@twoinanddone - that’s the part of the equation that I was missing. I just sat down and talked with my parents… We have auto EFC.
As for ‘paying for an expensive trip’, money is extremely tight at home. I’ve been fundraising for 2 years in preparation for a trip. I’ve done literally everything from car washes to selling wrapping paper door to door.
You have auto $0 EFC? If so, your assets do not have to be reported.
Will this be the case next year as well?
@thumper1 - I don’t know, but likely.
You’re ahead of the curve when it comes to investment IQ and management of money.
Just the habit itself of accumulating savings alone, should help keep money in proper perspective well into your 20’s, 30’s and beyond. I encourage you to continue reading, exploring and investing in the stock market (just make sure to dot the i’s and cross the t’s with FAFSA first, if need be).
As a courtesy, and friendly reminder, please keep in mind (as you’re well aware) that virtual paper trading and real, live trading are two complete, different scenarios. The safety of paper trading does not take into account the roller-coaster emotions that you will inevitably encounter. There’s really nothing that will prepare you for live trading imho.
I don’t know too much about your trading background, knowledge, use of investment strategies and emotional temperament, so I can’t speak about the likely outcome, but should you decide to put live money on the line, I kindly suggest that you start with the least amount of money first (1 stock share, 1 option contract, etc), and to see how you respond. Can you keep your cool when things go south (as they always do)? Will this affect your sleeping pattern, and thus, your academic performance?
Depending on your trading strategy (yes, you can set auto buy and sell depending on your trading firm, but slippage can bypass that), you also want to take into account whether if you’ll be able to fully concentrate on your studies as well. As you are aware, you need to perform constant research on each company, make decisions based on forecasts/earnings and to take into account spontaneous, hourly industry news that may affect your trade(s). Will you have a dedicated internet connection available when you need to make an emergency trade? Wait, was that part of your original trading plan? Do you even have a plan?
As always, proceed with caution when it comes to trading with the stock market.
Thank you @UCLAalumPro - that explanation put alot into perspective.
The idea that a kid coming from a low income family is going to start day-trading with his earnings is ludicrous to me. UCLA- did you even read this kids posts?
OP- you need a dumb old boring savings account/money market account with emergency funds in it. It’s just what it sounds like- an emergency fund. Stuff happens. You need dental surgery and insurance won’t cover it. Your eyeglasses break and you can’t wait a week to get to the eye doctor and wait for the inexpensive online prescription glasses to come in so you go to the local optometrist and pay out of pocket. You need to make an unexpected trip home. Etc.
Then, you should look into some safe (read boring) low fee mutual funds. Trading stocks will get very expensive very quickly if you are buying and selling and paying fees. Expect to make mistakes- the higher the fees for every transaction, the lower the likelihood that you will ever see a true profit from trading. So park your excess cash in a solid, low or no fee account which will experience modest growth over time. You can’t get rich from 13K but you can go broke in a matter of months following a buy and sell strategy.
UCLA’s advice is great for someone from a high income family which is bankrolling their lifestyle, college experience, , will give you a credit card to pay for emergencies. Someone in your situation who follows UCLA’s advice will end up broke and stressed out.
You do not need a trading strategy. You need an emergency fund in a bank.
Doesn’t the auto $0 EFC using the requirement of requiring filing the 1040A or 1040EZ also apply to the student? If this student sells any stock or mutual fund share, he might be require to file an 1040 which could cause the lost of auto $0 EFC.
The auto 0 and simplified formula are solely dependent on the parents filing a 1040a or 1040ez if that was the item that qualified them. Which form a student files doesn’t matter.
I don’t buy it. A student from low income family planned to spend $7000 on a trip and want to invest in the stock market with saving. There may be more hidden from FAFSA and IRS. It does not matter how long it took you to save the money for the trip. The way you spend money is not consistent with the claim of low income family.
“It’s just what it sounds like- an emergency fund. Stuff happens. You need dental surgery and insurance won’t cover it. Your eyeglasses break and you can’t wait a week to get to the eye doctor and wait for the inexpensive online prescription glasses to come in so you go to the local optometrist and pay out of pocket. You need to make an unexpected trip home. Etc.”
Blossom provides credible points in her post, and from my experience as a college student, I would say they have merit. I needed emergency money to get my car repair, buy textbooks, a new laptop, visit the doctor’s office and stock up on pertinent school supplies during the school quarter.
“Trading stocks will get very expensive very quickly if you are buying and selling and paying fees. Expect to make mistakes- the higher the fees for every transaction, the lower the likelihood that you will ever see a true profit from trading.”
There is truth to her statement, hence, the cautionary warnings in my original post. Day trading (one of many different trading vehicles and strategies) carries risks, and the novice trader shouldn’t assume that one’s education is full and complete – a recipe for disaster.
Having said that, based on the same content provided by the OP, I’m likewise offering another perspective and educational background that the OP can consider should he/she chooses to investigate further. What the OP decides to do with any of the information will ultimately be at his/her own discretion and will assume responsibility for it.
A couple points of interest:
The OP demonstrates a history of money savings and management. This is key. Incidentally, this is a behavior that many adults tend to grapple with, while only some will embrace and ascribe to. How the OP decides to make this important habit work for (or against) him will be up to him.
The OP also demonstrates the ability to think long term. He/she has obtained scholarships, grants, etc that will allow him to graduate from college debt free (and from an expensive private school). He also has plans of obtaining a doctorate as well (though he hasn’t shown concrete proofs of that now, his history suggests a likelihood). Based on this pattern, I don’t think the OP should necessarily be held back (though with well-meaning intentions) by short-term thinking and obstacles (insurance for dental surgery, new eyeglasses, eye doctor visits, unexpected trips home, etc). This happens to everyone, myself included. While this thinking may threaten a poster’s outlook based on his/her past experience and background, this shouldn’t necessarily color and limit someone else’s ability to explore and discover imo.
The OP also shows the ability to continually learn and grow - a quality that is generally rigid and inflexible in most adults. He admits he’s in a “predicament” and asks for assistance to help “navigate” through his problem (true, while it’s done anonymously, he has nonetheless made the effort to post on CC). While some may criticize and be quick to fault the OP’s thinking in response to the potential risks of stock trading, he admits that the response help put the topic into “perspective.” Whether that means he’ll give up on stock trading, think twice about it, do a little research, give it time to think about it, look into other pursuits, etc, illustrates his capacity to learn and grow. He doesn’t know it all.
“ … you should look into some safe (read boring) low fee mutual funds.”
This is true. However, millions of Americans have likewise found another similar investment vehicle, whose returns aren’t held captive by the expensive “low fee” of mutual funds. Sometimes the decision of one’s education, thinking, focus of opportunities, embrace of change (irrespective of one’s demographics) can be illustrated and reflective by the six-figure digit savings one can realize and amass after a parallel span of 30 years.
And what about the $6000 in external scholarships received? What are the chances that CollegePianist reported them to his/her college? Was the $7000 in income earned through yard work and babysitting over the years reported on his/her 1040 with Schedule C?
" I don’t buy it. A student from low income family planned to spend $7000 on a trip and want to invest in the stock market with saving. There may be more hidden from FAFSA and IRS. It does not matter how long it took you to save the money for the trip. The way you spend money is not consistent with the claim of low income family."
??
Many kids plan expensive senior trips. Maybe the OP had higher income friends and didn’t wanna miss out…parents obviously can pay, so it’s up to the kid to come up w/the money. And just because parents are unfamiliar with certain financial aspects (such as investing in stocks) doesn’t mean that the kid is (although it’s still not a good idea). And yes, you might say “well if he/she is low income, shouldn’t all his $ go towards helping out at home?” Uhh not necessarily. The parent income might be low enough to qualify for simplified needs tests, yet high enough for them to meet their basic needs. Plus, speaking from experience, there’s a lot of parents who wouldn’t take $ from their kids no matter what, for whatever reasons…Point is, we can’t assume the OP’s lying based on his/her spending choices.
You forgot OP demonstrates an inability or inattention to understanding FAFSA, taxes and avoiding fraud.
I don’t think he/she was deliberately trying to commit fraud. The OP did express a desire to do things legally. He/she was looking for a legal way to not have to report the assets (which there isn’t of course, unless he/she qualifies for the needs test).
OP, when you filled out the FAFSA, did it let you skip the assets questions?
Read post 20. The OP says he or she has an auto $0 EFC which means assets are not reported. So…the assets did not need to be listed on the fafsa.
Now…income…that is another story?
@annoyingdad with simplified needs, or auto $0 does student income get reported?
Why can’t low income people do those things? Many public schools in our area offer a senior trip to Europe and a lot of kids seem to think that going will give them a leg up in the college application process. Families start saving several years before, which often means kids working to help raise the funds, so they have the opportunity to do what their higher income classmates are doing. And kids are required to take at least one economics course in high school, so even low income kids are exposed to investing.
The OP wrote that two years of active fundraising took place before booking the trip to Australia. This is not at all unusual for students who are planning to participate in a student exchange program such as AFS, or People to People.
I can understand that the OP is exited about the possibilities presented by investing in the stock market. Happydad was too. When he picked his own stocks and did all of his own research, he lost almost all of the money. He gave up on that notion, and now subscribes to one of the Motley Fool newsletters and uses some of their investment suggestions. All of my money is in mutual funds with TIAA-Cref. We are just about even, and I put absolutely no effort into my investments.
Well I don’t know. If you have no knowledge of when income needs to be reported on a tax return, or how to fill out FAFSA, but think it’s a good idea to invest the money in the stock market, do you know how to correctly report your earnings from that endeavor?
My D did not know how to fill out FAFSA, neither did I, but I followed directions and I showed her what we entered before we submitted it. It is the student’s FAFSA and you sign your name to it. You need to make sure what gets reported is correct.
Same with taxes. Even if someone else prepares the return, you need to understand what is being reported and sign your name to it verifying its accuracy. If you have income from babysitting, yardwork, if it is over $400 a year you need to file a return (it’s considered self employment income).
I don’t know much about stocks, but if you sell it for more than you bought it, that is a capital gain I believe. Also reportable on your taxes.
There is another wrinkle here. If you are receiving scholarships and grants that cover your complete cost of attendance, then you have taxable scholarship income to report on your taxes.
Scholarships and grants that exceed qualifying education expenses (QEE), which are tuition, mandatory fees and books, are to be reported as income on your federal and maybe state tax return.
If you got money for room and board, travel, personal expenses and computer, that amount is taxable. It could well be over $20,000 depending on the school. Only about $6,000 would be deducted from your job earnings and taxable scholarships for standard deduction. The rest would be taxable.
So the suggestion about saving the majority of your money is a good one, for taxes, emergency expenses and such.
You might even need a car later to go to internships and such and your parents might not be able to help with that.
Ha Ha. Is this how it is now?
In the old days, kids worked so their family wouldn’t have to be on assistance. Now, we have trips to Austria and cash in the bank and we still take public money.
This is, what, the third thread on how to hide your assets so you can get more money?
I would not be planning on spending the money right now. What if you want to move off campus in later years. You need to have a security deposit and one month’s rent up front, maybe months before classes start.