High Return Bank Account?

[James Bond]

My dad has always encouraged me to take 10% of my paycheck each month and put it into a high return bank account (or something similar).

What would be the best type of account to do this? What is the best strategy? It is possible to have my paycheck split into percentages, and automatically deposit into multiple accounts, I suppose that would be the easiest?

Does 10% sound about right?

 

[K1052]

While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

 

[paulxcook]

I would assume he means a high-yield savings account, I believe they earn around 5% annually, depending on which bank you go with. HSBC, ING, and many others offer these. As for 10%, that's probably a personal preference. I don't know that there's a hard and fast rule, though many like to have 3-6 months salary saved in some sort of liquid form for emergencies. I guess you could build up to that using your 10% idea.

 

[Pugnax]

Yes, most employers all your to split up how your paycheck gets deposited.

I'd say though, instead of putting it in a high return bank account, might be better building up a portfolio or perhaps using an IRA. If you are looking for low risk, you could just put your money into some of the ETFs that just track the market (SPY for example S&P 500).

And as for 10%, no golden number, do as much as you can afford. The book "richest man in babylon" has some good ideas about this.

 

[maddogchen]

Pick the best one for you

its best to ask your work to do an automatic deposit of xx% every month into your savings account. Most places will do this for you. 10% is a good start or whatever you can live with.

After you build 6-12 months of emergency fund then you should start looking toward investing your extra money rather than saving more.

 

[overst33r]

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

 

[K1052]

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

 

[Minjin]

I'd recommend 10% for retirement and 10% for general savings at a minimum. Personally, I believe in saving closer to 30%.

 

[Svnla]

Originally posted by: K1052

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

Not if you agree to do at least $50 a month automatic deposit into the account. That's what I do right now with Vanguard. Low cost index mutual fund FTW.

 

[TruePaige]

Question:

https://us.etrade.com/e/t/welcome/completesavings

E-Trade's High-earning saving accounts, do they come with a bank card?

 

[K1052]

Originally posted by: Svnla

Originally posted by: K1052

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

Not if you agree to do at least $50 a month automatic deposit into the account. That's what I do right now with Vanguard. Low cost index mutual fund FTW.

Maybe they changed since I looked last, that would certainly make them more attractive if you don't have a chunk of change to throw in right off the bat.

 

[TruePaige]

Originally posted by: TruePaige
Question:

<a target=_blank class=ftalternatingbarlinklarge href="https://us.etrade.com/e/t/welcome/completesavings">https://us.etrade.com/e/t/welcome/completesavings</a>

E-Trade's High-earning saving accounts, do they come with a bank card?

 

[ElFenix]

get an IRA.

 

[overst33r]

Originally posted by: Svnla

Originally posted by: K1052

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

Not if you agree to do at least $50 a month automatic deposit into the account. That's what I do right now with Vanguard. Low cost index mutual fund FTW.

Do you have to trade/buy them yourself... How does the account work and what are the fees?

 

[aeroguy]

I went to 100% online banking with eTrade recently and am quite happy with it. I am now making ~$50/month in interest instead of the $3/month I was getting before.

5.05% interest rate savings account, no minimums, no fees.
4% interest rate checking account with $5000 balance. If you fall below $5k, you only get a 0.5% return. $5000 minimum balance OR monthly direct deposit to eliminate monthly fee. Free ATM card, no ATM fees, refunded ATM fees charged from other banks.

Account transfers are instantaneous. You have to mail in deposits, but they start earning interest the day they are received, even if they don't clear for a few days.

 

[James Bond]

Well in that case... maybe I'll save up for a few months until I have some "backup money", then find somewhere to invest.

 

[Svnla]

Originally posted by: mariok2006

Originally posted by: Svnla

Originally posted by: K1052

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

Not if you agree to do at least $50 a month automatic deposit into the account. That's what I do right now with Vanguard. Low cost index mutual fund FTW.

Do you have to trade/buy them yourself... How does the account work and what are the fees?

You go to their website. You can either do it online or print out the application form and mail it in. You will have to do at least $50 a month for every month into the index fund account. Zero fee to set up and no hidden fees and Vanguard has one of the lowest, if not the lowest management fee in the industry.

BTW, get your saving money into internet banks (they are fully FDIC insured). All my savings are 4.5% APY or higher. You would be lucky if you get 2% at your local B&M bank branches.

 

[Capt Caveman]

To start things off, just have your paycheck direct deposited to your checking account. Open an online saving's account and schedule an auto-deposit monthly or bi-monthly from your checking acct.

From there, you can decide to open up a Roth IRA, mutual fund acct, etc by having them do an auto-deposited from your checking or online savings accts.

 

[alphatarget1]

I have HSBC direct, 4.50% APY (it was 5.05% until the fvcking retard Feds cut the rates). Pretty satisfied with it, you get an ATM card with the account.

Had ING Direct before but they're only at 4.20% right now. I have like, 1 dollar left in the account.

 

[overst33r]

Originally posted by: Svnla

Originally posted by: mariok2006

Originally posted by: Svnla

Originally posted by: K1052

Originally posted by: mariok2006

Originally posted by: K1052
While building up a cash reserve to a certain number of month's expenses (I maintain 3-4 months worth) is a good idea, you eventually reach a point where that money is better off invested elsewhere

Low cost index mutual funds and ETFs FTW.

So how would you get into that? Vanguard?

Vanguard is good, though most of the funds require a minimal starting investment of several thousand.

Right now I'm using Sharebuilder to accumulate a diverse set of ETFs (mostly Vanguard). If I didn't have a good 401K plan at work I'd be with Vanguard.

Not if you agree to do at least $50 a month automatic deposit into the account. That's what I do right now with Vanguard. Low cost index mutual fund FTW.

Do you have to trade/buy them yourself... How does the account work and what are the fees?

You go to their website. You can either do it online or print out the application form and mail it in. You will have to do at least $50 a month for every month into the index fund account. Zero fee to set up and no hidden fees and Vanguard has one of the lowest, if not the lowest management fee in the industry.

BTW, get your saving money into internet banks (they are fully FDIC insured). All my savings are 4.5% APY or higher. You would be lucky if you get 2% at your local B&M bank branches.

I think I will be doing this tomorrow... Even though I am not very experienced, I can learn while my money is getting more than 5% (hopefully)...

Currently my CU is giving me 1.97% for my savings and I have a 4,97% CD that is expiring tomorrow, so I'm thinking of starting out with $1,000 and adding a sum every month like you said.

I will probably do it online... One thing I am hazy about is the type of account I need to open... I was thinking Individual according to their website...

 

[PhoenixOrion]

check bankrate.com

for the highest yield MMA/Savings Account.

saving any % is good.

 

[Svnla]

Originally posted by: mariok2006
I think I will be doing this tomorrow... Even though I am not very experienced, I can learn while my money is getting more than 5% (hopefully)...

Currently my CU is giving me 1.97% for my savings and I have a 4,97% CD that is expiring tomorrow, so I'm thinking of starting out with $1,000 and adding a sum every month like you said.

I will probably do it online... One thing I am hazy about is the type of account I need to open... I was thinking Individual according to their website...

Remember

1. All mutual funds are NOT FDIC insured, only savings/CD are with approved banks. Go to fdic.gov to check the bank(s) you want to do business with. Based on historic returns, most stock funds are about 10% return per year but you know the old saying "past history/return is NOT an accurate indicator for future performances".

2. If you can renew that CD for similar rate, I would do that.

3. What kind of mutual funds account you need? That will have to be based on how old you are, your risk tolerate, how soon you will need the money, etc. Only you can make that call. I always told my clients to go slow and start out with low risk index mutual funds. You can go exotic and risky if you want to (International, OTC, penny stocks, etc.).

4. You can do Vanguard, or Fidelity. Those are the ones that I am using for years.

Disclaimer: I don't work for Vanguard/Fidelity or any banks/CUs.

 

[Eeezee]

I use EmigrantDirect, my account is still earning 5.05% as of my last statement but I know they've decreased the rates (4.75% perhaps?). High-interest savings is a good idea until you can find something else to invest your money in that has a higher rate of return. There are some higher interest CDs out there, but they require large deposits.

IRA/Roth IRA seem like a decent idea, although I have no idea how they work or what the rate of return is. I don't know what an ETF is. What's the average return on a low-cost index mutual fund?

 

[overst33r]

Originally posted by: Svnla

Originally posted by: mariok2006
I think I will be doing this tomorrow... Even though I am not very experienced, I can learn while my money is getting more than 5% (hopefully)...

Currently my CU is giving me 1.97% for my savings and I have a 4,97% CD that is expiring tomorrow, so I'm thinking of starting out with $1,000 and adding a sum every month like you said.

I will probably do it online... One thing I am hazy about is the type of account I need to open... I was thinking Individual according to their website...

Remember

1. All mutual funds are NOT FDIC insured, only savings/CD are with approved banks. Go to fdic.gov to check the bank(s) you want to do business with. Based on historic returns, most stock funds are about 10% return per year but you know the old saying "past history/return is NOT an accurate indicator for future performances".

2. If you can renew that CD for similar rate, I would do that.

3. What kind of mutual funds account you need? That will have to be based on how old you are, your risk tolerate, how soon you will need the money, etc. Only you can make that call. I always told my clients to go slow and start out with low risk index mutual funds. You can go exotic and risky if you want to (International, OTC, penny stocks, etc.).

4. You can do Vanguard, or Fidelity. Those are the ones that I am using for years.

Disclaimer: I don't work for Vanguard/Fidelity or any banks/CUs.

I'd like to stick to index funds for now, until I get more knowledgeable about it... I just opened a savings account at HSBS for 4.5% so that would replace the CD and still retain more liquidity in case something comes up.

Overall, I'd like something that has a low-mid risk tolerance but >7% return (historically speaking) So, I think index funds would be a good start, I am just confused about how to pick them...

 

[Svnla]

Originally posted by: Eeezee
I use EmigrantDirect, my account is still earning 5.05% as of my last statement but I know they've decreased the rates (4.75% perhaps?). High-interest savings is a good idea until you can find something else to invest your money in that has a higher rate of return. There are some higher interest CDs out there, but they require large deposits.

IRA/Roth IRA seem like a decent idea, although I have no idea how they work or what the rate of return is. I don't know what an ETF is. What's the average return on a low-cost index mutual fund?

Just checked and Emigrant is 4.75%. Some of the CD will get you 5% or more but you need to have at least 10K or more.

Google IRA and Roth, ETF and see for yourself. I don't have time or space to explain it in detail here.

See my previous post, most stock funds are about 10% per year. Again, I will say it, only savings/CD are insured by FDIC. Stocks, mutual funds are NOT. Please go slow and if you can't afford to lose your money, don't invest in stocks/mutual funds righ away. Educate and learn as much as you can and invest slowly but steady.