HOT MAMA! Where To Put Your Money If It's Just Sitting In a Checking Account

[Giscardo]

Originally posted by: Kwad Guy

Oh yeah, I forgot: Publicly traded big companies are by definition safe and sound. I think I'll go buy some Enron today.

HSBC of Delaware has Bankrate and Safe & Sound ratings of 3, which are quite average AT BEST. A good bank should have ratings of 2 and 4, respectively, and a great bank would have ratings of 1 and 5, respectively.

Exact same thing for the ING bank.

If you think "publicly traded", "billions in assets", and "worldwide corporation" mean anything with regard to how good a bank is, then I expect you don't have enough money to need to worry about this, anyway.

Kwad

What banks have good ratings, or would you recommend any to open a savings account? Or a place to do the research?

 

[dp004i]

Why not invest in some mutual funds instead?

 

[ng12345]

you should update these rates .... citibank is showing 4.75% now

as compared to hsbc's 4.65% and ing's 4.15%

 

[scb175]

If you have money in ING and Emigrant, can you transfer money between the two?

 

[Meritt]

dp004i:

Because everyone should have a bit of savings in a totally secure situation that is easily accessible. The intent of these isn't to become rich from ING/Emigrant/HSBC, but to make a little bit of a return on your savings as opposed to your local bank that is offering a whopping 0.30% or whatever.

I would suggest keeping 3-6 months of living expenses in a savings account (less if you are more financially responsible, more if you don't trust yourself so much) and then start looking at stocks, bonds, and mutual funds.

If your only form of "liquid" money is in mutual funds, you are taking a considerable risk (compared to savings) in that a] you might see a negative return or lose it all and b] How quickly can you get that money in your hands in an emergency?

 

[ShizNet]

Where To Put Your Money? freezer 419 of course!

step 1: invest in 419 - Nigeria
step 2: freezer - Washington
step 3: profit? - Big House

 

[russr]

Thanks for this info. i found it helpful. Is what you say true for something like a ROTH IRA as well?

Originally posted by: Meritt
dp004i:

Because everyone should have a bit of savings in a totally secure situation that is easily accessible. The intent of these isn't to become rich from ING/Emigrant/HSBC, but to make a little bit of a return on your savings as opposed to your local bank that is offering a whopping 0.30% or whatever.

I would suggest keeping 3-6 months of living expenses in a savings account (less if you are more financially responsible, more if you don't trust yourself so much) and then start looking at stocks, bonds, and mutual funds.

If your only form of "liquid" money is in mutual funds, you are taking a considerable risk (compared to savings) in that a] you might see a negative return or lose it all and b] How quickly can you get that money in your hands in an emergency?

 

[bennylong]

Originally posted by: ShizNet
Where To Put Your Money? freezer 419 of course!

step 1: invest in 419 - http://www.secretservice.gov/alert419.shtml">Nigeria</a>
step 2: freezer - http://www.cnn.com/2006/POLITICS/05/21/jefferson.search/index.html">Washington</a>
step 3: profit? - http://en.wikipedia.org/wiki/Prison">Big House</a>

Is money worth more freezed? Kind of like aged Steak or aged Whiskey.

Congressmen should do what I do with money, punch a hole in your wall and deposit it there. Then put a Mirror or plaster the wall to cover up the moneyhole

 

[Meritt]

Which portion of what I said are you referring to for a ROTH IRA?

A ROTH IRA is an investment for retirement in which you place your after-tax dollars into this. It allows a maximum of $4,000 a year contribution ($5,000 if you are 50+).

However your money is most definitely not fluid, although there are no penalties/fees for early withdrawals (such as Traditional IRA and 401k plans), you still have to meet eligibility requirements for withdrawal.

Generally education, emergency, medical, etc expenses are allowed to be withdrawn -- Funding your new home entertainment center or new car is not allowed.

IRAs and 401k's are great retirement investments, but again they are not something I'd place money which I might need immeditely in. A ROTH IRA is tax-deferred from your profits on interest earnings. (Your contributions were already taxes as regular income)

 

[Alienwho]

So how much could I get to open up an ING account at 4.15% and dump $4,000 or $5,000 in? I don't see it personally being worth the trouble unless I was able to cash in $25+ a month on interest. Also are there any stipulations or negative effects? Also what is the exact math equation to figure out yearly monetary gains off of interest?

 

[Meritt]

Alienwho:

Well that 4.15% is APY, so the compounding interest is already taken into account. On $5000, at the current rate, that would get you $207.50 the first year, or about $17.29 (it'd be less the first 6 months, more the last 6) a month.

Take a look at http://www.math2.org/math/general/interest.htm for exact math equations, but realize you need the actual APR and not the APY.

Honestly I just got a lead on http://www.gmacbank.com which is offering 4.75% APY (An extra $30 a year in your case), which I'll probably be switching to.

Worth it?
Well, what is that $5000 doing otherwise for you? I know $17 a month is a paltry amount, but then again, it's a hell of a lot better than $1.25 a month (How much you'd earn on a US Bank savings account at 0.30%). And it's hardly any trouble. It takes about 10 minutes to fill out the online application, then wait about 2 days for the ACH verifcation to your bank account.. at which point you are free to transfer to/from your ING account as much as you'd like.

I can't speak for all the other banks, but ING has no minimum fees/requirements or maximum transactions... they are very flexible in that.

Negative effects? That $207.50 a year is subject to capital gain tax... just like any income from interest.

 

[Meritt]

For any investing, however, the real profit is realized over a much longer time period. Say you stick that $5000 in the account tomorrow, and an extra $75 a month for the next 10 years, all the while it's gaining 4.75% APY.. after 10 years you would have $19,381.74 -- But out of pocket money? Only $14,000. $5,381.74 would be entirely from interest earnings.

From an investment perspective, that amount of money would do much better in mutual funds/diversified stock investments, which average around 7% return for medium risk/medium growth portfolios.

 

[Alienwho]

Thanks for the informative post. I'm a college student and have a few more years of college to pay off. However I'd like to get started in this kind of stuff early. That's why i'm kind of iffy, I think I could easily spare $5k to dump in some account and not ever have to use it. But then again I'm young and single and I don't want to get into a hole that say I get married next year and have to bring out some money for wedding costs/buy a house/whatever. It's tough to know what to do.

<edit>

I would say I don't even touch 75% of my income. I just have that sitting in some MoneyMarket account and I don't even know what my return rate is, probably like 1.5%

 

[Meritt]

Alienwho:

I know it seems ridiculous to think about this now, but starting a retirement account at your age is an extremely good idea. If you are employed, see if your employer does a 401k, otherwise take a look at IRA's (Traditional and Roth). They are a great way to start a retirement savings early and there are numerous tax deferment/removal benefits and the longer you have your account open the more time interest will work in your favor.

One thing to keep in mind, as you said you are paying off college, is to start paying those of as soon as possible. If they are federal stafford loans and in repayment now, chances are they are at 5.3% APR. Start making more frequent payments and in larger amounts towards those loans so you can get rid of them as quickly as possible. That 4.75% is nice and all, but your money would better be put towards that loan where it's, effectively, saving you 5.3% versus that 4.75%.

I'm not saying blow your savings into one lump payment towards student loans, but if you are making the minimum on your student loans and placing $100 a month into savings.. I'd look at instead putting $25 into savings an and extra $75 towards paying off your debt.

Not to mention payments towards student loans are tax deductible where as capital gains from interest is taxed. That alone is going to substantially increase that gap between 4.75 and 5.30, making it a better decision to get rid of debt now.

 

[Alienwho]

Well I should rephrase my sentance that I have a few more years of college to pay off. I am still in college and I pay everything in full. I am not in debt at all. I meant to say that I still have tuition to pay for a few more years, heh.

Basically I want to find a place to store my cash that gives me the highest return with no setbacks (including the ability to use the cash in need of an emergency). I know it's one of those almost fantasy plans. My current company is "in the process" of setting up a 401k plan for its employees (as they have been for the past year now).

 

[Meritt]

Ahh, gotcha, avoid taking out loans if you can. Also realize that most of your tuition, fees, and book expenses can be deducted from your yearly income.

If the company is dragging their feet, go ahead and get an IRA setup. There's no reason you can't have both anyway. After your initial savings amount, you might want to do some research and put some money in a mutual fund (which will most likely have a higher rate of return.. but there is a bit of risk, of course)

Sounds like you are on track either way about it.

 

[Googer]

Originally posted by: Meritt
dp004i:

Because everyone should have a bit of savings in a totally secure situation that is easily accessible. The intent of these isn't to become rich from ING/Emigrant/HSBC, but to make a little bit of a return on your savings as opposed to your local bank that is offering a whopping 0.30% or whatever.

I would suggest keeping 3-6 months of living expenses in a savings account (less if you are more financially responsible, more if you don't trust yourself so much) and then start looking at stocks, bonds, and mutual funds.

If your only form of "liquid" money is in mutual funds, you are taking a considerable risk (compared to savings) in that a] you might see a negative return or lose it all and b] How quickly can you get that money in your hands in an emergency?

Disclaimer, please consult a professional advisor before makeing any investment or savings decisions. As with any investment there is always a risk involoved that can result in a total loss of assests. Be advised that any advice given on this forum is strictly opinion based and should not in it's entirety be considered as fact.

Have A Great Day.

 

[Meritt]

Heh, thanks.

I was hoping the forumers would be intelligent enough to not need a hand-holding through investments, but yeah I suppose it's a good idea just to be safe so people don't lose all their money.

 

[Googer]

Originally posted by: Meritt
Heh, thanks.

I was hoping the forumers would be intelligent enough to not need a hand-holding through investments, but yeah I suppose it's a good idea just to be safe so people don't lose all their money.

Even the best and brightest often make some of the dumbest financial decisions. Temptaion, lust, and greed are powerful forces that even Mensa Members may have a tough time with.

 

[Kenji4861]

new rates updated. Don't go for ING Direct.

 

[Ricochet]

Wow, just when I opened HSBC a week ago, Citybank e-savings comes up with a 5% one.

 

[saymyname]

I still want to point out that shopping your local banks/credit unions can pay off. I thought citibank was higher than mine now that it hit 5%, but my bank has been constantly raising their rates so I'm still higher at 5.1%.

 

[GrammatonJP]

HSBC now @ 5.05

 

[NICKel]

Did I read the terms right on HSBC $3.00 to transfer money to other bank accounts?? ? That is going to add up to more than interest .... if u do it a few times a month

 

[Ricochet]

Originally posted by: NICKel
Did I read the terms right on HSBC $3.00 to transfer money to other bank accounts?? ? That is going to add up to more than interest .... if u do it a few times a month

I didn't even read the fine print but if true, that really blows. Looks like I won't be moving funds very much.