I have some money in savings--just about 3300.00, earning 1% a year. I haven't touched it in a year--its with a credit union in my home state.

I am not rich, by any means, and have never saved more than this in my life(I'm 26). I have a pretty solvent checking account in that I keep a cushion that can withstand a major car repair, emergency plane tickets, etc. I have health insurance with my employer and a retirement account that gets automatic contributions from my paycheck--also provided by employer. This is my first solid relatively high paying job, where I feel comfortable enough not to worry about overdrafts. I'm paying off student loans and a motorcycle.

So...I am wondering what to do with my 3300.00 so I can earn more? Should I open a CD? MOney Market? I'm not looking for a financial planner, just some advice for how I can make this grow a little. Thanks.

If you don't already have an IRA..start one.

ok, I guess I'll go figure out what an IRA is, lol...

CD's are really conservative Jessie. I was just talkin' with my daddy about this the other month....he was saying that because we're still fairly young(upper 30's), that CD's wouldn't be aggressive enough. That basically money markets and IRA's, if they took a hit, then it wouldn't be difficult to recover from.
He suggested money market accounts and ROTH IRA's for us---and you have a helluva lot more to 'play' with than we do!

You definitely can do better than 1% interest though!

I am a bit older and have invested in a number of items good and bad over the years. My money market at the brokerage house makes me 4.75% right now. If you want to invest in some mutual funds I recommend some that are 5 star rated by Morningstar. They have a web site that offers information on investing.

There are a number of ways to invest. A traditional IRA provides tax savings until you take the money out. A ROTH IRA offers saving after you invest, but the contribution is taxable.

A general investment account is taxable. There are limits of how much you can invest in an IRA, but you are far from that number. You are probably also in a very low tax bracket. In that case the suggestion of a ROTH IRA is good.

One issue with all IRAs is that taking the money out is costly. Never invest your cushion in a tax preference account (IRA, KEOGH, 401K, etc).

By the rules of this forum, I can not make specific suggestions for investments. And to be honest I am an accountant by training and an investor by the desire to make my money work for me, but I am not a professional money manager. I suggest that you look at some of the options from major discount brokerages or your bank.

And I do not moderate this section, so it is my advise as an older vet.

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A good financial advisor will not tell you to invest in anything, instead they will run you through a self evaluation test and let you figure out what investment strategy you feel the most comfortable with and offer you a range of options to invest. I have access to a fairly well compensated Financial Advisor in Ft Meyers, FL because I am a trustee.....thats how it basically works with a good Financial Advisor.

All a good financial advisor really does is provide you with tools and HELP you reach a decision. They do not tell you where to invest. Investing seems confusing at first but if you spend time doing research and asking questions you will get the hang of it. My best resource for getting started on my own was Kiplinger's Personal Finance magazine that you can buy off a newstand.

IRA advice above is good and my own rule of thumb for IRA's is as follows:

1. IRA based on a Mutual Fund rated by Morningstar to be at least 3-4 stars.

2. I look at the Mutual Fund as a stock in a company with Net Asset Value (NAV) being the share price.

3. I look for potential for potential increase in NAV as well as annual returns. I don't focus on one to the exclusion of the other. Remember that a lower NAV with potential for upward growth will return more than a higher NAV that is stagnant. If I can buy 50 shares in a company and it increases 15% I'm going to make more then 10 shares in a company that grows 15%.

4. I select a Mutual Fund that invests in U.S. Companies Primarily.

5. I will use a aggressive Mutual Fund investment approach until I am 50.

So as a example I would pick for myself a Mutual Fund Morningstar rated 3-4 stars that had a NAV of under $25 and a Aggressive Growth investment strategy with a weighted portfolio of Company stocks that I felt was relatively safe and not overly high risk (well known US Companies). I also further limit my choices by looking at maintenence fees and picking the one that had the lower fees.

In the Finance world PAST PERFORMANCE is no guarantee of FUTURE PERFORMANCE. So don't give too much weight to 5 or 10 year returns. They are a indication of how the fund has performed in the past not how it will perform in the future.

I look at the stocks that the fund holds in it's portfolio and make a guess on my own how well they will do in the future. I watch the mutual fund stock portfolio over time and make sure it stays in line with what your comfortable with.

Hope all of the above is not too confusing and this investment stuff is up to you and what you feel comfortable with. Like Jennifer said, if your too conservative though your probably going to be losing money. Inflation advances around 3-4% a year and if your only earning 1-2% in interest, your losing 2-3% of your money to inflation.

well, thats not good!


ok, I looked up some info about IRAs...thanks for all the info--I appreciate the help!

CDs are conservative, I agree--but partially thats why they are attractive. I had about 1200.00 in a mutual fund that my grandparents gave me and in two years I lost 600.00--I guess the market was really bad (this was in the early '00s). But I am afraid that will happen again. It was supposed to have been a really stable fund--Monetta, I think it was. But I knew nothing about investments, then--and have not learned anything since--except maybe that it seems like the stock market is always wildly fluctuating.

anyway, I plan to chat with someone at my bank about what is best for me, and I am also going to investigate what kind of fund my employer has--maybe they have an investment option I have not taken advantage of.

Do something with it - you need to take care of yourself for retirement.

Alot of people talk a good talk about investments, but instead would rather live in the here and now and blow it w/ impulse buying.

INVEST!!

You know Jessie, you can always split it as well. Take a grand and throw it in a CD for a year or so, take the other and play with the market. If you watch the tickers, don't take too much stock in the DOW---people see that and freak out too much, just my opinion.
My daddy recently turned me on to what he's been investing in for years now. Damn if they haven't done well and saved his azz when some family crap went down. This is why our family calls him "Bank of Bob"--the man knows what he's doing when it comes to money. But anyhoo, we were talking about the DOW and other stuff, and he said 'you know, don't pay too much attention to the DOW and all the crazy talk about the housing markets. Housing markets and the DOW only make up for a small percentage of the overall picture'.....since then, I've really relaxed about the Market and what's going on. I certainly don't check on the TSP and stuff as often as I did before either.

Just a thought....

quote:

Originally posted by jessieMrs.Someday:
well, thats not good!


ok, I looked up some info about IRAs...thanks for all the info--I appreciate the help!

CDs are conservative, I agree--but partially thats why they are attractive. I had about 1200.00 in a mutual fund that my grandparents gave me and in two years I lost 600.00--I guess the market was really bad (this was in the early '00s). But I am afraid that will happen again. It was supposed to have been a really stable fund--Monetta, I think it was. But I knew nothing about investments, then--and have not learned anything since--except maybe that it seems like the stock market is always wildly fluctuating.

anyway, I plan to chat with someone at my bank about what is best for me, and I am also going to investigate what kind of fund my employer has--maybe they have an investment option I have not taken advantage of.

Posting as a regular poster here....

OK, well you have to do what you feel comfortable with in the investment game so maybe some more advice might help you decide or make you more comfortable with choices.

Quite honestly, I did not save a nickel until I was 35. I am pretty well set now at 44 as long as I maintain my current salary (which should not be too hard).

I am not familiar with the Mutual Fund you selected but the trick is to NOT look at them year to year. I selected mine from Fidelity although the name brand shouldn't make a difference either. There were some years early on that were painful to look at the statement but I left the funds alone and let dollar cost averaging and growth in good years happen.

Over time a mutual fund should grow at least 8-15% annually. That means in some years it will drop by 10% other years it may grow by 22%. Over a 10-15 year duration of time a good mutual fund should perform approx at or above the S&P Index growth rate.

CD's are OK at your age quite frankly, if you feel more comfortable with them then go with them until you learn more. Any investment type that compounds interest is better then one that does not.

On the 401(k) or TSP or whatever it is called. Your money really does not start multiplying appreciably year to year until you hit approx $50-100K in savings, then it starts to really grow fast. Mine took off around $75k.

A lot of people with under $50k in savings get discouraged in 401(k)'s early and don't save enough because the balance looks largely stagnant to them and they feel they could spend the money in the here and now (thats shortsighted). Your balance will hit a threshold where it takes off and starts some decent compounding you just have to be patient.

On the saving money front, don't overlook anything.

I just cut $300 annually from my electric bill by switching electrical providers. From Reliant Energy 15.5 cents KWh to Direct Energy 11.9 cents Kwh. Seems like a small amount of money based on Kwh but it added up over a years time.

Cut your cable TV to basic cable if you don't watch that often and rent movies.

Switch your auto and home insurance if you can find a lower cost provider that is a reliable name.

Start replacing incandescent bulbs in your home with spiral flourescents (they burn cooler, last longer and use less electricity.....they are more expensive to purchase initially BUT cheaper in the long run).

Buy a bike with a backpack and use it for short errands instead of your car in the summer to save on gas.

There are some suggestions to cut living expenses and increase your savings rate.

Anyway, thats my additional two cents worth.

I also like Fidelity, but also have investments in American Funds through my financial adviser. He handles some of our money and we handle the rest.

Since a large portion of my income is fixed my concern is making the money grow until we are 65. At that time I will loose some of the income. I will loose another piece in the next few years and by then we will be able to live off our investments if we need to.

Erich is right. When I worked for one of the Fortune 50 they always taught that the easiest way to make one more dollar is to not spend it. It is easier to cut spending than increase earnings.

It works at home. Things like cutting the Starbucks and drinking coffee at home can save you $1,800 a year. Packing a lunch versus Wendy's is another big saver. One less drink at happy hour is $260 a year. And if you smoke that is about another $1,500 a year. You get my point. There are small luxuries that you can get rid of without suffering and bank another few thousand a year.

We started at 28. We went with a Finacial Advisor since we had no clue. One thing that works for us, and has since we started..

DH was an E5 when we began. he had already been accepted to OCS, so we knew he was going to get an $800/month pay raise.. and that's what we started off with to invest. and ever since then his Promotion payraises have been added to the pot to invest.

Just take one increase in pay that happens..CoL, promotion, whatever, and invest it. you have already been living on the previous amount of pay, so you won't even miss it. Lose all the store credit cards with outrageously high interest rates and keep one bank CC for catastrophic emergencies( the engine blows) and one with a LOW limit for every day expenditures. Pay it off in full each month.

Jessie,

1. Learn about the investing basis. Its your money and nobody looks after it with more interest than you will over your lifetime.
2. Alot of people here have offered solid advice about investing in an IRA etc. Though you feel your on solid financial footing an formal emergancy savings is warrented in my opinion. Three months of savings for a single person and six months for a couple is the generally accepted 'cushion'.

Your $3,300 should give you a strong start for your emergancy savings. In general, liquidity (access to you money) and saftey (highly rated from a credit perspective or government insured) are the two priorities for an emergancy fund.

'On Target'- Motto of 1/84 FA (LAR)

Exchange Traded Funds are the wave of the future, and can work in both up or down markets. There are ETFs, as well as Inverse ETFs.

"DELETED" should be a great place to start, so that you can learn more. "DELETED" is also a great avenue to get your feet wet!


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