<p>I had planned to earn some wages this year and invest about $500 in stocks hence my savings account, but my parents are telling me putting any amount of $$ more than $100 ish will hurt my financial aid. I already receive alot of $ from my school. Will this really hurt me? </p>
<p>Alternative plan: What are some good ways I can play around w/ stocks like it's the real thing without using "real" money ?? My motive w/ stocks really is to play around with the system, be more wary of the current events and just learn the system as opposed to making money (although some money would not hurt)</p>
<p>First, kudos to you for thinking about this at such a young age. </p>
<p>Don’t play around with individual stocks. I know it’s more glamourous to say “I own Disney” than “I own Vanguard Balanced Index”, but the first thing to know about investing is: Diversify, diversify, diversify. Mutual funds help you avoid the risk of putting chunks of money into one company, which is never a good idea.</p>
<p>Next decide what you’re investing for. An emergency cash reserve should be invested differently than money for a down payment on a house, which should be invested differently than your retirement fund. When you’ve decided on your goal for a particular pot of money, then check the websites of the big investment companies (Vanguard and Fidelity are good places to start). They have funds for any goal which will give you the right mix of investments to balance risk and return.</p>
<p>Well thanks for such a sophisticated response but the answer I’m looking for is whether $ in my savings / investing in stocks in general will hurt my financial aid. Moreover, I only wanted to invest about $500 just to learn the system not really try to make money (although that’d be nice)</p>
<p>$500 in savings will not substantially impact your financial aid. Student assets are tapped at about 20% so that would be about $100 added to your family contribution.</p>
<p>HOWEVER…(disclaimer…I am not a stock specialist)…you have to declare the value of stocks, I believe…not just what you paid for them. So…if you hit it lucky and your investment became a cash cow improvement into the thousands of dollars, your assets would be much larger.</p>
<p>OP: I’m sorry, I should have said originally that I know my response wasn’t precisely on-point, and I don’t know the answer to your question about the impact of investing on your FA. One of these days, you WILL want to make some money on your investments, so I just wanted to plant some seeds about smart investing. ;)</p>
<p>As usual Thumper has excellent advice. A Roth IRA will let you invest and keep your money sheltered. Is there an amount students can have in cash or investments before it is hit with that 20%?</p>
<p>The amount IN an IRA is not counted as an asset at all…for parents or students. In the case of a Roth IRA, the money has already been taxed and already is included in the student’s income.</p>
<p>Good question about protected student assets…for some reason, I don’t think the students have an asset protection…</p>
<p>Your original question asked about playing around with stocks without using real money. This is called paper trading, and it’s an excellent way to get somewhat of a feel for the market without actually putting up any money. I say “somewhat” because there’s often an emotional component to stock trading that can’t be replicated when it’s not real money. But paper trading is still a worthwhile way to learn more about stocks, and develop a trading strategy that’s not just randomly throwing darts on the financial section of today’s newspaper.</p>
<p>There are many ways to paper trade. Some brokerages allow you to create and track a model portfolio. One of the easiest ways is to create a Yahoo account and log in to Yahoo Finance. On the right side of the Yahoo Finance home page is a tab that says “My first portfolio”. Click on that tab and edit your portfolio, entering the stock ticker symbols, number of shares, and purchase price of any stock that interests you. Use the notes area to record why you purchased the stock, what your target gain is, and how much of a loss you’re willing to take. Stick to your plan; “sell” the stock if it hits your target gain or loss, and reinvest the proceeds in your next great idea. I believe you can also enter mutual fund symbols in this portfolio, so take LasMa’s advice and create another portfolio of mutual funds. Buy one of each fund category: large cap, small cap, international and bond. Track this portfolio over time as well.</p>
<p>How do you pick the stocks to buy? There are lots of ways to research stocks online. Too many, in fact, as there’s a lot of misinformation out there. Here’s one way: get a trial subscription for Investor’s Business Daily for 2 weeks (investors.com) and download their IBD 100 spreadsheet. It’s a spreadsheet of their top-rated stocks. Study these stocks and understand where the ratings come from. If you find this very interesting and want to know more, then get thee to your public library and read IBD every day.</p>
<p>You are right, Thumper, no protection at all for student assets, just income. </p>
<p>As for “play inversting”, ll you need is a computer, or paper, pencil and news source for market values, and you can do that. My kids have done that as school projects, They have to to research, document and analyze the info, make the choices, document them and then continue for a period of time “investing” and see how they do. They do this in elementary school so it is not a difficult set up at all.</p>
<p>thanks for the great advice all. But just to be safe… would you guys suggest I don’t put money into my savings and invest at the risk of losing finaid? Let me repeat again: I get a lot of aid from the government and the school</p>
<p>FutureCFO-- Good foresight. As many other responders have replied, a few hundred dollars in your savings account is not going to make a huge difference on your financial aid. If it truly worries you, give the cash to your parents for them to keep for the time being (as their assets count less towards your EFC).</p>
<p>As for trading with the money, I would advise against it. If you’re saving money for college, you want that money to be there when you need it. Given the volatility of the markets, it’s very possible for you to lose that money especially as you don’t really have enough to truly diversify without buying a mutual fund. Try using a virtual portfolio like VSE. It’s got a friendly interface, Fb Connect, and you can join a competition or play privately. [Virtual</a> Stock Exchange - Home](<a href=“Virtual Stock Exchange - MarketWatch”>Virtual Stock Exchange - MarketWatch)</p>
<p>While I think saving is a wonderful idea, I need to point out that need based aid is there for those who NEED it. When you have money that could be spent for your college costs but choose to do something else with it, you don’t actually have “need.” Just saying …</p>
<p>^ Just wanted to point out that I do have a “need” and I know $500 is a lot of money but as far as investing $500 is concerned I don’t believe it’s a “a lot” if you know what I mean… plus like I said it’s more about investing $500 as a big learning experience but anyhow I was hoping people could answer one more question: </p>
<p>My EFC isn’t affected while investing if I’m expecting aid for grad school, correct? because grad school aid is all merit-based not need-based</p>
<p>That depends on the program. I work in financial aid. MANY of our students do NOT have any merit aid for their grad programs. They are eligible only for subsidized and unsubsidized Stafford loans (up to $8500 sub, $20,500 unsub max per year). Sometimes there is a little work study available for grads, as well, and possible Perkins loans. $500 would probably not make a difference in the award for a grad who doesn’t earn much, since only $8500 can be sub, anyway.</p>
<p>No. For federal loans, the school will use the FAFSA formula. You can go to a calculator & run your numbers to get an idea how much you can earn before it makes an impact on your eligibility. If you are just making a few thousand, you will have a low EFC. As a grad student, you are automatically independent, so it would be just your income/asset information that you plug into the formula. Depending on your assets, you will probably end up with a 0 EFC. That doesn’t mean a whole lot for need based grad aid, since many schools do not have grad grants. Here is how you determine your eligibility:</p>
<p>Sub Loans: COA-EFC-merit aid/fellowships/assistanceships=Need. You can get a sub loan up to the amount of your Need or $8500, whichever is less.</p>
<p>Perkins Loans: You may or may not be offered a Perkins loan (funding, if available, is usually very limited). If you do, it may be done before or after sub loans. If before: COA-EFC-merit aid/fellowships/assistanceships=eligibility for Perkins (up to the max your school will offer). Then the Sub loan eligibility is done from there: COA-EFC-merit aid/fellowships/assistanceships-Perkins=eligibility for Sub (up to remaining Need or $8500, whichever is less). If Perkins is offered after Sub, it’s: COA-EFC-merit aid/fellowships/assistanceships-Sub=eligibility for Perkins (up to remaining Need or max your school will offer). Keep in mind that need based aid may not be offered in excess of COA - so if you have merit aid/fellowships/assistanceships, that will reduce your eligibility for Sub/Perkins.</p>
<p>Unsub can be offered to bridge the gap between all aid and the COA (EFC is ignored). However, the total of all Sub & Unsub cannot exceed $20,500 for the year, and total aid cannot exceed COA.</p>