Hi all, I worked full time over the summer and part time since then. I have five or take 10k in a savings account sitting there not doing anything. What would you guys recommend me putting that into for it to at least beat inflation?
Hi all, I worked full time over the summer and part time since then. I have five or take 10k in a savings account sitting there not doing anything. What would you guys recommend me putting that into for it to at least beat inflation?
Read the wiki. Work through that and you’ll know where your money should go.
Are you going to need to touch this money any time soon?
Put it in a managed broker’s account focusing on mutual and index funds.
The answer of where to put your money will depend on how quickly you need to access it.
First step: plan for what you want/need to do with that money. Do you have debt you need to pay down? Are you saving up to go to college or a trade school? Do you want to make a large purchase soon, like a house or a car? Do you have enough savings saved up right now to account for 3-6 months of living expenses (i.e. an emergency fund)?
A good rule of thumb is to address the following needs in order: (1) have a 3-6 month emergency fund; (2) pay down [high interest] debt; (3) save 30% of your income for (a) future large purchases and/or (b) retirement.
If you want (or, more accurately, need) to put this $10k to an emergency fund, I recommend leaving it in savings. It won’t outpace inflation, but you’ll have the money accessible in the event of a catastrophe. You can improve your savings account return rates by joining a credit union that has better APY on its savings accounts, though it still won’t outpace inflation in this market. If you have a good safety net, you can save less than 6 months’ worth and move a portion of your emergency fund into relatively safe short-term investments.
If you have any high-interest debt, such as credit card debt or student loans, use your money to pay this down first. High interest means anything over inflation. Some long-term debt interest can actually be under inflation, which then it becomes better to pay the debt down as originally amortized — that is, unless you are inclined to spend the money rather than save it, in which case, paying down debt can be more useful. Since you already have the money saved and are asking about how to make it perform better, I’m going to assume this exception doesn’t apply to you.
If you have an emergency fund fully saved up and don’t have any more debt to pay down, then you can invest that money to get a better return on it. As far as what to invest in and where to invest, that will depend on what your goals for investing are. A good, flexible option is to open a brokerage account with a broker like TD Ameritrade. They are free and will give you the ability to start investing in stocks, bonds, mutual funds, ETFs, etc. You can also pull your money back out of them, unlike an IRA, which would be good for locking away retirement funds where you can’t get to them (easily/cheaply).
If you aren’t yet familiar with investment vehicles and what they do, a relatively safe place to put money for longer-term (5+ year) investment is in no-load index mutual funds or ETFs. These will typically keep pace with the stock market, both as far as its ups and downs. They won’t earn you a ton of money overnight, but putting money down early will yield you a huge benefit in compound interest. This becomes extra true if you can increase your principal a little bit more each year. Vanguard offers a lot of different mutual funds and ETFs that invest in different areas of the market, so read up on them and see if one of those works for you. There are other companies, too.
I wouldn’t recommend getting a broker just yet, if you’re only going to invest in ETFs or mutual funds. “Simple” investing like I described is pretty easy to DIY, and then you’re not losing 1% each year just to keep up with the stock market.
Put 6k into a Roth IRA (invest in a sp500 index fund) then have some fun with your hard earned money. With Covid coming to a close, travel sounds like a good option.
At 19 that is hard to say, chances are you will need that money at somepoint…to cover a move or a car or a rental while you get a new job etc. So Id be reluctant to tell you to invest it because if you need to pull it out in 2 years and the market drops that could hurt.
If you are confident you dont need it for a full year then buying an I-bond for $10k would guarentee you around $600 at least with no risk of loss…but that money would be completely unavailable to you for 1 year.
Invest it in ETF’s — it’s been shown Vanguard’s Index fund has the best return over time (that’s the safest bet). If you can find a good financial advisor that’s another option. Avoid mutual funds bc of all the fees. A good financial advisor should only take about 1% of gains and you should be able to view ur acct online at all times
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