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Financial Advice?

A

Asharus

Senior member
Edit: She has no debt, and lives w/ her parents.

My girl has 10k in her savings account w/ only a .5% interest rate, or something like that... That's unacceptable.

What type of investments should she look into? Perhaps move her savings account to Orange? What type of "safe" investments should she look into?

Sorry, we're newbies when it comes to saving money...

As for myself, I have 6% of my paycheck to 401k, and 4% to my company's stock purchase plan. I figure I should save at least 10% of my income, and still have enough to pay bills, etc.
 
i agree with the ING direct. unless you have a local bank that can give higher interest.
ing gives you what, 2.1% for savings if i'm not mistaken, and higher if you leave CD's for a year +
 
Beyond clearing your debt, it is a good idea to have a large amount of liquid money.

1. You can use it as a down payment on a home.
2. You can use it in an emergency.
3. You can live on it if you lose your job.

Most advisors recommend 3-6 months of living expenses.

OK, so you are debt free and you have your cash buffer. Now what?

Best bet for your average joe/jane is to invest in a mutual fund via a direct deposit program (e.g. $500/month from your checking account) Regular investing will soon add up.
 
Yeah, I'm thinking about opening an Orange Savings account there too. How does that work though? Can I transfer funds to/from my local checking account freely?
 
Originally posted by: Asharus
Yeah, I'm thinking about opening an Orange Savings account there too. How does that work though? Can I transfer funds to/from my local checking account freely?
Click to expand...

Yes, it's completely free, although you are limited to (I think) 5 transactions per month, but that's a federal rule, not an ING rule.
 
Originally posted by: Mwilding
Beyond clearing your debt, it is a good idea to have a large amount of liquid money.

1. You can use it as a down payment on a home.
2. You can use it in an emergency.
3. You can live on it if you lose your job.

Most advisors recommend 3-6 months of living expenses.

OK, so you are debt free and you have your cash buffer. Now what?

Best bet for your average joe/jane is to invest in a mutual fund via a direct deposit program (e.g. $500/month from your checking account) Regular investing will soon add up.
Click to expand...

I was also looking at ING's mutual funds, but this scares me:

Mutual Funds are:
? not insured by the FDIC;
? not a deposit of or other obligation of, or guaranteed by, ING DIRECT;
? subject to investment risks, including the possible loss of principal amount invested.
 
Originally posted by: Jzero
Originally posted by: Asharus
Yeah, I'm thinking about opening an Orange Savings account there too. How does that work though? Can I transfer funds to/from my local checking account freely?
Click to expand...

Yes, it's completely free, although you are limited to (I think) 5 transactions per month, but that's a federal rule, not an ING rule.
Click to expand...

Interesting, does that apply to accounts within your local bank as well?
 
should have 3-4 months of "put roof over head and eat" in savings.

the rest she can put in an index fund. provided she doesn't have any revolving debt in which case she should pay that off first.
 
Originally posted by: Asharus
As for myself, I have 6% of my paycheck to 401k, and 4% to my company's stock purchase plan. I figure I should save at least 10% of my income, and still have enough to pay bills, etc.
Click to expand...
Just curious, is part of your 6% company matched? I'd imagine it is, and I'd imagine that your company matches it wil stock. If so, then you might want to take away that 4% of company stock. It's all about diversification. If you need to put away that money, put it in a savings account.

For instance, my company matches 75% of the first 6% of my paycheck that I contribute with company stock. If I also get 4% in out stock purchase plan, then 59% of the money I put away every month is in company stock. Not good if something happens to your company, no matter how secure you think it is. Plus, what if the stock just goes down.

Seriously, D-I-V-E-R-S-I-F-Y!!!!!
 
Originally posted by: Asharus
I was also looking at ING's mutual funds, but this scares me:

Mutual Funds are:
? not insured by the FDIC;
? not a deposit of or other obligation of, or guaranteed by, ING DIRECT;
? subject to investment risks, including the possible loss of principal amount invested.
Click to expand...
That's true of all mutual funds -- they are like buying tiny fractions of shares of stock in dozens or hundreds of companies. As with any stock purchase, there is risk that stocks will lose value.

An "S&P 500 index" mutual fund gives you little pieces of all 500 stocks in the S & P 500 index. It's one of the safest and best stock market investments you can make, because the fund company charges very little to manage the fund, and with 500 different stocks even when some drop in value others gain at the same time.

Over decades this kind of fund has averaged about an 8-10% gain, but you shouldn't buy any fund and expect short-term gains -- you have to plan to hold the fund for 5+ years to ride out the short term ups and downs.
 
Originally posted by: Asharus
Originally posted by: Jzero
Originally posted by: Asharus
Yeah, I'm thinking about opening an Orange Savings account there too. How does that work though? Can I transfer funds to/from my local checking account freely?
Click to expand...

Yes, it's completely free, although you are limited to (I think) 5 transactions per month, but that's a federal rule, not an ING rule.
Click to expand...

Interesting, does that apply to accounts within your local bank as well?
Click to expand...

I think it involves any transaction from one bank to another (i.e. one account can only send/receive funds from an account in another bank 5 times per month). I'm not certain of that, though 🙂 Sorry!
 
just remember that a whole lot of comapanies don't use stock for their 401k.

but for sure - putting money into a company stock and also for retirement is a bad idea.

company has trouble then you're doubly screwed. Out of a job, and no retirement and no savings.
 
Keep 4 months worth of pay in ing direct account or presidential online as rossman linked. Take the rest and put it into municipal bonds, cds, or treasuries. These are all low default risk investments that will yeild you somewhere around or above inflation, while stilling having some level of liquidity in case of emergency. Beware of company stock plans if you are a newbie, company stock is very risk (as is any single stock instrument). Example: Enron and Worldcom.

In addition to 401K plans, Roth IRAs are an excellent way to invest after-tax dollars. I would say invest in these in order:

1) 4-6 months emergency fund
2) 401K at least up to employer match, more if the funds available are really good
3) Roth IRA
 
Originally posted by: Ilmater
Originally posted by: Asharus
As for myself, I have 6% of my paycheck to 401k, and 4% to my company's stock purchase plan. I figure I should save at least 10% of my income, and still have enough to pay bills, etc.
Click to expand...
Just curious, is part of your 6% company matched? I'd imagine it is, and I'd imagine that your company matches it wil stock. If so, then you might want to take away that 4% of company stock. It's all about diversification. If you need to put away that money, put it in a savings account.

For instance, my company matches 75% of the first 6% of my paycheck that I contribute with company stock. If I also get 4% in out stock purchase plan, then 59% of the money I put away every month is in company stock. Not good if something happens to your company, no matter how secure you think it is. Plus, what if the stock just goes down.

Seriously, D-I-V-E-R-S-I-F-Y!!!!!
Click to expand...

My company matches up to 6%, so that's how much I elected. The stock purchase plan is a separate plan. They basically put away 4% of your paycheck and purchase the stock at 15% off the lower of the 2 stock prices (either at start of 6 month offering period, or the end).

My company's 401k is handled externally by TRowePrice, and the stock purchase plan is handled by Fidelity.
 
Originally posted by: Asharus
Originally posted by: Mwilding
Beyond clearing your debt, it is a good idea to have a large amount of liquid money.

1. You can use it as a down payment on a home.
2. You can use it in an emergency.
3. You can live on it if you lose your job.

Most advisors recommend 3-6 months of living expenses.

OK, so you are debt free and you have your cash buffer. Now what?

Best bet for your average joe/jane is to invest in a mutual fund via a direct deposit program (e.g. $500/month from your checking account) Regular investing will soon add up.
Click to expand...

I was also looking at ING's mutual funds, but this scares me:

Mutual Funds are:
? not insured by the FDIC;
? not a deposit of or other obligation of, or guaranteed by, ING DIRECT;
? subject to investment risks, including the possible loss of principal amount invested.
Click to expand...

Putting your money at risk is how you make it grow. You have to match your risk tolerance with your desire to have your money work for you. If you have a cash nest egg "just in case" you can afford to take a little risk...

You want risk free? go to a bank and they give you 1%
You want a little risk? Buy a AAA rated muni bond and get 4% with the slight possibility that the bond will default.
A little more risk? Get a preferred stock of a blue chip company (e.g. Citibank) and get 6-8% and so on.
Want a lot of risk? Buy a canadian mining company stock and get a 2000% return in 6 months (or not...🙁)
 
Don't recommend investments with risk to someone who is risk adverse. The person themselves must accept the risk and potential loss of principle if the investment turns bad, in the case of the poster and his subsequent responses indicate your best bet is to attempt to educate the poster as to the scale of the risks but not to talk down to them for being risk adverse. Not everyone can handle the idea of having the potential to lose hard earned money. Those of you promoting investments should consider that.
 
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