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URL:  https://boards.fool.com/hey-i-am-24-and-am-in-grad-school-and-have-13076104.aspx

Subject:  Re: Invest vs School Loans Date:  8/6/2000  11:23 AM
Author:  TMFKaren Number:  130759 of 284468

Hey. I am 24 and am in grad. school and have $7,500 saved back. I have considered taking $5,000 of it and invest it. And use the remaining amount toward my school loans that are currently on differment. Should I use the total amount on school loans or use $5,000 for investments?
Also should I begin an IRA with the $5,000 or should I do Drip or Foolish Four approaches? Any IRA recommendations? Thank you. - jmac


Dear jmacn22,

To begin, you can only deposit $2000 per year in an IRA and you have to have earned income in order to qualify. I'd suggest you head over to the IRA to read up about how they work. You'll also find some suggestions about what to put into them. http://www.fool.com/taxes/faqs/pensions.htm?ref=TXSpnsn

DRIPs are a fine idea inside of a ROTH, but one drawback is that not every company has retirement option. If you head over to the DRIP discussion board, you can some feedback about companies that do allow this. Some of the newer service, i.e. BuyandHold.com don't yet have IRA accounts available just yet, so you wouldn't be able to go that route.

As for paying back your school loan, my first reaction is to advise you to pay it off and get it out of the way. Of course, alternatively, you can open the IRA and use the balance for the loan, if you like that option. You can get other responses if you go to the Paying for College board or even the Credit Card board. (They discuss much more than only credit cards there.)
You can get to any board by typing the board name in the center space of the navigational bar below and pressing 'enter.'

Be sure to read the reply from the previous poster.

Good luck to you. Fool on!

Karen Kosoy
TMF Karen
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