Hi ya'll! I (26F, single) will be starting a U.S. PhD program this August, which is funded with a 50k (pre-tax) stipend. I have accepted I'll be living hand to mouth/limited savings, which is common for PhD students (& I'm so grateful to have this opportunity, for all the **** the U.S. has in it, the chance to be funded to do science is incredible!). Unfortunately, my parents never spoke to me about finances, and I don't know how to best position myself. Right now, I have approximately 95k saved up, anticipated to be 100k before I start my program, and another 10k from my 401k. Do I put some of it in a retirement account? investment? continue getting 200$ a month from having it sit in a high-yield savings account? I don't really know what I'm asking, so all advice is welcome. Thank you so much.
Finance/saving help – pre-PhD, unsure what to do with current savings!
byu/Beginning_Benefit308 inpersonalfinance
Posted by Beginning_Benefit308
2 Comments
Wow, great job saving. I wouldn’t worry too much about retirement. Definitely keep the 10k in the 401k and make sure it’s invested in a target date fund or similar. With the 100k, you have a few options. You could keep it in the HYSA, which is a very conservative approach. It’s safe and hands off, which works perfectly for a lot of people. You could throw it into VTI (a very popular index fund) for slightly more growth at slightly higher risk.
Depending on where you’re moving, and how long you expect to stay there, you could price out using a chunk of the savings as a downpayment on a condo or a small house. 20% down on a 200k house leaves you 60k for incidentals, but a 200k house is a pipe dream in a lot of cities. You can play around with this calculator: [https://www.nerdwallet.com/mortgages/calculators/rent-vs-buy-calculator](https://www.nerdwallet.com/mortgages/calculators/rent-vs-buy-calculator)
I would not worry about retirement until you’re done with your PhD. Once you get a post grad job, you can strategically invest whatever savings you have leftover in retirement accounts to lower your tax burden. As it stands, your stipend stays within the 12% tax bracket, so investing in retirement accounts now wouldn’t be more beneficial than investing the money outside a retirement account, and you get the bonus of access to the money whenever you need it.
You can continue to an IRA as a grad student if you’d like to continue saving for retirement.