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Q: I am a 19-year-old, male college freshman and I wonder if I should invest in the stock market to increase my funding for school. Any suggestions?
–R. Williams, Greensboro, NC
A: Since you’ve just started college, it is probably too late to seriously think about using the stock market to fund all of your education costs. But you can still save and invest a portion of your money in the hopes that it will grow and help you pay for your junior and senior years.
Investing in stocks would probably be too risky for you right now, so I suggest placing any money you have to invest in inflation-indexed treasury bonds (I-Bonds). I-Bonds deliver a guaranteed rate of interest above the inflation rate and the interest they earn is compounded semiannually. You can cash them anytime after 12 months. If interest rates continue to rise as expected, you’ll earn more interest as you continue to purchase the bonds. I-Bonds purchased between May 1 and Oct. 31, 2004 earned 3.4% interest. You can purchase I-Bonds at your local bank or online at www.treasurydirect.com.
Beyond that, you should still look for scholarships and other programs. Many corporations, such as Burger King and Discover Card, have college scholarship contests that you can enter. Local, nonprofit organizations and churches also give small awards to college students, so make sure you inquire about those as well. With the College Board estimating that yearly college tuition and fees will top $27,000 in 2004, every little bit helps.