It is currently 21 Aug 2017, 18:26

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

How to invest MBA Savings

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  

How to invest 60k over two years for an MBA program

You may select 1 option
Author Message
Intern
Intern
avatar
B
Joined: 15 Apr 2013
Posts: 27

Kudos [?]: 4 [0], given: 9

Location: United States (TX)
Concentration: Finance, Healthcare
GMAT 1: 710 Q47 V41
GPA: 3.35
GMAT ToolKit User Reviews Badge
How to invest MBA Savings [#permalink]

Show Tags

New post 15 Aug 2016, 11:09
Hello!

Thanks in advance for your input. I'm planning on matriculating to a full-time B-school in the Fall of 2018. My wife and I decided to downsize to an apartment and cash out of the real estate market. We sold our home and have around 60k in profit that is going to be set aside for B-school (extremely grateful for this provision!). I will most likely use the money for living expenses during the program, and will take out loans for tuition.

My question is- how would you invest that 60k in the time leading up to the program? Here are a few options I've considered:

- 529 plan. Downside is if the MBA falls through- I'll be penalized for using it on other things.
- CD or bond- low interest, low risk.
- Low risk mutual fund- higher risk than the CD or bond, potential for greater return.
- Head to Vegas, win big, screw loans. 8-)

(obviously joking)

I have about 24 months before I'll need to draw on the funds. What would you do?

Kudos [?]: 4 [0], given: 9

Expert Post
1 KUDOS received
Founder
Founder
User avatar
P
Joined: 04 Dec 2002
Posts: 15384

Kudos [?]: 27207 [1] , given: 5004

Location: United States (WA)
GMAT 1: 750 Q49 V42
GMAT ToolKit User Premium Member CAT Tests
How to invest MBA Savings [#permalink]

Show Tags

New post 24 Aug 2016, 22:53
1
This post received
KUDOS
Expert's post
Good job on taking advantage of the RE market!

This question probably applies to anyone who has $60K and a 2-3 year spend horizon so everyone is out there hunting for the answer (with exception of the 529 option that is on the table for you).

Ultimately it depends on how much fun you think it will be to develop an investment strategy vs. how burdensome it is. While I don't think it is going to be possible to generate substantial growth/dividends from this sum, you can still do well and get 10%+ perhaps if things work out, so definitely worth the hassle. Of course, the yield reality is that CD's and savings accounts are not going to produce more than just 1-2% per year since the rates are low. Stock market is doing better than ever, which some feel means, it is not a great time to buy, esp with your short-term horizon. Bonds and date-based funds are going to be just weak in terms of the yield.

I am not an investment adviser and you should research it on your own. However, you could built out a custom portfolio with 20-30% in Stock funds (growth), 20-30% in Bonds and 20-30% in Cash CD's/High Yield Savings accounts. You can then start with cashing out your best performer (either stocks or bonds) and then draw down the other instruments. Make sure you consider the tax implications. There are good and bad - good is that you won't have much income in school years but you will be taxed on dividents along the way so you may want to consider tax-free bonds (depending on your tax bracket). This would give a good chance to capture any growth from equities but also protect yourself with bonds and cash. Should the worst case happen and some of your equities go down more than 10%, you can always not sell them and wait for the market to recover. However, the percentages should be based on your risk tolerance, at our age, it tends to be pretty good since most of our productive lives are ahead.... and yes, get a life insurance.

Good Luck!
_________________

Founder of GMAT Club

GMAT Club's Special offer for Student Loans only through Aug 31 - New!
Just starting out with GMAT? Start here... or use our Daily Study Plan


Co-author of the GMAT Club tests

Kudos [?]: 27207 [1] , given: 5004

How to invest MBA Savings   [#permalink] 24 Aug 2016, 22:53
    Similar topics Author Replies Last post
Similar
Topics:
Experts publish their posts in the topic How hard is it to get into Investment Banking from top 20 MBA eggplantpower 6 13 Apr 2016, 18:18
Experts publish their posts in the topic MBA Financing -- $0 Savings. Am I Screwed? pennyless 9 01 Jun 2013, 20:12
1 how much cost of MBA mandelawillson 4 11 Jan 2013, 01:47
4 Experts publish their posts in the topic What % of your MBA expenses are from savings vs loans? kdub09 18 12 Oct 2011, 13:30
8 Experts publish their posts in the topic Personal: How much did you save before pursuing your MBA? dominion 36 11 Apr 2017, 01:43
Display posts from previous: Sort by

How to invest MBA Savings

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.