Stable, yet fruitful temporary investments?

VThornheart

Okay, so here's the situation!

I guess we Americans are getting this tax rebate, to the tune of 1200 bucks for a married couple.

The way I figure, that's enough to pay for pretty much my entire trip to PAX, which I was going to do anyways... but now I don't have to worry about where I'm getting the money for it.

But the question I suppose is what to do with the money until then?

Our savings account gets a miserable interest rate. I think it's something like .5% APR. Just aweful.

I checked the rate for a 6-month CD over at my local Washington Mutual. Looks like they're offering 1.75% or so APR, which is better but still doesn't seem great to me.

What other options are out there? I'm trying to be a good boy and avoid making a risky stock investment out of this money, but I'd also like to see some sort of appreciation in value over the 6 months or so that we have before PAX. I don't absolutely need a guarantee of protection (like FDIC protection), but I'd like it to be safe enough that I don't sweat about it, and as I'm starting to get over my "high risk investment" foolish phase I'm valuing safety over investment return right now.

I also assume that putting it in an IRA is out of the question in this particular situation because I'd be pulling it out to pay for the PAX trip anyways... but if it'd be smart to put it in an IRA anyways, I'm up for suggestions about that too. I also recently got into an HSA (Health Savings Account) health care plan, so I think that's another option but I also think you can only use what you put in for medical expenses.

TL;DR

Getting $1200 to use for PAX. Want to invest it relatively safely before PAX itself.

Gdiguy

ING Orange savings account (currently 3.4%), HSBC Direct (3.55%), and WaMu (I can't find a good link, but supposedly it's around 4% with a checking account) are all online savings accounts that get great interest rates with no/very low fees (I have an HSBC one, and that one I know has no minimums/transfer fees)

HSBC online I know has some CDs that are closer to the 3% savings rate, but honestly right now the savings accounts are better deals

VThornheart

Wow, impressive! I'll take a closer look at that in the morning. It's crazy to me that they can offer better interest rates for their savings accounts than for their CDs... but the proof's in the pudding.

oldsak

Etrade offers 4.1% or there about on their savings account.

Gdiguy

VThornheart wrote: »

Wow, impressive! I'll take a closer look at that in the morning. It's crazy to me that they can offer better interest rates for their savings accounts than for their CDs... but the proof's in the pudding.

Yeah, it's been true for a while... of course, those accounts were all at ~5% interest within the past year, and all dropped a percent - percent and a half when they lowered interest rates a couple weeks back, which is probably why CD rates were lower (more risky for them if they need to quickly lower interest rates)

EggyToast

Which is also the advantage to a CD -- you lock in the rates. Those people with 5.25% CDs are pretty happy about that reduced liquidity right about now, when a regular savings account would have earned 4.5 and then dropped over 1.5%.

To the OP, I'd honestly suggest just canceling your savings account and only maintaining a local checking account, and doing all of your actual savings via an online account like ING or similar. The low interest rates on local savings accounts are laughable; I don't know why ANYONE still uses them. If you're feeling particularly adventurous, you can even try out a Charles Schwab checking account. My wife recently decided to try it out, since she was with a local credit union, and really, really likes it. Their deal is an interest bearing checking account (at rates comparable to ING, etc.), they let you use any ATM anywhere (they refund your fees), and they let you deposit checks online (you then mail the check to them). She's been really happy with it, and has earned $2 in just January, when she didn't have any savings -- just the general surplus between getting a paycheck and at the end of the month sending out bills. So even though she wasn't "saving," she still earned interest.

VThornheart

Cool, thanks for the advice everyone! I appreciate it greatly.

I'll look into the eTrade account, but I'll definitely be getting one of the three mentioned here. It seems like a great deal.

Thanatos

EggyToast wrote: »

Which is also the advantage to a CD -- you lock in the rates. Those people with 5.25% CDs are pretty happy about that reduced liquidity right about now, when a regular savings account would have earned 4.5 and then dropped over 1.5%.

To the OP, I'd honestly suggest just canceling your savings account and only maintaining a local checking account, and doing all of your actual savings via an online account like ING or similar. The low interest rates on local savings accounts are laughable; I don't know why ANYONE still uses them. If you're feeling particularly adventurous, you can even try out a Charles Schwab checking account. My wife recently decided to try it out, since she was with a local credit union, and really, really likes it. Their deal is an interest bearing checking account (at rates comparable to ING, etc.), they let you use any ATM anywhere (they refund your fees), and they let you deposit checks online (you then mail the check to them). She's been really happy with it, and has earned $2 in just January, when she didn't have any savings -- just the general surplus between getting a paycheck and at the end of the month sending out bills. So even though she wasn't "saving," she still earned interest.

WaMu offers an online savings account with rates comparable to ING if you've got a checking account through them. They don't advertise it, but if you go in to talk to a teller, they'll most likely ask you if you've got a savings account, then mention it. They don't want to lose their traditional savings account customers to the online one (because they pay way less interest), but I think they got sick and tired of losing their savings accounts to ING.