My Investing Strategy as a 23-year-old Graduate Student

As someone who has just recently committed to spending the next decade of their life to being a low-income graduate student, I have lately begun to think about how I want to save, earn, and invest my money in the years to come. For me, putting in a small amount of time and work now to minimize the total debt that I have to take on during my graduate training will ultimately lead to a more productive and stress-free life tomorrow.

While I am no self-claimed expert on this subject, I have spent the last six months going down the rabbit-hole of investment resources online to reserach how to best utilize money. Almost every day, I find something new that adds to my knowledge-base of investing; so while this plan may likely change, these are some of the definitive steps that I will be taking to progress towards financial freedom over this next year.

Firstly, I should preface by saying that financial freedom was a term that I hadn’t even heard of until quite recently when my friends and I started an investment club together last year. As a group of eight friends, we gathered up some of our savings and invested it together in the stock market. This club has truly been such a great learning experience for me and has really motivated me to start thinking about my relationship with money. My hope is that everyone can begin to have the discipline now to start thinking about their future with money. At least for me personally, I had always pushed the thought of finance management aside and generally thought that thinking about money was inherently bad. Now, I realize that this doesn’t have to be the case and money can serve as a vehicle for good-doing and carrier of value. Achieving financial freedom, at least to me, means living within your means today to live a secure lifestyle tomorrow and giving to others throughout it all.

So, while my plan may be different from yours, I have found that these options to be extremely worthwhile for me as an investor at 23-years old.

1. House-Hacking — As someone who knows for certain that they will live in one place for (at least) the next four years, buying a house has been a great option for me compared to the alternative of renting. Lately, the housing market has boomed due to the low post-COVID interest rates (30-year interests rates dipping as low as 2.25%) and more people taking out loans. With the average inflation rate from 1990 to 2018 being 2.46%, money borrowed from the banks now has very little cost. This past year, I was extremely fortunate enough to secure a duplex in the Indianapolis region (just 15 minutes away from campus). As the term “house-hacking” implies, I intend to live on one side of the duplex and rent out the other. This more covers the cost of mortgage, taxes, and principal interest of the house and allows me to live at very little cost. With an FHA loan, more people can get into real-estate with with as little as 3.5% down. There are also many (completely legal) tax-benefits to living in a owner-occupied multifamily home.
2. High-Yields Savings Account— Nothing is worse than having a bad day that ends up costing thousands in unexpected home, car, or medical fixes. Nearly every financial book that I have read so far stresses the need to set up an emergency fund for a rainy day. Basic guidance suggests at least 3 months savings of income, but for me personally, I’m opting to save at least 6-months just in case something goes wrong. Instead of keeping this money in a bank savings account which can vary between 0 and 0.02% APY interest (yes, that’s much less than inflation), I have decided to put my emergency fund into Goldman Sachs’ Marcus high-yield savings account. As of this writing, they offer 0.5% APY which is about 25x better than any other banks.
3. Roth-IRA — Once my emergency fund is filled up to a comfortable level, the first place I plan to invest my money is into a Roth IRA. A Roth IRA is essentially a fund that you can invest in at your current tax rate now (post-tax compared to pre-tax such as an Traditional IRA or 401k). This is really a good idea for anyone just starting out in their careers as you will likely be paying taxes at a lower tax rate than you would be taking it out in the future. For me, I’ll be in the second tax barcket with my graduate stipend, so that equates to only a 12% tax rate on the money I put into this account.
4. Low-cost Index Funds — One of the major lessons I took away from The Intelligent Investor by Benjamin Graham is that mutual funds are often not up to par as they can be. When taking account for all the costs of management fees, often times at best case scenario, your money will match the market and at worse, end up costing you. Investing in low-cost funds such as Vanguard’s Total Stock Market ETF (ticker: VTI) or Fidelity’s 500 Index Fund (ticker: FXAIX) means no worrying about whether you’ll beat the market or not, because well… you are the market. Investing in Index funds like these means that your money is partially invested in a diverse array of sectors and companies. Just because one suffers, doesn’t mean they all suffer.
5. Acorns — Systems that are automatic mean that you’ll be more likley to follow them. Acorns does some of my investing for me by rounding up my purchases to the nearest dollar and pouring it into the stock market. I’ve used them for about six months now and I can say that their management fee of $3 per month is completely worth it! It’s a great feeling knowing that even when you’re spending, you’re saving too. If you use my link, we’ll both get $5 added to our accounts!
6. HoneyGain — This is bonus here, but I really enjoy making money on the side. Recently, I have discovered this company called HoneyGain which will pay you in passive income for allowing access to your computer’s server. Just like how universities run mega computational algorithms on a series of computers due to the demands of the program, you can help use some of your GPU (less than 10%, barely any slowed internet connection) in return for credits. On average, you can make about $20 per month just for having it run in the background. From my research, they are completely transparent that they don’t mine your privacy or data. If you try it out, try it with my attached link and you’ll also get a $5 credit. An extra $20 a month can go a long way!

While this list is what I’m going to be trying over the next year as I delve deeper into the world of investing, I believe that these resources are evergreen and can be applied to anyone’s life no matter how little or how much they make. Earning, saving, and investing now more efficiently means a better peace of mind later. I hope that this guide was helpful and I greatly encourage any comments/suggestions on my investing plan! Let me know how I can improve!