Very soon I will finish paying off my car and be done with a multi-year dental work ... campaign. This will lead to me having an extra ~$500 a month after taxes etc.
I want to start building up an "oh crap my car broke, or I lost my job" type of fund. My priorities would be
1) Accessibility, i would need to be able to pull from this without any major drawbacks in a relatively short (2-4 weeks) time.
2) Automation, my employer lets me direct portions of take home pay to different bank accounts, I can also do this via my bank's (chase) website. Ideally the whole thing would happen without any action from me past the initial setup.
3) Interest, if there is some way I can make a little extra off of this per month that would be great.
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As to actual investing like stocks and such, I would try and keep that separate, as it's not always easy get the money back quickly, and if you get into a situation where you're waiting long term to make money on a stock, but need the money today, you could take a substantial hit to your investment. And you will be in that situation unless you're trying to go the day trader route.
You aren't doing this for the interest, though. It's not an investment, it's an oh shit fund that you can easily get to but keep separate from your spending money for emergencies. Any interest you can get is just a bonus.
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2nd, you're able to access the OSF immediately at an ATM
3rd, Chase's online banking makes it easy as hell to set up recurring weekly transfers from checking to savings.
But lets say one gets passed the "oh shit!" stage, and has like 3 months of pay stashed away in a savings account.
And now its time to look for investments and long term plans where you actually care about interest. What are the options?
I know CDs can get you good returns on a semi-short term (6 month or so) scale.
I know IRAs are good for retirement and stuff (mainly due to tax breaks and what not you get for using them)
What is a good middle of the road there, what exactly is a mutual fund? What is an index fund? Where should I put my money to have more money later? But not when Im old and blue later.
You'll need to check the specific conditions of each promotion, usually they are: at least 10 debit transactions per month (ATM withdrawals do not count), at least once monthly direct deposit/transfer to the account, and sign up for electronic notifications. These banks are usually smaller community banks or credit unions. Some promotions do refund some to all ATM charges. The promotions change constantly (meaning something that looks great today may not be available next week).
mutual funds are investment vehicles that are composed of many smaller funds, individual stocks, bonds, securities, etc. They are usually considered a smart investment because unlike individual stocks, it would take a marketwide crash for them to actually decrease significantly. Index funds are the same but instead of following a specific sector, they track an index like the S&P.
IRAs are for retirement only (with a small handful of exceptions), so if you are just looking for "savings" and not saving for retirement, you'd want to look into straight mutual funds and brokerage.
CDs are not very good right now because the rates are awful and I don't even think some of them are better than the rate of inflation.
As far as where to get started
http://www.investopedia.com
http://www.vanguard.com
http://www.morningstar.com
It would really suck to save up $10k or something and have the bank go under just at the time you need it.
Also IRAs are not investments, they are accounts in which you can use the funds to make investments, and the profits are tax-deferred (traditional) or tax-free (Roth).
Get a financial advisor.
People think they are for people that own silk crevats but they are not.
Basically they talk to you and assess the risks that you are prepared to take and how long you want to invest your money for. Really you shouldn't look at investing until you want to not access the money for 7+ years.
Satans..... hints.....
There's a guy at my office who says that when you're young, you can afford to be riskier with your investments, since you have plenty of time to gain it back, I took his advice and started investing in stocks, and you might want to look there too. For awhile I was beating the DOW and gaining a much better return on my investments then they would have made in savings. But not so much recently. Middle of the road would likely be mutual funds as already noted above, and you could even try working in some bonds too, which are considered a more conservative investment.
Are those days ever coming back?
Also how big are the "good returns" that we are talking about with mutual funds? Like 5%?
They will probably be back some day, these things move on a cycle. We are currently at historically low interest rates. Thirty years ago the rates were in the double digits. There are a lot of things that effect the movement of interest rates, but in general, low interest rates are used to promote economic growth (it makes it cheaper to borrow money to start or expand a business, and it makes stocks a more attractive purchase for investors seeking larger returns) and high interest rates are used to "cool off" a hot economy, helping to combat bubbles and inflation (they make it more attractive to save and more expensive to borrow, and it makes stocks less attractive since you can get a good, safe return from simply putting your money in a CD/GIC or buying bonds). If the economic recovery goes well, you will see interest rates gradually rise. If it goes poorly, you'll probably see something akin to the "stagflation" of the 1970s, where things keep getting more expensive (inflation) but there is little economic growth (and hence little wage growth).
Also on Steam and PSN: twobadcats
https://personal.vanguard.com/us/funds/vanguard/all?reset=true&mgmt=a
So can you explain what's going on here?
Why are the 1 year returns in the double digits and then 5 year and 10 years are like 1-4%.
Does that mean on some years you get good returns and others you get really really shitty returns and in fact even losses?
Precious metals are always high or low depending on what's going on in the world, and since it's retardedly aggressive you'll see massive gains one quarter which will then be completely negated the next. It's why there is a holding period for them. You should also ignore money market funds, as those are basically just a way for people to keep liquidity. For example, if you own a brokerage account, you usually take your payouts into a money market.
Also it's important to remember that mutual funds are things you want to hold for closer to 5 years (at least), not 1 year or less.
Yea I think I have about 20k I can put away for 5 years. I won't miss it if I lose it all so I'll probably go with something higher risk.
But is now a good time to get in on mutual funds with the way the economy is? And what exactly should you look at to determine what makes a good fund? Maybe I need a book
But two things to think of:
You're young right? The economy is bad, but like we saw last year it's rebounding. This is your chance to get in while things are cheap, and if you lose some money you're young.
You need to diversify. Don't just pick one fund, pick at least three (and include an international one!).
This is the point of the conversation where, if you're serious about investing 20k, you talk to someone certified to talk to you about how to invest that. Vanguard, Fidelity, T Rowe Price, Janney, SmithBarney, wherever you want :P
Also, as opposed to a book, check out investopedia.
Most financial advisers are just financial salesmen. They'll sell you whatever crap gets them the biggest commission.
And how do I know which of those financial advisers is even the best or better than others?
There are flat fee financial advisors that don't receive any commissions.
Also true.
Yes, you can call them up and they have licensed people who will talk to you.
I won't tell you which one is better (as I'm inherintly biased), but just remember that they all have similar funds but the fees, minimums, and other intangibles are different depending on where you go.