Investing Advice

Congrats man, No advice here...just curious what industry you're in.

 

Have you set up a Roth IRA yet?

 

I would at least max out your 401k to the point the company matches. But probably just totally max it out since you get tax deductions too. Then I would max out your IRA too. Then I would start looking into other investments.

 

scratch-off lotto tickets

 

Set up an emergency fund with that 5k, and don't start investing your money until you have 3-6 months worth of monthly expenses saved.

 

The emergency fund is a top notch suggestion. I'd put it away in a higher yielding account where you can have quick access IF it is needed. Something like ING or HSBC. If you'd like a referral for ING, let me know.

 

Basic Financial Planning:
Making the Most of Your Money by Jane Bryant Quinn

Basic Investing:
The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein

 

Right now 3-3.5%, but it's been as high as around 5-5.5%. For a basic savings/checking, it's not bad. I use the checking for direct deposit, then schedule payments for all my bills from it the day they are due.

 

hi AzCkR,

If you like the idea of keeping your assets relatively liquid than a high yielding account can work, as can, a basic (CD) certificate of deposite.

The minimums of high yield accounts (i.e. money market, or high yield savings) can vary from bank to bank. For example, where I live there is Fifth Third Bank who offers both money market and high yield accounts. You can open a basic one for as little as $1000, but the yield you get goes up with the balance. Usually, these are quoted in basis points which are 1/100 of a percent. The difference between 3% and 2.75% may not seem much, but is in actuality, very significant in percentage difference.

Since CDs are FDIC insured up to $100,000, you can probably find some that yield as high as 3% without any fear of loss. A lot of banks are having a tough time at business right now with losses in residential loans and commercial credit costs on the rise. What's nice about this scenario is that it also makes banks more eager to collect time deposits like CDs b/c they represent low cost sources of funding. With the FDIC guarantee you can take advantage of higher yields offered by weaker banks without fear of loss should the bank go bankrupt. Mid-tier banks that are decent to strong are also go ways to go albeit they may not offer as a high yield. Thus, the trade off one often sees with yields and the strength of the bank.

Money market funds unlike CDs won't lock you in for a prespecified period. Much like a CD there may be a minimum, but you will likely have a balance to maintain as well here but with the benefit of check writing. It's good for liquidity, but rates will vary where, by my experience, stronger brokerage houses tend to offer better rates than the commercial banks.

Lastly, there are other "alternative" investments in bonds and equities that could work for you too should you see this money as parkable and unneeded for some time. Thanks to the troubles in our financial markets, there are actually lots of opportunities to invest in GREAT situations at fair to bargain prices. It all depends upon your time horizon and risk tolerance.

Anyways, feel free to e-mail me off-line if you'd like to talk more about this.



thefinancialSAGE

 

Want some real advice. Listen to the guy you know for a fact does this for a living. Meaning your relative.

 

I think there is a $250 minimum deposit. No you do not have to keep a certain balance.

 

Agree with the emergency fund suggestion.

I would also suggest picking up a book on technical investing or some other sort of fruitful investment strategy, then start learning and studying the markets now. In some month's time when you've saved up enough additional money to start investing, you can start doing that. These days it's becoming easy to spot market trends and ride them using ETFs, for example.

 

What could go wrong?

Your uncle's advise was solid, but it pays to get a financial education, in case your uncle is there when you need him (or g-d forbid he gives you some self-serving-to-him advice).

 

Wachovia's not a bad way to go. They desparately need deposits. You might want to also check out Countrywide/Bank of America if they are in your area in addition to Citi and Washington Mutual. Wamu and Countrywide can give you good deals b/c they need your cash. Citi and BoA give better deals in general b/c they are just bigger banks.

One thing to keep in mind though, yield alone should not be your only consideration. Given the very probable scenario that (interest) rates will go high between now and '09 (my guess is probably beginning of '09), THE LAST THING YOU WANT TO DO IS TO LOCK YOURSELF IN MORE THAN YOU NEED TO. Why? b/c when the gov't raises rates with the prospect of raising yet again, CD rates, like savings rates will move up appreciably. imho, this more likely than not will happen. So ideally, I would recommend that you go for 6 month CD max and then decide then to either roll over to a new CD or do something entirely different. For the 4% they quote you, expect to only get HALF of that amount as your cash will only be compounding for 6 months and not the full year rate.

When rates shoot higher, you should be able to get a higher CD rate on a rollover basis six months out from now.

My two cents. Does that help?

theSAGE

 

Don't credit unions offer relatively higher rates on CD's and other types of accounts?