1 How Can I Better Invest This Money My Boyfriend and I Plan to Use for Our Wedding? | The Billfold

How Can I Better Invest This Money My Boyfriend and I Plan to Use for Our Wedding?

My mom has $4,000 she has set aside to give to me for a wedding. Right now it’s sitting in a savings account or CD of some kind, but it’s not really earning much interest. She says I’m welcome to manage it if I’d like, in hopes of it “doing more.” So my question is: what should I do with it?

My boyfriend and I don’t make much money, but we’ve managed to build a healthy cushion, don’t have credit card debt and have reasonable plans for our student debt. So this really is just “fun money” that we can use for a wedding in the next year or two. I’d like to do something with it that would earn a good return in a shorter time frame, and might be something I could add my own money to if I have extra at the end of the month to throw at it.

Thanks! — Newbie Investor

“I’d like to do something with it that would earn a good return in a shorter time frame.”

Ah, Newbie Investor, that is a wish we all have! If only we could all make a good return on our investments in a short amount of time! People who want high returns on their money in a short period of time usually head to Vegas. The problem is that only few people win that way.

The thing about investing is that it is a long game. In general: You invest your money, say by putting it in a retirement account, or a brokerage account, and then you leave it there for many years — decades — ignoring the rise and falls of the stock market. You take on risk when you are young (by investing in volatile stocks), and then shed that risk as you get older (by gradually moving that money into conservative bonds). After a few decades, if you haven’t touched that money, you should come out ahead.

Whenever anyone asks me how to invest money I tell them: Go with low-fee index funds. Former bankers say nothing beats a low-fee index fund. Warren Buffet also says it is all about low-fee index funds.

So what should you do with that wedding money in the next year or two? Keep it in a CD or an interest-earning savings account (I don’t say high-yield anymore because that is not really a thing at this point in time)—check Bankrate to see what might be best for you. Set a savings goal for your wedding and continue to save. Keep the costs of your wedding to what you can reasonably pay based on your goals and savings. And then, once you get married and have money leftover (or maybe wedding gift cash), you can put the money into an investment account and think about the long-term.

Congrats, and all the best on both of your futures!

To those of you who have gotten married: How did you save for your wedding? Any advice for the Newbie Investor?



9 Comments / Post A Comment

eemusings (#6,021)

Sound advice – I’d definitely look for the best rate on a term deposit, it’ll probably be better than an online savings account.

How we did it was I basically paid for our (big, expensive honeymoon) and he paid for our small wedding (I make more than he does). Hustled a lot and did freelance work, tutoring and editing, to bring in as much extra as I could.

sherlock (#3,599)

I sympathize with you! As I’ve commented here in the past, I’ve been frustrated with the lack of options for my grad school savings (which I will need to use in about a year) that will get me more than a 1 to 1.5% return. (Though I have made peace with this now.)

I’m curious, since it seems like a conceptually similar scenario, what do people usually do as they’re saving up for a down payment on a house/condo?

spex (#1,159)

@sherlock Same. I’ve been considering opening a 529 with my grad school money, for the state tax break if nothing else, but I’ll need it too soon for investing to really make sense.

boogers mcgee (#4,474)

@spex I’m in the same boat! Right now my savings for grad school next year are in a Capital One 360 account, earning very minimal (I think 0.75%? if that) interest. It feels so futile, and I’d really love to know if there are any better options for what to do with this money for the next year or so.

The Mole (#2,633)

Have low expectations – any CD or other note you put it in for a year or two won’t get your more than a couple percent at best right now, and that’s $40 / year per percent. Not exactly killing it.
If you’re willing and able, throw it in the index fund, but also remember taxes will apply on any earnings, and you’ll have the risk of it dropping.

samburger (#5,489)

@The Mole I would never advocate for short term investing in index funds. One good market correction and a good chunk of that money vanishes.

pizza (#599)

@samburger right on. And a good chunk and can 40% of it.

It is always interesting to hear about what Mike would do! I’ve also seen these kinds of questions get answered over on NerdWallet’s Ask an Advisor platform (http://www.nerdwallet.com/finance/question) where you can ask certified financial planners for free advice, although there’s only so much they’re legally allowed to say.

Peter Daniels (#6,261)

A friend of mine just told me about this penny stock newsletter called Microcap Millionaires, have you heard anything abut it? I am pretty new in this field so I am not sure about it. I read a review of it here but I would like to know if anyone else has any experience with it. http://microcapmillionairesreviews.org/

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