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].

With muflax, huh. This sounds like it'll be epic to watch, regardless of how it turns out.

Cookbook for standard best practices in the US:

1. Open a Roth IRA account
2. Select a fund for when you retire
3. Contribute $5000 every year to that fund.
4. If you have money left over, or make more than $50,000 per year and so should be saving more than $5,000 per year, set up a general savings account with the same target retirement fund.
5. Keep your other finances in order. Keep enough cash in your bank account to last you at least 2 months, preferably 3 or more, plus $1000. Emergencies will happen. Don't do anything stupid like acquire credit card debt. If you follow only one step, follow this step.

You have two separate questions tangled into one. I suggest you need to disentangle them. They are:

1. How should I invest a lump sum for minimum stress?
2. Should I invest my lump sum in my startup?

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.

but in, like, some African region that has previously been served by, I dunno, jungle-donkeys

I realise you only meant this flippantly, but... it sounds really unpleasantly dismissive to me. Just wanted to flag this.

Good luck with the money, I'm afraid I have no useful knowledge!

Markets are essentially random walks with an upward trend?

Yes, but with a relatively high variance.

“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”?

This is more or less true (minus some potential entry/manteinance costs)

“Developing world” economies generally grow a lot quicker than those in the “developed world”?

In general this is true, but the variance here is even higher. Lately, though, they are not performing particularly well (see here for example).

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?

Yes, diversification reduces the risk, but the risk for equities remains in general significantly higher then the one for e.g. government bonds (i.e. losing your money is a real concern).

That said, even with a very good allocation, it should be very hard to make more than 8-10% a year with you investent (not impossible, mind you, chaotic systems are chaotic). This means rouglhy 1-1.3K per year in you condition. Of course, mr. exponential says that the longer the investment, the better (barring future market instabilities). It's up to you to decide if it's worth it. On the other hand, if you don't need the money now, there are other forms of investing that block your capital for a longer period of time, but with much lower risk.

EDIT Maybe it's an obvious advice, but be careful about what you're doing. If there's someone you trust to whom you can ask questions and submit invesment proposals for evaluation, absolutely do it. In any case, try to learn at least the basic features of what you're investing in (e.g. stock markets' returns have fat tails, whch means high probability of heavy losses, various derivatives can have many complicated features). I'll be glad to answer any questions, here or by PM, the best I can, but any specific investment must be evaualted on its own.

Markets are essentially random walks with an upward trend?

Yes, but with a relatively high variance.

“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”?

This is more or less true (minus some potential entry/manteinance costs)

“Developing world” economies generally grow a lot quicker than those in the “developed world”?

In general this is true, but the variance here is even higher. Lately, though, they are not performing particularly well (see here for example).

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?

Yes, diversification reduces the risk, but the risk for equities remains in general significantly higher then the one for e.g. government bonds (i.e. losing your money is a real concern).

That said, even with a very good allocation, it should be very hard to make more than 8-10% a year with you investent (not impossible, mind you, chaotic systems are chaotic). This means rouglhy 1-1.3K per year in you condition. Of course, mr. exponential says that the longer the investment, the better (barring future market instabilities). It's up to you to decide if it's worth it. On the other hand, if you don't need the money now, there are other forms of investing that block your capital for a longer period of time, but with much lower risk.

EDIT Maybe it's an obvious advice, but be careful about what you're doing. If there's someone you trust to whom you can ask questions and submit invesment proposals for evaluation, absolutely do it. In any case, try to learn at least the basic features of what you're investing in (e.g. stock markets' returns have fat tails, whch means high probability of heavy losses, various derivatives can have many complicated features). I'll be glad to answer any questions, here or by PM, the best I can, but any specific investment must be evaualted on its own.

The most I've been doing is poking at a post tentatively titled "A dry introduction to the empirical evidence on DI's effectiveness", essentially a summary of "Research on Direct Instruction", since I was feeling like maybe the best thing to do would be to take a step back and present a better explanation of why people should be interested in the theory before explaining the theory itself. (Yes? No? Maybe?)

Personally, I'm eager to actually use DI more in my own learning, so I'm currently working through Theory of Instruction. But some better evidence than PFT would be nice, yes. Especially if it isn't always about basic skills. (Because otherwise, no matter how good the technique, I won't benefit from it.)

My best wishes to your mom. I can sympathize with you a lot there.

If you want someone to read over material you have and give you critical feedback at any stage of the process, I am eager to help you. For example, if you have an outline or are planning on basing your writing on the previous post, I'd be happy to give you feedback on those. Also, if you need access to any papers, I have access to a university library account, so I can get you those. The same goes for Misha. Don't be at all shy about asking me for help. You can either contact me through PM, email me (username at gmail), or make a discussion post.

I suspect the motivation for studying DI shouldn't take more than a paragraph.

Hope your internship is starting off well. Who are you interning with/what are you doing?