# Savings & investment during college



## Colin (Jan 9, 2010)

Next Monday I start my second semester of college and I'd like to start it off right. Financially, the first semester didn't go so well (fast food, booze, etc.) but I haven't touched my OSAP loan and I still have about $1000 in the bank. I also have a part-time job.

I have my OSAP loan in an ING TFSA (3% currently) and I've started putting half my paycheque into it as well. With the second part of my loan coming this month, I should reach the contribution limit soon.

That being so, I'd appreciate some advice as to how I should be saving or investing my meagre income. I can always put it into another high-interest savings account but I'd like to see more return on my money. Thanks in advance.


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## HaroldCrump (Jun 10, 2009)

Colin said:


> Next Monday I start my second semester of college and I'd like to start it off right. Financially, the first semester didn't go so well (fast food, booze, etc.) but I haven't touched my OSAP loan and I still have about $1000 in the bank. I also have a part-time job.
> 
> I have my OSAP loan in an ING TFSA (3% currently) and I've started putting half my paycheque into it as well. With the second part of my loan coming this month, I should reach the contribution limit soon.
> 
> That being so, I'd appreciate some advice as to how I should be saving or investing my meagre income. I can always put it into another high-interest savings account but I'd like to see more return on my money. Thanks in advance.


Colin, good job on thinking about personal finance so early in the game!
You haven't provided specific details around your income and expenses (not that I'm asking either), so it's hard to give specific suggestions.
Do you have any other debts at this time?
If so, your income should first go towards paying those off.
It will be such a wonderful feeling for you to graduate without debt and have most (if not all) of the OSAP unused so that you can pay it right back.
3% is a very good rate of return in these times and honestly, don't get greedy for more.
You mention that your income is "meagre".
Therefore, it is more important to preserve it rather than try to increase it by taking risks.
I'm sure you know that greater reward comes only with greater risk.
Markets are (generally) efficient and there's no free lunch.
As you go higher up the returns graph, you are taking on progressively more risk.
I recall reading in a book years ago that the goal of investing should be:
*1. Protect what you have
2. Get a return on it*

The other risk-free way to get a higher return on your money is to agree to lock it in for a period of time.
For example in a GIC.
However, these days even a 5 year GIC is not a whole lot higher than 3%.


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## the-royal-mail (Dec 11, 2009)

Yeah this is really early to be thinking about this but by all means stay responsible and don't get reckless with the money. By the time you finish, even with a job and some outside help you will still have racked up a lot of debt. Stay away from buying a car (most students use the bus) while in school and that will save you quite a bit but this period of your life is an investment in your future but NOT from a financial standpoint. You will be SPENDING money to fund this education now and will repay it later. So I wouldn't worry about trying to get any returns on your OSAP. Use it. You'll need it soon enough to pay for rent, books, food, leisure money etc.

After college, I think it took me between 2-5 years to pay off my student loan.

Try to enjoy your college years a bit, make some friends, keep your grades up, have fun, attend your classes and spend a few dollars on small things you like. This isn't the time to get into boats, property, investments and what not.

As usual, these are just my opinions. Good luck!


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## Colin (Jan 9, 2010)

Thanks for the responses. I agree with all that's been said here. I'm hoping I won't need to use my loans but it's possible I may require it so I don't want to lock it into a GIC or possibly lose some of it with other investments.

What I still need advice on at the moment is what to do with my savings after I max out my TFSA. I got the paperwork for my 2nd semester loan and it will nearly max it out for this year. I figure the only thing to do is put it into a regular savings account and leave it there.


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## HaroldCrump (Jun 10, 2009)

Colin said:


> What I still need advice on at the moment is what to do with my savings after I max out my TFSA. I got the paperwork for my 2nd semester loan and it will nearly max it out for this year. I figure the only thing to do is put it into a regular savings account and leave it there.


Yes, that is the easiest and safest thing to do at this time.
Shop around for best available savings account rates - the online banks offer better rates than the big 5.
Make sure that the institution you are saving with is covered by CDIC and your account type is eligible for CDIC protection.
In general savings, chequing and GIC accounts are protected by CDIC while investments accounts (bonds, stocks, mutual funds, etc.) are not.


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## Ben (Apr 3, 2009)

Just save your money and sit on it for now. Get the best interest rate you can that does not lock in the principle. 3% is just fine. It is good that you've maxed out the TFSA, and at least sheltered that income from tax.

Your first priority is to complete your education - that's the best return on your money just now. And this means making sure you've got enough cash to pay for your education and the other, potentially unexpected, expenses that could pop up during this time.


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