minimum initial investment is usually about $2000 -$3000) If you are looking to start smaller you could start with a low cost trading account (like Scottrade or Sharebuilder) and buy well established long term dividend paying companies with low P/E ratios (I like consumer companies - HRL, KMB, PG, ADM, and there are many others...) Really look for companies that have always increased their dividend.
