Quote:
Originally Posted by unnamedplayer
Hello all!
I'm hoping for some wisdom from fellow TFPers related to money 
Here's the deal:
Basically right now I have a checking account and a savings account at a well known national bank. Through the past couple of years of working my checking account has grown to ~$10g. My savings account is much smaller (about a 1/10 of that due to an automatic transfer of $25 a month that I was encouraged to setup when I opened my checking account).
I am relatively young (early 20s) and this is the most money I've ever had in my life! But it seems to me that I should be doing something else with this money instead of just letting my checking account grow. I've thought about moving more money into my savings account obviously, but even that doesn't seem too great since the interest rate is pretty puny. So I am looking for some help. Basically a couple of questions I was hoping to have some input to:
1) How much money should you keep in a checking account? Savings account?
2) What are some investment options a youngin' like me should look into? I've been thinking about a 401k for long term since my employer offers that, but I don't know a great deal about them.
3) What about options for shorter term investment so I can have access to that money if needed?
Any input would be greatly appreciated!! |
1. You should only keep as much money as you need in a checking account to pay your bills and other monthly expenses. Everything else, I'd put it into a higher yield online savings account. I like ING Direct (current interest: ~3%), but there are other online savings banks (HSBC Direct, etc) that are great. Check bankrate.com .
2. I suppose you should decide what you want to do with your investment money, and what sort of timeframe you're thinking. If you don't have a retirement account set up, I'd do so asap. It's never too early to start saving for retirement. I hear a lot about people who regret not saving for retirement early. Compounding returns is a good thing.
If your employer offers a 401k, I'd definitely choose that, especially if they match your contributions. I mean, who can beat free money?? Ignore all the doom and gloom surrounding the markets right now, since retirement is a long-term investment and the market return will be fine.
3. Short-term investment... er, if you need access to the funds, I suppose CDs aren't the best thing. I don't really know too much about other options though...
Good luck!