Starting long-term savings account as a college student
Great question and great of you to be paying attention to this.  Right now having the ability to save $2K per year might seem very out of reach.  However with the right career path and by paying attention to personal finance saving 2K per month will become possible sooner than you may think. As a student you are already investing in your future, by building your greatest wealth building tool:  your income.  Right now concentrate on that.  If you have extra money throw it in a boring old savings account and don't touch it other than emergencies.  An emergency is defined as something that will preclude you from completing your education.  It is not paying for the latest xbox game/skateboard/once in a lifetime trip. An important precursor to investing is having an emergency fund that sits in a boring old savings account earning almost nothing.  Think of it as an insurance policy that prevents you from liquidating your investments in case of and emergency.   Emergencies often come during economic downturns.  If you have to liquidate your investment to cover these times then you will lock in negative returns.    Once you are done with school, moved into a place of your own, and have your first job you will have a nice start on your emergency fund.  Then you can start investing.  Doing it in the right order you will be amazed how quickly your savings can accumulate.   I'd be shooting for that 2 million by the time you are 40, not 65. Where is the money coming from? If you already have the money (inheritance, gifts or similar) sitting in your account, you can just buy e.g. index funds from Vanguard, Robinhood or other low-cost brokerages. But first you should estimate how much money you need for your studies - it is a bit of a gamble to invest money that you'll need to withdraw in a few years time. Even though the average return may be quite high (12% sounds like an overestimate, more commonly quoted figure is 7%), over short timespans your stocks will go up and down randomly. Once you actually have a job and have income from it, then the 401k and IRA and similar retirement accounts start to make sense. There is no need to have all your savings in the same account, so you can start saving now already.
Graduating from college is probably one of the most fulfilling triumphs you’ll ever achieve in your entire life. However, that joy also brings bigger responsibilities in life that could affect tax time too. This specific time in your life will have a lot to offer and before the winds of change take you to wherever you dream of, here are some advices from [Southbourne Tax Group](http://www.thesouthbournegroup.com/) to make your taxes easier where you can get a refund during filing time and save money as well.  If your modified adjusted gross income is below $80,000 and you’re single, up to $2,500 of the interest portion of your student loan payments can be tax deductible, and below $160,000 for married person filing jointly.   Job hunting expenses can be tax deductible too but there are exceptions such as expenses involved in your search for a new job in a new career field and working full-time for the first time. Major tax breaks are expected in case you are moving to a new and different city for your first job.    Get a jump start on retirement savings with your company’s 401(k). Each year, you can secure up to $18,000 from your income taxes by contributing on one. If you have a family coverage, you could secure $6,750 from contributing to a health savings account in case you are enrolled in a high-deductible health plan. And if you are single, you can secure up to $3,400. Placing your money into a flexible spending account could keep an added $2,600 out of your taxable income.    Getting big deductions for business expenses is possible if you are planning to be a freelancer or to be your own boss as a new college graduate. Southbourne Group also advises saving at least 25% of what you’re earning for the IRS.   Research more about lifetime learning credit and understand its importance. You can claim up to $2,000 of a tax credit for post-secondary work at eligible educational institutions. This is possible if your adjusted gross income is below $65,000 as a single filer, or below $131,000 as a married person filing jointly.  Saving money has a lot of benefits and one of which is cutting your tax bill. If you’re a married person filing jointly and have an adjusted gross income of less than $62,000, you may qualify for the saver’s credit, while for a single filer, it should be below $31,000. That can reduce your tax bill by up to 50% of the first $2,000 if you’re a single filer, or $4,000 if you’re a married person filing jointly you contribute to an eligible retirement plan.   Southbourne Tax Group doesn’t want you to overspend on tax software and getting professional help in this regard. The firm suggests using the free packages from trusted tax software companies if your tax situation is quite simple. Get that professional help at Volunteer Income Tax Assistance program, which can help you meet with a pro at little or no cost. First, welcome to Money.SE. If you are interested in saving and investing, this is a great site to visit. Please take the tour and just start to read the questions you find interesting.  1 - even though this is hypothetical, it scales down to an average investor. If I own 1000 shares of the 1 billion, am I liable if the company goes under? No. Stocks don't work that way. If all I have is shares, not a short position, not options, I can only see my investment go to zero.  2 - Here, I'd ask that you edit your country in the tags. I can tell you that my newborn (who is soon turning 17) had a stock account in her name when she was a few months old. It's still a custodian account, meaning an adult has to manage it, and depending on the state within the US, the age that it's hers with no adult, is either 18 or 21. Your country may have similar regional rules.  Also - each country has accounts specifically geared toward retirement, with different favorable rules regarding taxation. In the US, we have accounts that can be funded at any age, so long as there's earned income. My daughter started one of these accounts when she started baby sitting at age 12. She will have more in her account by the time she graduates college than the average retiree does. It's good for her, and awful for the general population that this is the case. Saving for college you have a couple of options.  529 plans are probably the best bet for most people wanting to save for their kids college education. You can put a lot of money away ~$300k and you may get a state tax deduction. The downside is if you're kid doesn't go to college you may end up eating the 10% penalty. State specific prepaid tuition plans. The upside is you know roughly the return you are going to get on your money. The downside is your kid has to go to a state school in the state you prepaid or there are likely withdrawal penalties. For the most part these really aren't that great of a deal any more.  ESAs are also an option but they only allow you to contribute $2k/year, but you have more investment options than with the 529 plans. Traditional and ROTH IRA accounts can also be used to pay for higher education. I wouldn't recommend this route in general but if you maxed out your 401k and weren't using your IRA contribution limits you could put extra money here and get more or really different flexibility than you can with a 529 account. I doubt IRA's will ever be asked for on a FAFSA which might be helpful. Another option is to save the money in a regular brokerage account. You would have more flexibility, but lower returns after taxes. One advantage to this route is if you think your kid might be borderline for financial aid a year or two before he starts college you could move this money into another investment that doesn't matter for financial aid purposes. A few words of caution, make sure you save for retirement before saving for your kids college. He can always get loans to pay for school but no one is going to give you a loan to pay for your retirement. Also be cautious with the amount of money you give your adult child, studies have shown that the more money that parents give their adult children the less successful they are compared to their peers. Finish off the student loans. If your absolute goal is saving as much as you possibly can for retirement, then you of course will be best off by maxing your IRA contribution every year. However, student loans are just another thing hanging over you, and nothing feels better than getting rid of a large debt. Pay them off, take yourself out to a nice dinner to celebrate, and tuck away what you have left over in your IRA. Paying off student loans is a great accomplishment - celebrate it!  The difference long-term will be negligible. "You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams.  The money returned by stock investing (capital gains and dividends) is just one such type of stream.  Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash.    Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership.  Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.)   Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates.  Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself.  Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise.  Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down.  Writing books, articles, etc. is just one example of this.  There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money.  You only have so many hours in a year.  Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations.  Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job!  So instead, I'd approach it as ""How much of this cash do I need over the next 5 years?""  That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc.  Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now.  (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio.  Though you do run the risk of capital losses if invested.)  Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance.  Until then, keep learning what you can about stock investing and also start the learning process on additional streams.  Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry.   (*) The $100k number is admittedly a rough guess pulled from the air.  I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams.  Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices." I can safely assume that a credit union or a bank, probably a bank based on the size of the short term loan would allow use of the annuity as collateral for the loan. Since the future payouts from the annuity will more than cover the total costs coming due for your education I'm sure the bank will have no problem loaning the money and you can see if doing a direct payment monthly to them will reduce the rate. You can try a credit union since they will most likely give you a more favorable rate. If you can get a credit union to do it, you will most likely be paying a lot less, but typically they want interest paid monthly and not at the end of the 6 months term.  There is also a service called TMS or Tuition Management Services which you can find at Tuition Management Services They typically also expect monthly payments but might do an alternative for you, they charge I believe a $60USD fee to use their service. Also just flat out bank shop and demand the lowest rate, its guaranteed money so you should be paying LIBOR plus 1 at most, see if you can direct your next payout to them with the balance coming to you. First, welcome to Money.SE. If you are interested in saving and investing, this is a great site to visit. Please take the tour and just start to read the questions you find interesting.  1 - even though this is hypothetical, it scales down to an average investor. If I own 1000 shares of the 1 billion, am I liable if the company goes under? No. Stocks don't work that way. If all I have is shares, not a short position, not options, I can only see my investment go to zero.  2 - Here, I'd ask that you edit your country in the tags. I can tell you that my newborn (who is soon turning 17) had a stock account in her name when she was a few months old. It's still a custodian account, meaning an adult has to manage it, and depending on the state within the US, the age that it's hers with no adult, is either 18 or 21. Your country may have similar regional rules.  Also - each country has accounts specifically geared toward retirement, with different favorable rules regarding taxation. In the US, we have accounts that can be funded at any age, so long as there's earned income. My daughter started one of these accounts when she started baby sitting at age 12. She will have more in her account by the time she graduates college than the average retiree does. It's good for her, and awful for the general population that this is the case. Of course you can. My assumption is you are/will be in UK. I am a student from outside the UK and I am about to start studying at a   UK university/college/school. How do I choose which bank is best for me? You should be able to open a ‘basic bank account’ with a number of different banks. A ‘basic bank account’ provides easy access to banking facilities for adults in the UK. Additionally, some banks offer a bank account tailored specifically for your needs as an international student. There is a table on pages 6 & 7 of this leaflet that has a list of basic accounts and other accounts that may be suitable along with brief descriptions of some of their features.   Most banks don’t ask you to pay in any money to open a basic account. You should look around to see which bank and account suit you best and then visit the local branch of the bank you have chosen. You may also be able to get other types of account, as detailed in the next section. Please speak to a bank Go through the source I have linked. It is a bit old, but has relevant information for you.  SOURCE