Re: Money - Short term saving
A few points. I make a living from my investments so I do know a little bit of what I'm talking about.
1. If I had continued to listen to my professors and financial advisors and do what they said, I wouldn't be broke, but I also wouldn't be retired early. Academia is fine for the 3Rs, but it definitely sucks for investing. If high school teachers knew anything about investing, they wouldn't be high school teachers. That goes for the college level as well. That also goes for Schwab and anybody else who makes a living selling stuff to someone else. EDIT: Oh Gawd, now I'll have chuck scwab suing me. They do fine at what they do, they just don't do fine for ME. Disclaimer: I have a scwab acct and I ignore them at all times and do my own thing.
2. I've learned 10x as much in the last 5 years as I learned in the previous 50 about investing. It's never too soon to start. Start now, YOU decide what's best for you. It will take some time and you'll make some mistakes, but not nearly as many as the people you might hire to make decisions for you. Make your own mistakes. They're a lot easier to avoid and to fix. Oh, and ignore the media. By the time the media figures out there's a story, it's too late and the smart money is out and doing something else.
3. I have seen a few good ideas so far in this thread (most of it short term savings and emergency fund advice) and a lot of bad advice from people who just don't know any better. Sorry about that.
4. I learned too late in life that many "tried and true" investing maxims were crapola. I could have retired a lot earlier. For example, diversification, as practiced by most people, is counterproductive. Do your own research and you'll find out even more nonsense.
Now, on to short term savings --
I have neither a checking nor savings account. Don't need 'em and they don't pay crap. The wife and I have a joint checking for our monthly expenses. We keep it pared down. We both contribute to this account monthly. If we have excess, we buy a CD.
I have a MM acct to deal with my personal expenses and to roll excess cash into before I do something with it. It's the clearing house for my finances. It's paying 5.25 or 5.35% right now, let's me write 5 checks a month (one of which goes to the joint acct), and no bank is going to beat it. In fact, most banks don't offer CDs with that rate. At the same location, I also have several CDs (paying > 5.35%) with varying maturity dates as emergency backup and as pure investment, i.e. instead of anything else like stocks or bonds or underwater palladium mines or whatever. I also have some foreign CDs that bring in a yield, plus or minus the change in the dollar's valuation, but that's a higher level playing field.
Yes, I have bonds, but you're interested in short term savings, so they don't much qualify unless you're looking at the shorter terms. Right now the MM is just as good if not better than the bond yields and it's more liquid. And you avoid market risk by staying away from bonds. I get the feeling you're looking for something sort of on the guaranteed side. Since MM rates have pretty much stabilized, you'll probably want to go with a longer term to lock in higher rates, but it also ties you up if you might need the money more quickly. As rates fall and continue to do so, you're better off with longer terms. As CD rates rise, go with the shorter terms. The penalty for early withdrawal can be substantial. For many years I have laddered my CDs to mature monthly in amounts I would need if my income was shut off (i.e. job downsizing).
A note on liquidity of mutual funds. You should be able to close your acct and get a check within a week, faster if you use wire transfer, but that'll cost you. If there is a local office, you could close a brokerage acct and get a check very quickly (3 days or less).
It sounds like all you're interested in right now is short term savings. If that's the case, you could hardly go wrong with 3-month, 6-month CDs. Do some research and find some high rates. Forget the banks, unless it's an internet bank or a savings bank, local banks rarely can compete. Don't be sucked into longer terms unless you know you won't need the money.
Are you local Indy? Try Landmark Savings Bank.
And in the meantime, do some research on investing, so that when you have some substantial money and can invest it, you'll know what not to do with it.
A few points. I make a living from my investments so I do know a little bit of what I'm talking about.
1. If I had continued to listen to my professors and financial advisors and do what they said, I wouldn't be broke, but I also wouldn't be retired early. Academia is fine for the 3Rs, but it definitely sucks for investing. If high school teachers knew anything about investing, they wouldn't be high school teachers. That goes for the college level as well. That also goes for Schwab and anybody else who makes a living selling stuff to someone else. EDIT: Oh Gawd, now I'll have chuck scwab suing me. They do fine at what they do, they just don't do fine for ME. Disclaimer: I have a scwab acct and I ignore them at all times and do my own thing.
2. I've learned 10x as much in the last 5 years as I learned in the previous 50 about investing. It's never too soon to start. Start now, YOU decide what's best for you. It will take some time and you'll make some mistakes, but not nearly as many as the people you might hire to make decisions for you. Make your own mistakes. They're a lot easier to avoid and to fix. Oh, and ignore the media. By the time the media figures out there's a story, it's too late and the smart money is out and doing something else.
3. I have seen a few good ideas so far in this thread (most of it short term savings and emergency fund advice) and a lot of bad advice from people who just don't know any better. Sorry about that.
4. I learned too late in life that many "tried and true" investing maxims were crapola. I could have retired a lot earlier. For example, diversification, as practiced by most people, is counterproductive. Do your own research and you'll find out even more nonsense.
Now, on to short term savings --
I have neither a checking nor savings account. Don't need 'em and they don't pay crap. The wife and I have a joint checking for our monthly expenses. We keep it pared down. We both contribute to this account monthly. If we have excess, we buy a CD.
I have a MM acct to deal with my personal expenses and to roll excess cash into before I do something with it. It's the clearing house for my finances. It's paying 5.25 or 5.35% right now, let's me write 5 checks a month (one of which goes to the joint acct), and no bank is going to beat it. In fact, most banks don't offer CDs with that rate. At the same location, I also have several CDs (paying > 5.35%) with varying maturity dates as emergency backup and as pure investment, i.e. instead of anything else like stocks or bonds or underwater palladium mines or whatever. I also have some foreign CDs that bring in a yield, plus or minus the change in the dollar's valuation, but that's a higher level playing field.
Yes, I have bonds, but you're interested in short term savings, so they don't much qualify unless you're looking at the shorter terms. Right now the MM is just as good if not better than the bond yields and it's more liquid. And you avoid market risk by staying away from bonds. I get the feeling you're looking for something sort of on the guaranteed side. Since MM rates have pretty much stabilized, you'll probably want to go with a longer term to lock in higher rates, but it also ties you up if you might need the money more quickly. As rates fall and continue to do so, you're better off with longer terms. As CD rates rise, go with the shorter terms. The penalty for early withdrawal can be substantial. For many years I have laddered my CDs to mature monthly in amounts I would need if my income was shut off (i.e. job downsizing).
A note on liquidity of mutual funds. You should be able to close your acct and get a check within a week, faster if you use wire transfer, but that'll cost you. If there is a local office, you could close a brokerage acct and get a check very quickly (3 days or less).
It sounds like all you're interested in right now is short term savings. If that's the case, you could hardly go wrong with 3-month, 6-month CDs. Do some research and find some high rates. Forget the banks, unless it's an internet bank or a savings bank, local banks rarely can compete. Don't be sucked into longer terms unless you know you won't need the money.
Are you local Indy? Try Landmark Savings Bank.
And in the meantime, do some research on investing, so that when you have some substantial money and can invest it, you'll know what not to do with it.
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