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Woohoo! 🎉⭐️

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Buying a car in the next three years 🚙

Emergency funds 🆘

Saving for college 🏫

Starting a retirement account 👴

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Stage of investing: Beginning to Invest
Allocation: $5,000
Tool: CD for 3 years
Risk: Low

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Although it may seem counterproductive to invest more into a shorter-term goal instead of the longer ones, in this current situation, it is the best option. Certificate of deposits have a short lifespan but an incentivizing interest rate. It is a good idea to take advantage of this low-risk advantage while I can. I can use some of the $6000 and the additional interest (some may be allocated towards my savings for college or retirement account) to then buy a bigger deposit on my car, lowering the monthly costs I would have to budget to via a car loan. Lower monthly cost means more I can invest into my other goals each month in the long run.

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Although the certificate of deposit is not as liquid as some other savings options (for example, a savings account), in this case we do not need the liquidity considering that we set our goal in the next three years, meaning we do not need our funds until 3 years from now. This option is more preferable than others (for example, investing into stocks) as these options tend not to be very liquid as the profit can only be acquired from long term investing. Again, this goal will only take 3 years.

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Stage of investing: put-and-check account
Allocation: $1,000
Tools: checking & savings account
Risk: low

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Currently I am only in high school, and I honestly don't necessarily need emergency funds until I leave college. This validates my allocation amount, as $1,000 will eventually be increased via my savings and the interest I receive as I journey through the rest of high school and then college. Funds can be added to my checking and savings account in the future as well. This will cover any of the “emergencies” that I may have right now as a highschooler but will eventually be transformed into emergency funds that I can depend on in the future. It will just take time.

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The risk for creating a checking and savings account and then contributing $1,000 into them is not very high. Both accounts are very liquid, more so the checking account, and the probability of a profit from the interest is almost guaranteed. The only thing that could create a "loss" from using these tools is not accounting for inflation. However, this can easily be accounted for as long as I make sure the interest rate is higher than the inflation rate.

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Stage of investing: Systematic Investing
Allocation: $1,000
Tool: mutual funds
Risk: medium

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It is estimated that it can take up to 10-20 years to fully pay off one’s debt for college. For this reason, paying off college will require a medium to long-term investment. In this case, mutual funds are the best way to reach this goal. Mutual funds diversify investments into different investment options, like stocks and bonds, from a professional. This ensures that I don’t have to necessarily worry so much on making sure that I am doing the correct financial choices and I could focus on other matters of my life, such as education or career in the future, and in doing so, increase my income. Also, if one option, such as stocks, aren’t doing so well, then I have other investments in the mutual fund that could cover. This ensures that my future payment towards my student debt will not last a long timespan, thus saving money in the long run. Essentially, investing in mutual funds ensures that I don’t put all my eggs into one basket. As for the amount, it seems little now, however, keep in mind that after 3 years I will invest some of the CD interest and amount into these mutuals funds. Eventually the amount will turn into a high profit, it will just take time, which is perfect since I'll only start paying my future loans 5+ years from now.

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there is some slight risk to this investment. One, I would have to verify if the professional or company behind the mutual funds are trustworthy and qualified. If they are not qualified, then I could risk losing money due to them mishandling it. Additionally, there is low liquidity in this option, since the mutual fund invests in things that take a long time to create a profit. If I were to take funds out of this account during the middle of its run, I could potentially be taking money out of a bad time.

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Stage of investing: systematic investing
Allocation: $3,000
Plan: traditional IRA
Risk: low

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While 30% of my inheritance may seem like a little amount to go towards my retirement, keep in mind that after my CD is over, I will invest a bit more additionally. As for why I chose this plan, soon in my life I will be paying a bunch of different monthly expenses, including my car payment and any maintenance associated with it, college loans, and even eventually a mortgage. Having my taxes deferred would make this process more financially easier for me to handle. This is extremely important because if I am late on any of my payments, I end up paying more in the long run via interest and fees. Essentially, tax deferrals make it easier to keep me financially stable.

Also, in the future I'd like to get a defined contribution plan instead of a defined benefits plan, as with a defined contribution plan, I have more control and my money gets partly matched.

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The risk with investing $3,000 into my retirement plan and choosing a tradition IRA is not high. I understand that it may seem impractical to only invest $3,000 into my retirement plan when I could invest more, but with the extra interest from the CD that I will use to buy a car, I could invest even more to my retirement plan.

Also, I discussed this in the "Allocation Explanation" for this goal, but a traditional IRA seems much less risky than a Roth IRA as not having to pay taxes will make it easier for me to not miss any monthly payments I will have in the future, ensuring that I save more money in the long run.