For former students
You turned 18 and want to start investing.
I get some version of this email every year, and it's my favorite email to get. Here's what I usually tell students, all in one place. If your situation has a twist, write me.
Not financial advice. This is general education from a teacher, not a recommendation for your situation. Nobody named here pays me; I name them because they're what I point students to. Rates, limits, and promotions change, so check current terms before you act.
Start here
When do you need this money?
Almost every choice on this page comes down to that one question. Howard Marks, who has written memos to investors for over thirty years, draws risk and return like this:
- Moving right, the middle outcome gets higher.
- The range of outcomes gets wider.
- The bad outcomes get worse.
Riskier investments have to look like they'll pay more, or nobody would own them. Marks' point is that they don't always deliver. Money you need in a few months has no time to wait out the orange. Money you won't touch for decades does.
Months away
Money you need soon
A car in four months. Tuition in the fall. The goal for this money is boring on purpose: every dollar is there on the day you need it, plus some interest. The S&P 500 has dropped about 14% at some point during the average year since 1980, and that dip doesn't check your calendar.
A closer look at money market funds
At Schwab, the one I point to is SWVXX, the Schwab Prime Advantage Money Fund. Its yield was about 3.7% in early October 2026. It's a mutual fund that makes very short loans, often for days or weeks, to the U.S. government, big banks, and large companies, then passes the interest to you. "Prime" means it lends to companies and banks, not only the government. It aims to hold steady at $1.00 a share, so your balance grows from the interest, not from the price moving.
The risks
- It isn't FDIC-insured. It's an investment, not a bank deposit.
- It aims to stay at $1.00 a share, but that isn't guaranteed. In 2008, one large money fund, the Reserve Primary Fund, fell to 97 cents a share.
- In a severe crisis, a prime fund like this can charge a fee to sell. Government money market funds, which hold only government debt, don't carry that risk and usually pay a little less.
A money market fund isn't the same as a bank's money market account, which is FDIC-insured.
What does that difference come to?
In early October 2026: 13-week T-bills paid about 4.1%; SWVXX paid about 3.7%.
Buying a T-bill at Schwab
- In your brokerage account, look under the Bonds tab for Treasury bills.
- Schwab sells them in $1,000 increments.
- Pick one that matures before you need the money. A 13-week or 17-week bill fits a 3 to 5 month timeline.
- On the maturity date, the full amount lands back in your account as cash.
- The interest is taxable federally, so expect a tax form for it.
Decades away
Money for the long run
I usually suggest opening two accounts at the same place, so moving money between them is easy.
Roth IRA
You need earned income from a job. You can put in up to what you earned from work this year, capped at $7,500 for 2026.
It grows tax-free, and withdrawals in retirement are tax-free.
What you put in (not the growth) can come back out anytime without tax or penalty. That's a lot of flexibility for an account labeled "retirement."
Individual brokerage
No income needed and no limit on how much you add.
Take money out whenever you want.
You pay tax on dividends each year and on gains when you sell.
What to buy
Something diversified: one fund that owns hundreds of companies.
- SWPPX
- Schwab's S&P 500 index mutual fund. $1 minimum, and it works with automatic investing.
- VOO
- Vanguard's S&P 500 ETF. Same 500 companies as SWPPX; trades like a stock.
- VTI
- Vanguard's total U.S. market ETF. Everything in the S&P 500 plus thousands of smaller companies, so it overlaps heavily with the two above.
Schwab Starter Kit. As of October 2026, new customers who open a Schwab brokerage account and deposit $50 get $101, which Schwab invests in five large S&P 500 stocks (or you can cancel those orders and keep the cash). Search "Schwab Starter Kit" for the current terms.
The key idea
Make it automatic
- Set up an automatic transfer from your checking account to Schwab. Any amount, on any schedule.
- Enroll in an automatic investment plan for a fund like SWPPX. It buys $50 a week, $100 a month, or whatever you pick, starting at $1.
- Each purchase happens at that day's price. Some land high, some land low, and you don't have to guess which is which.
The part nobody puts on the app
Your brain is part of the plan
Daniel Kahneman won a Nobel Prize for studying how people actually make decisions. One of his findings: a loss feels about twice as strong as a gain of the same size. That's worth knowing about yourself before your account has a bad week.
How often the S&P 500 finished higher, by how long it was held
Total return, 1926 to today, rounded. Past results, not a promise.
- Check your account as often as you like. Notice what you feel when you do, and whether a red day makes you want to act.
- Nobody buys at every low and sells at every high. Not professionals, not me. Automatic buying is a way to stop trying.
- If "short-term investing" means holding stocks for a few weeks or months, look at the top row again. That's why my short-term answer is T-bills.
One question to answer now, while you're calm: if your account dropped 30% next year, what would you do? Write it down. When it happens, compare what you wrote to what you feel like doing.
Proud of you for asking. Questions are always welcome at tyler@thelostunit.org.
Mr. Hensley
Not financial advice. This is general education from a teacher, not a recommendation for your situation. Nobody named here pays me; I name them because they're what I point students to. Rates, limits, and promotions change, so check current terms before you act.