I am currently using a method that I have called stretch investing in my current life and we will see how it turns out as I make it through this school year. In case you didn’t know. I am a student and I have little to no income coming in from August to May every year. Fortunately I work as an intern/co-op in the engineering industry in the summer which is a very lucrative and rewarding experience. This past summer I was working at a large manufacturing company as an intern and decided I was going to try to maximize my returns and to stretch the money I made as much as I can. So here is what I did. I invested everything I made and I mean EVERYTHING. I use excel spreadsheets to track my income and expenses down to the dollar every summer when I work and as you can see I spared no expense to invest everything I made.
|8/11/2017||$1,400.00||.75 of paycheck|
|IN tax refund||$22.00|
|ebay||alternate income sources|
|total made:||$9,136.41||total invested:||$5,950.00|
|% invested of net||97.80%|
|% invested of tot||65.12%|
|net:||$6,084.03||invested per month||$1,878.95|
How and why did I do it?
How: I use my credit card for all purchases, between the ease of keeping track of what I was spending and where I also received cash back rewards. On pay day (every 2 weeks on Friday) when the direct deposit hit my bank account I would pay off my credit card routinely. This kept my credit utilization low and prevented me from digging myself in a hole. The rest was invested as you can see nearly 98% of what I didn’t spend to live (food, gas, rent, etc). I didn’t really have any savings that summer, I didn’t intentionally stash away money in a savings account or anything, it all went to investment accounts (Robinhood for stock investing, Lending club for peer to peer lending, and Stash to invest in ETF’s)
Why: I believed that the returns of over investing and the hassle it created would outweigh the risks. I should also mention that a job as an intern is relatively secure, it would cost more to hire and fire me than it would to let me work the 12 weeks I was designated to. The pay was consistent, if anything big happened I had my parents I could rely on and a joint debit card between my dad and I. With all of that in mind that is why I assumed this risk.
What happened afterwards:
The plan was to use Lending Club payments to cover my weekly expenses and use returns in stash to cover larger expenses that came up. Again my parent’s cover my living costs at school and what not so I have relatively little financial obligations during the school year besides what I do myself (going out to eat, bar, etc). Unfortunately I do the latter quite often and the $100 a month I was receiving a month from Lending Club just couldn’t keep up. That and added costs of things like winter break trips etc required me to pull money from stash more often than I liked to. Overall I think it worked out alright, if you can stick to a stricter budget and can forecast your expenses well then the returns you receive from your investments will benefit you. An example is while I was pulling money out of Lending Club from September to November 15th, my immediate average return increased 2.8% in 2.5 months. Which is clearly better than sitting in a savings account earning a measly .1% interest annually.
I plan to keep updating this method that I have created and give my results and feedback from it. I would also like to point out that this is not for everyone by any means. I took a calculated risk with a safety net of my parents should anything go seriously wrong with my investments.