Investment $$

Macdaddy4738

Macdaddy4738

Well-Known Member
Joined
Jun 1, 2005
Question for you guys..

I've had a mutual fund since I was 14 or so, my dad put it together after I was given 5,000$ by a great aunt when she passed away. It's been in this fund since I was 15 or so, and somehow only gained around 2k, even though the 10 year average of the fund shows that it should have doubled. I suspect our finance guy is trash, and I really want to move the money into another fund, but I have some questions regarding this.

Initially I wanted to use this fund for nothing more than paying back student loans for a while, so I would have a good 2-3 years of not actually using any money I make working paying back these loans, so I could build up some savings. Well that didn't play out, and while I was unemployed after college I ended up drawing around 3k from the fund just keep afloat.

Basically, I want to invest the remaining money in something that continues to gain, but I can also use to draw direct billing for my student loan accounts (results in a 0.25 interest rate deduction if I get direct billing). The only thing I know of is a savings account, but the interest isn't worth junk in those most of the time. Is there any account that will gain more aggressively but that I can still draw from at any time? The mutual fund takes close to a week to get cash from there.
 
I would just see if you can throw it in a cd for a year or so, but that doesn't solve needing to withdraw from it.
 
I'm lost. You want to use the funds to pay off a loan, but you also want to build savings somewhere? He doesn't think like most, but I'd highly recommend Dave Ramsey's stuff on financial peace. Most of it is very straightforward.

BTW- I'm very glad you are thinking like you are. Get a plan going and see it happen! We are living on a written budget. It really does help change your outlook on finances. That is all I have to contribute. Sorry to not give a direct answer
 
Only thing I have to contribute here is... getting a good rate of return, and having fast access (liquidity) are almost always opposing one another.
Buuut - student loan payments ate the same time every month right? Why do you need a mechanism with fast access? Sems to me like reliable planning ahead would be enough. So what if it takes a week? its not like you don't know a week before when the loan payment is due.
 
It should have been set up in a non taxable investment. Which means, when you withdrew from it, you were suppose to pay tax, as "taxable income".
There may also have been a withdrawal penalty. If its non taxable, such as IRA, it has to go back into the same thing, or you get hit with the Tax & penalty. If the investment was paying income tax, that may be why the small return, but that's a rare set up. Biggest difference in most investments, is how much maintenance fees, are charged against the account. If you want to be able to withdraw from it, something like a money market,will be you only options, & NO, they don't pay much. You need a financial adviser, like that Edward Jones, guy, on here.
 
broncosbybart said:
I'm lost. You want to use the funds to pay off a loan, but you also want to build savings somewhere?
Click to expand...

Well basically what I had hoped to do was place the funds from the mutual into something that can still gain money, but also allow me access to it.

RatLabGuy said:
Why do you need a mechanism with fast access? Sems to me like reliable planning ahead would be enough. So what if it takes a week? its not like you don't know a week before when the loan payment is due.
Click to expand...

This is why I need the quick access. I have to set up the loan payments for automatic in order to reduce interest. I suppose I could set it for automatic with my current bank account, and just transfer money in from the loan account manually.
 
Yeah, the only way to do what you're describing is to have a brokerage account that's linked to your bank account. But that means selling enough of whatever equity you've bought, transferring the money (the next day) to your bank account, waiting 3-5 days for the transfer to clear, etc.

And that's not going to work particularly well with a mutual fund, since most of them have rules specifically designed to lock you into the account for a minimum period. But depending on what it was, you could buy an ETF of the same thing.

Either way, returns aren't guaranteed, and you could well end up losing money in the market, especially if your term is short.
 
All this work for a .25% reduced rate on interest on a likely already really low student loan rate? sounds like a lot of work with some risk to save just a couple of $$$.

You can do the same thing with your bank account, just auto draft it out of that account and just be sure you know how much $ is coming out each month and set up auto drafts from each account to be sure your bank account is funded sufficiently for the student loan payment.
 
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