Disclaimer: We are not financial advisors, just friends sharing knowledge!

Roth IRA

The SECURE Act has come into effect starting 2020 and it has a major implication for graduate students receiving a stipend/fellowship/etc: we can now invest stipend/fellowship/etc into retirement accounts. The bill states:

“The term ‘compensation’ shall include any amount which is included in the individual’s gross income and paid to the individual to aid the individual in the pursuit of graduate or postdoctoral study.’’

Therefore, starting Jan 2020, we can put $6000 per year into an IRA (or Roth IRA). This is great news for graduate students!

Mutual Funds

Many people save for retirement using mutual funds. Mutual funds are professional managed investments funds that are diversified so they are not dependent on one stock or classes performance. They also have the benefit of having low expense ratios (the cost of owning a fund) compared to other managed funds. Vanguard is the pioneer and largest provider of mutual funds. A good starting point for retirement investment is to predict the year you plan to retire and contribute to a mutual fund that matches that target (example: Target Retirement 2055). These funds adjust their assets over time to match the risk profile for the individual.