College Student w/ investment considerations?

I am a college student / single parent and via student loans and scholarships will get $5000 by the end of the semester. I took the loan out for living expenses, but now the ex is paying child support and as long as he continues to do so, we will be alright. In the field I am studying - my student loans will be mostly paid off in three years due to government incentives (loan forgiveness), if I work full time in an economically depressed area. My first question is - Is it better to keep this money and invest it OR return it back to the gov't student loan program?





I don't really want to return it, because you never know when a car will break down or the child support will stop coming - so I feel far less stressed knowing I have it just in case of emergency.





That being said, If I keep it and want to invest it and make it work for me - while still having access to it when I need it - do you have any suggestions?





Thanks!

College Student w/ investment considerations?
You can invest it in CD (certificate of deposit) at a local bank. CitiBank is now offering a 5;75% interest on a 6mth CD. If you want to access the money and also want to invest it and earn some profit, this could be one of a choice for you. CD is very secure and it is fixed interest. If you deposit into a CD, your interest payment (profit) will be: 5000*0.0575*6/12=143.75. Not that much because your principal is not that much. If you want to earn more from this investment, put more money into it if you can. You can withdraw or re-invest in another CD again and I suggest only if the interest is higher not lower. Well, either high or low you stll can make profit out of it. For CD, you dont have to worry about risky or anything. Stock is not an option for you because you can loose all if the stock is down. And you are in need with that money for child support, etc...Stock will not be a good decision to go for. Go for CD
Reply:The best place to put it that will get you a return better than inflation (inflation is about 3% per year) is an online high yield savings account. Many companies offer this (Etrade, Emigrant Direct, ING Direct, Citibank, HSBC, and a slew of others). They all give roughly 5% interest on the account.





This isn't really "investing," as it is a savings account, but I strongly discourage investing for any term shorter than 10 years, in fact, I wouldn't recommend investing for any term shorter than 20 years, either. A high yield savings account is your best bet, because it won't lose any value, but will earn you enough to beat inflation.
Reply:1st compare the loan interest vs the fd interest it may b lower than the FD interest due to it is a government scheme, if FD is higher than the safest way is keep in the FD, due to as what you mentioned you make ned the money in emergency, so you won't face any risk in short term time, don't forget investment it carries risk.





If you have confident and know how to monitor, then stock is another option but you shall look for the good stock which not much fluctuation and paying high dividend.





The last option is into bond funds which is the low risk investment tools





Lastly before you invest you should analise the investment cost, time and returns factors of course your country environment and regulations

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