Anonymous User wrote:Off topic, but curious to get feedback on this...
Current 3L, trying to decide what to do with part of the 15k my firm will give me as a salary advance in a few months. I'd like to put 40-50% of it away to be able to being using approximately 6 months later once I start work. I figure 5-7k + other income sources will get me through the summer, so I'd like to do something with the remaining cash. tc
Considered putting some in a CD, but that seems too risk adverse and I would like the opportunity for a larger upside. Also considered a index mutual find, but not overly optimistic about the direction of the market next year specifically. Any other thoughts? Am I missing some specific considerations?
I'll have 45K in student loans so I'll start paying those off next summer too, but it seems like a waste to put all my extra cash towards loan payments, plus, I'd like to be able to access the cash in the fall if I need it.
1. Are you sure it's $15k net? My firm gave us $15k stipend (not an advance, basically a signing bonus) and it had all the usual deductions for fed, state, local taxes plus FICA and Medicare for a net of about $8100. I'm not sure if it works differently for advances though.
2. If you want to use the money to live off of either over the summer or in the first few months of work (this is what I did), it would be kinda dumb to take on any risk for 6-9 months.
3. If you want a guaranteed higher yield on the money, pay down your loans. No investment on the planet will give you dollar-denominated guaranteed post-tax returns of 6+% like paying down your loans will.
4. If you really don't want to pay down loans, use the cash to position yourself so that you can boost tax advantages account contributions. My firm has a really nice 401k with a safe harbor match and if I had budgeted a bit better I probably could have gotten my AGI into the sweet spot range for relevant deduction and tax credit eligibility (somewhere between $55k-$75k).