Putting My Money to Work... I Hope?

va643can's picture
Rank: Monkey | 41

Let's take a step back from the recruiting questions and comments, and think of my (and many others') situation for a second.

I'm a junior. I'll be making ~$15K during an internship this summer, $7K of which I plan to save (being conservative, will prob save more). I've read Rich Dad Poor Dad and the Wealthy Barber. I've read articles and books on how to put money "to work" for me or how to earn a return (besides interest). Honestly, 99% of that is for people who have A LOT of cash to work with, not $7K made from a summer.

I've given stocks a thought... but again, I don't have millions to spare. Not just that, but the institutions will slap me outta the market as fast as my naivete drags me in. Further, it will take time to understand the nuances of the market and learn the trade, and I don't see a viable payoff. My student loan is fully paid off (scholarship).

What did you guys do when you had this much cash? I find myself with many investment ideas which require a lot of capital and so its an endless circle... If you are/were an intern at some point, did you try anything?

PS: This is not an I-Banking post, but I didn't know where else to put it, so I threw it in the forum where I thought I'd get the most reads. Sorry if its a piss off.

Comments (18)

Apr 1, 2013

better spend that money on traveling before you start working. go to europe, backpack through south america or asia. go see the world while you are still in school and are not chained to your desk yet.

    • 1
Apr 1, 2013

If you want to save and invest, put it in ETFs (XLF, XLY etc) or mutual funds... Kinda boring but with only 7k there isn't much else you can do. Just don't plan on touching the money for a few years

Apr 1, 2013

Spend it on buying things in bulk which you KNOW you will use. Buy a year's supply of razors, deoderant, toothpaste, etc. Not only do you get a discount on each of these items from buying in bulk, you avoid any increases in price due to inflation.

Obviously you can't spend $7K on this, but for however much money you DO put into it, it's a guaranteed rate of return as long as you KNOW you will use it all eventually (assuming no price deflation)

Apr 1, 2013

Thanks for your input.

iddqd - Great idea. In fact, I'm currently on an academic exchange in Singapore and for the past four months or so I've been backpacking Southeast Asia. Have covered Indonesia (twice), Cambodia, HK, and Malaysia so far, and plan on doing Thailand and India soon ;) Any other suggestions? Travel is good advice, but I'll prob be putting aside ~$2K for that.

Waymon3x6 - Cool. I was recommended ETFs and mutual funds before, but to be honest, I find that a little boring. I wanna have some fun with the money (take risk, actually do something entrepreneurial). I know this creates a tough situation, but keeping that in mind, any other ideas?

MFFL - I actually heard Mark Cuban suggesting this... I've given it some thought and will look into it when I get home. Any other ideas in terms of investments?

Cheers

Apr 1, 2013

Stocks. Learn a bit of fundamentals and go deeper on technicals (as in charting). If you already got the knowledge, put your money on whatever fundamentally-good stocks that are currently good technically, take profit within the day whenever it reaches/breaks the third resistance level, otherwise take profit when the charts say so. At first, you'll get some losses, but as the feeling grows, and your technical skills get better, you will be able to avoid loss as long as you adjust your horizon.

I do that with my own money, getting 10-20% in a good day is not that hard that way. (hint: try markets in emerging countries)

Apr 1, 2013

Like WCR said, saving your 7k is not going to do very much in comparison to what you will hopefully be saving over the next couple years. I would do something interesting with that money. If you are entrepreneurial at all and have a good idea, you could probably get that going for a couple grand depending on what it is. Potentially unlimited return (if you're not in the 9 out of 10 that fail) and will give you something to do senior year since you probably will be coasting through your classes.

bowibowi:

Stocks. Learn a bit of fundamentals and go deeper on technicals (as in charting). If you already got the knowledge, put your money on whatever fundamentally-good stocks that are currently good technically, take profit within the day whenever it reaches/breaks the third resistance level, otherwise take profit when the charts say so. At first, you'll get some losses, but as the feeling grows, and your technical skills get better, you will be able to avoid loss as long as you adjust your horizon.

I do that with my own money, getting 10-20% in a good day is not that hard that way. (hint: try markets in emerging countries)

I like this idea as well and it is something I might try.

bowibowi - Why emerging markets? Greater price inefficiency and greater growth opportunity? Also, what challenges did you face moving from investing in US stocks to emerging markets (assuming you started investing in US stocks)? Which countries do you use (BRIC?) and how do you access (and validate) financial data from firms in those countries?

Apr 1, 2013

@bowibowi - Thanks for the input. I've already begun learning, but I'm hearing from many people that its almost pointless if I don't have much to spend (as mentioned above). At the same time, some of my buddies are making returns similar to yours through day trading.

Emerging markets... interesting. Any markets in particular? Brazil/India/SE Asian countries?

Also, what do you guys think about gold/silver?

Apr 2, 2013
va643can:

@bowibowi - Thanks for the input. I've already begun learning, but I'm hearing from many people that its almost pointless if I don't have much to spend (as mentioned above). At the same time, some of my buddies are making returns similar to yours through day trading.

Emerging markets... interesting. Any markets in particular? Brazil/India/SE Asian countries?

Also, what do you guys think about gold/silver?

The reason is, stocks in emerging markets tend to be cheaper. With your 7k, you'll get another 7k in a year or so if you're good.

I have experience only in SE Asia, coming from Europe to work here, I knew nothing about the capital market (practically, but I learned the theories in Uni). I think its the same between emerging markets as long as you can spot the good stocks. I prefer small to mid cap because I play with volumes, but the blue chip in here will be reasonably cheap as well when translated into dollars.

About gold/silver, know nothing about that or any other commodities, but as long as you can chart it, I believe you can profit from it. The thing is, its the charts that contribute to most of my profits so far.

Apr 1, 2013

I wouldn't go insane trying to save money from your internship (or even the first year or two of work). A marginal 10k is nothing given the salary ramp in finance. Have an emergency fund, but try to enjoy life for once. If you are like 99% of the people going into finance, your college experience has been pretty high-pressure. Take a trip. Do something new (scuba? sky diving?). Buy some quality-of-life items. Even 5k can vastly improve your senior year.

Apr 1, 2013
West Coast rainmaker:

I wouldn't go insane trying to save money from your internship (or even the first year or two of work). A marginal 10k is nothing given the salary ramp in finance. Have an emergency fund, but try to enjoy life for once. If you are like 99% of the people going into finance, your college experience has been pretty high-pressure. Take a trip. Do something new (scuba? sky diving?). Buy some quality-of-life items. Even 5k can vastly improve your senior year.

emergency fund is a great idea. if you put ur near negligible 5k in the markets, u mite end up losing a small but relatively sizeable chunk of it, whereas the emergency fund (even if u lose out to inflation) can just get you through a rough patch. and while your wealth grows over time, your emergency fund really doesn't need to grow nearly as much as your income and certainly not much overall (unless you start a family or something)

Apr 1, 2013

@WestCoastRainmaker - Great advice. BUT, as mentioned above, I'm currently on exchange in SE Asia and have travelled extensively. After this experience, I've promised myself that I'd do it every year, but going away for 3 weeks or so will only cost ~2K.

Also, my internship this summer is at a CPG, but I am working hard towards landing a FT gig in consulting upon graduation! You're still right; there will be a huge salary ramp - albeit lesser than finance - so the 10K or so may be negligible. At the same time, I want to learn during this time and with this money so I have a better idea of what to do when I make more money a year from now. I want a crash course, if you want to put it that way.

Any ideas?

Apr 1, 2013

Granted I'm an incoming SA as well so no great experience here but...

Invest in your relationships. I'm sure you've got friends who won't be feeling loaded like you at that point. Be generous.

Also, if you are looking to learn where you can really put your money to work, I'd suggest taking a look at small-cap special situations. Spin-offs, M&A, etc. Serious money to be made if you can learn how to pick your spots. It is research intensive though, so be prepared to put a lot of time in if you go for it.

Apr 1, 2013

Invest in relationships - that's a first. Something to really think about.

What have you done in the past or are planning to do with your savings?

Apr 1, 2013

I guess a couple examples of what I've done in that respect would be:

-Paying half of a good friend's costs for a vacation we took. I'd only do this sort of thing for someone who you've known a long time, and you sort of just have to judge the relationship yourself for whether it's appropriate. For me it was a slightly special situation in which a long-time friend was having a rough time and obviously needed some time away. Definitely worth it.
-Taking friends I don't know particularly well or haven't seen in awhile out for lunch/coffee on me regularly. This is a great way to get to know people a lot better and turn acquaintances into good friends. I actually burned through a reasonable chunk of savings doing this but I don't regret it for a second.

Basically I think of anything that allows me to spend more quality time with someone as the best way to invest in a relationship, though things like souvenirs from trips can also be appropriate sometimes.

Apr 1, 2013
Mike McDermott:

I guess a couple examples of what I've done in that respect would be:

-Paying half of a good friend's costs for a vacation we took. I'd only do this sort of thing for someone who you've known a long time, and you sort of just have to judge the relationship yourself for whether it's appropriate. For me it was a slightly special situation in which a long-time friend was having a rough time and obviously needed some time away. Definitely worth it.
-Taking friends I don't know particularly well or haven't seen in awhile out for lunch/coffee on me regularly. This is a great way to get to know people a lot better and turn acquaintances into good friends. I actually burned through a reasonable chunk of savings doing this but I don't regret it for a second.

Basically I think of anything that allows me to spend more quality time with someone as the best way to invest in a relationship, though things like souvenirs from trips can also be appropriate sometimes.

This. I can say for a fact that I regret not hanging out with friends more, because even if you don't work 100+ hour weeks, when you're free your buddies are rarely free as well.

Apr 1, 2013

Buy ammo- it is an outstanding investment.

Apr 1, 2013
Comment