[EDIT: Through conversation with Rolf Andreassen below, it has been brought to my attention that I am simply completely and irretrievably insane.
Sane and well-measured advice is therefore wasted on me, and I just wanted to edit in this notice here so that other well-meaning folks don't get tricked into wasting their time trying to talk sense into a total nutcase like me. :)
(I appreciate all y'all, though. ^^ ) ]
So my dad set up a trust fund for me when I was a kid, and I've got 13k (CAD) now, which I am going to be taking direct control of.
Now, I have no interest in making a deep study of investment. I have a life to live and dealing with money is boring.
The only thing more boring than dealing with money, is dealing with a lack of money, and so I want to optimize the time and thought I spend avoiding that down to a minimum.
Four things occur to me:
1) Taking the naive and sparse knowledge I have of this area, basically just stuff I‘ve randomly osmosis’d up, this is my train of thought:
Markets are essentially random walks with an upward trend?
“Index funds” are magic boxes that you put money in and your money will grow at the same rate of the market that the fund “indexes”?
“Developing world” economies generally grow a lot quicker than those in the “developed world”?
(This makes sense to me. Places like the US, Canada Europe, etc, already have mature transportation and communication infrastructure. You can't get much economic growth out of doing basic stuff like building a new highway here, but in, like, some African region that has previously been served by, I dunno, jungle-donkeys, it makes a proportionally much bigger difference.)
There are a few countries where “developing” is a euphemism for “totally messed up”, but in general it really does mean “growing”?
And there are enough of these places over the world, and they're independent enough, that natural disasters/political trouble/etc in a few of them still leave a consistent and high rate of average growth?
So shouldn't I just put all my money in a fund that “indexes” all these "developing" economies together?
2) My dad set up this trust fund with a bank that has a bunch of big expensive physical buildings for some reason. I recently read a letter from them saying that they will charge a $100 yearly fee for having less than 15k in an account.
Are there better options I should be taking than opening my own account with an institution that thinks it makes sense to charge me a hundred bucks for not being rich?
3) Me and muflax are actually going to go work full time on developing [this totally amazing educational technology that will completely revolutionize human civilization but you have no reason to care about that until you've seen a demo in action so nevermind].
We might spend as much as a year (yeah, that's outside-view calibrated) working on it until we have something we can make a living off of while continuing development.
We think we can get total living costs for a year down into the 5k..10k range… maybe even lower. We're going to be living in the UK, because of reasons.
So… can I leave this measly 13k in an investment account and still draw out of it for monthly costs?
4) Or is this whole “investing” thing something I should even be bothering with at all right now?
Should I just pop out the whole sum into a savings account that I can draw from as I need, and worry about reinvesting whatever is left over then, a year from now, after we have obviously started on our way to becoming rich and famous?
You have two separate questions tangled into one. I suggest you need to disentangle them. They are:
People seem to be answering number 1, but that rather depends on you having decided that the answer to number 2 is "no". My opinion is that, if you believe your startup has a good chance of success, then yes, swing for the fences. Thirteen thousand is not a huge sum - if you get a reasonably good job, you can easily save up that much in a year. But it will keep you in ramen noodles long enough that you can tell whether your startup will succeed or not. So, your downside is very limited by adult standards, but the upside is presumably quite large.
If I were going to go for the startup, I would split my 13K in two halves. One half goes in a checking account, ready to pay for my ramen noodles for the next six months. The other half goes in a six-month CD, where it will accumulate 32 dollars and fifty cents of interest. Obviously this is not intended to actually make money, it's a precommitment to not touching that half until next year. Then in February, take the money out of the CD and re-evaluate the startup. Does it still seem like a good idea? Great, more ramen noodles. If not, give it up, start looking for a job, and put the remaining 6532.50 in a proper investment account.
For added precommitment, you could try splitting up the first half into a ready sum and a three-month CD, perhaps even some one-month CDs that you roll over until you need them; the interest will be utterly derisory but it's a convenient way of managing your monthly budgets.
Incidentally, if you haven't already done so, for the sake of all the absent gods go and read Paul Graham's essays.
... Yes, the winner is you.
Our answer to 2, from the depths of our souls, can only be: Hell. Fucking. Yes.
Now, Paul Graham is awesome (he has left me in a state of complete conviction that LISP is the One True Way, to which I must aspire), but that's... alot of essays. (An entire herd of alots, majestically migrating across vast prairies of prose.)
And I think our "startup" is going to be a lot different from what is normally meant by the term, so... I'ma sketch said differences, and you can tell me what you think is relevant, if you want.
Our &q