about to start 5 5 year CDs at 1k each

[Relmiw]

hey guys, i started a thread similar to this a while ago. i've found my self in a similar situation again.

i'm 26, working on my undergrad degree and planning on grad school in 2 years.
here's where my money is:

5k in a balanced vangaurd fund
5k in 3 year CDs (started 4 months ago)
13k in savings account (.1% interest)

i'm getting more in financial aid than i anticipated, so i've got some more money to put away
i can't put it away too far or take too many risks though because i might need some of it for all things grad school related.

i would like to put 5k from my savings into something, right now CD rates are below 1% on short term CDs, 1.1% for 3 years, and 1.8% for 5 years, with a 6 month penalty for cutting the CD short. this means it would be more profitable to cancel the 5 year CD after 1 year rather than just let the 1 year CD mature.

i wouldn't mind doing something completely different as a way to sort of diversify, explore, get my feet wet with different aspects of investing.
can ya'll think of a better option for me?


ideally i'd like to put some money in some high risk funds, as well as put away in an life insurance and retirement fund, but i'm not sure i can start on that until after school is over.

[snafu]

Since you have little investment experience, have no idea of grad school expenses, this might be a great time to learn more about investing and your risk tolerance. Some of us have lost 50% of the USA portion of our portfolio during the worst point of the downturn. It was really hard not to chuck it and sell off the losers, particularly those in a retirement segment and not replaceable. Some of us shut our eyes and kept buying according to our 5 year plan. I kept telling myself it was like buying stocks 'on sale.' When I wavered on that, I asked myself to pretend I spent that sum on a holiday in Las Vegas. I have a high risk tolerance but I still shudder when the monthly statement arrives. The other holdings are recovering, the USA set is inching upwards not yet even breaking even with initial investment.

The point of diversifying is to buy international funds and different market segments. Buying Vanguard Balanced MF gives you their split between bonds and equities. CDs are like adding to the bond segment of your portfolio thereby tipping your 'Balanced' account out of balance.

Wealthy Barber, Motley Fool and two easy to read books likely available at your library.

[Slug]

If you're going the CD route, just be sure to use ALLY for them since they seems to have the least punitive penalties on their 5 yr CD's.

[feh]

Don't buy CDs now. You can get better rates in a savings account.

[fiscallyprudent]

Read "The Coffeehouse Investor". It's an easy read and the best book I'd give an undergrad student. It will open your eyes for your investment journey. There are lots of other excellent resources, but this should be a great start.

Good luck on your studies!