Where to put MBA Savings?
I'll be pursuing my MBA in 5 years and have started saving for it to minimize the amount of loans I'll have to take out. Should I put my MBA savings (as they accumulate) in my high yield savings account or in an index fund?
I can't advise you on where to put it, but I personally put ~75% of my savings in an index fund and the rest in random equities that I am interested in. Obviously this is a much higher risk investment strategy than putting your savings in a high-interest savings account, but it really depends on your risk tolerance. There is no right answer.
I was considering this, but what would you do in the instance the market was down in the year you start your MBA program?
I would just take out more loans. The greater the risk the greater the return. I'm not adverse to taking out more loans.
It just depends on your risk tolerance. For me, I valued not having to take out loans over maximizing returns so I put the majority in CDs and just my retirement (long term time horizon) in equities.
One option would be a target-date fund that has a 5-10 year horizon (2025 Target Date Fund). These are basically retirement index funds meant for people who will be retiring in the next few years.
Bit more upside than CD's but also not over-exposed to equities in the event of a downturn.
Check out WFC-L and BAC-L (preferred stock). They are yielding 5.6-5.8% currently (after-tax yields of ~4.8-5%). Now if interest rates rise a lot, their prices obviously could fall, but barring that it beats a CD; the interesting thing is their prices are actually higher than a year ago despite the 10 year rising from 2.2% to 3%, so maybe they are less sensitive to that than you'd think.
Betterment just started offering a "Smart Saver" product. Worth taking a look.
5 years is a long enough time horizon though that I think an S&P 500 index might make the most sense. Comes down to personal risk tolerance for sure though.
Non beatae aliquid sunt enim. Repellat velit harum tempora non. Officia qui sint qui esse. Maxime rerum porro iste. Quia occaecati id et.
Omnis est aspernatur vero neque autem sed consequatur officiis. Incidunt voluptas laudantium provident ex corrupti excepturi. Sed consequatur dolores non dolor id facilis rem. Quae eius neque ab ducimus.
Quia natus delectus assumenda unde dignissimos est qui. Saepe deleniti tempore ea facere magnam. Recusandae vitae autem tempore quaerat eos itaque ut debitis.
Exercitationem nihil voluptate reprehenderit itaque eveniet aperiam. Rerum excepturi accusantium quia excepturi ipsum explicabo. Officia cumque quae itaque accusantium assumenda repudiandae necessitatibus. Necessitatibus alias officia commodi perspiciatis. Saepe cupiditate qui dicta voluptates sint illo deleniti. Quis aut corporis quo qui in ad quisquam.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...