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More financial advice needed

I

iMacZealot

macrumors 68020
Original poster
Mar 11, 2005
2,237
3
I have nearly USD$1200 in cash divided into envelopes in a velvet bag in my closet. As a sixteen-year-old, I'm as surprised as you that I have that much money in cash. I've gotten most of the money from odd jobs, as gifts, or coin-to-cash collection machines at the grocery store. As I already have a brand new MacBook Pro I used to buy with $2000 of money my grandfather spontaneously gave me, an HV20, and Final Cut Studio 2, there isn't much that I want to buy. My dad and my sisters tell me that I should invest it in the stock market (specifically AAPL), but I don't think I have enough money to even start an account (my sisters told me I need $2500), and I'm not sure if I want it all swallowed up in the market anyways. There's also always the savings account, but the interest rate is so low, and there are probably a lot of other fees, that I don't think that's worth it.

Should I just keep it tucked away inside the whiskey bag in my closet?


(I also see Lufthansa is having a sale, haha)
 
The stock market is a risky place, so if you're not prepared to lose a significant portion of your money, I'd advise against that route. Unless you do something like a mutual or index fund to diversify your investment. $1200 is not too little to invest in the stock market, but it's about the minimum of what I would consider to invest in a single stock or fund. Much less and the commission you have to buy and then later sell the stock put you in fairly big whole right from the get go.

I'm also unsure of what investment opportunities are available to a 16-year old. In many cases, you'd likely need an adult to be on the account with you...don't know if that's an issue for you.

But keeping it in your closet isn't going to earn you anything. Take a look at money market funds if you want security. They earn decent interest, and don't tie up your money for a period of time like CDs do. They're technically not guaranteed not to lose value, but they have never done so in their history, and the money market industry as a whole would go to great lengths to prevent that from happening, lest they suffer from the resulting bad PR.
 
Investing money you can't afford to lose in the "market" is a bad bad bad idea. Don't do it.

Safest bet is to just put it in the highest interest account you can find, you won't make much on it, but it's better than it sitting in a box in your room.
 
edesignuk said:
Investing money you can't afford to lose in the "market" is a bad bad bad idea. Don't do it.

Safest best [sic] is to just put it in the highest interest account you can find, you won't make much on it, but it's better than it sitting in a box in your room.
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Right now, the most appealing idea is a low-fare Lufthansa ticket for tomorrow. :p

Chase (the bank my family uses) is offering 0.1%, or roughly $1 a year. That doesn't seem worth it, except for that maybe I can get United miles in my MileagePlus account.
 
edesignuk said:
Well, that's complete an utter s***. Obviously not being in the US I know next to nothing about your banks and what they offer. Hopefully someone else can help you find something better than 0.1% :eek: :eek: :eek:
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Doing a five-second Google, HSBC Direct looks like my best offer at 3.5% APY (whatever APY means.) I know that HSBC plasters their names over every jetway around the world and is "the world's local bank", but where do I physically handover my cash?

harveypooka said:
Donate it to charity. Help others!
Click to expand...

Going to a Catholic high school, I donate here and there whenever I can.
 
iMacZealot said:
I know that HSBC plasters their names over every jetway around the world and is "the world's local bank", but where do I physically handover my cash?
Click to expand...

You would put your money in a bank account (I'm assuming you already have one). Open an account with HSBC and link it to your bank account. Then transfer money from one to the other.

The APY thing is the approx return on your money in one year taking into account that you'll be earning interest on your interest (every month you get your earned interest added to your account, so the next month you earn on the money you added plus the interest for previous months).
 
Motley said:
You would put your money in a bank account (I'm assuming you already have one). Open an account with HSBC and link it to your bank account. Then transfer money from one to the other.

The APY thing is the approx return on your money in one year taking into account that you'll be earning interest on your interest (every month you get your earned interest added to your account, so the next month you earn on the money you added plus the interest for previous months).
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Erm, I don't think I have any banking/checking accounts, unless if my parents set something up for me when I was born.

But the HSBC thing won't work. For some reason, you have to be 18 to open the account.
 
interest

money market or CD's...some online savings banks have good rates ( Schwab for example ) with no minimum balance.

*IF* you decide to put some in stocks by setting up a scottrade account or something, get a stock that is paying a good % dividend and invest back into stock...I'm doing this on some energy stocks and for me, it's better than trying to "play" the market.
 
iMacZealot said:
I have nearly USD$1200 in cash divided into envelopes in a velvet bag in my closet. As a sixteen-year-old, I'm as surprised as you that I have that much money in cash. I've gotten most of the money from odd jobs, as gifts, or coin-to-cash collection machines at the grocery store. As I already have a brand new MacBook Pro I used to buy with $2000 of money my grandfather spontaneously gave me, an HV20, and Final Cut Studio 2, there isn't much that I want to buy. My dad and my sisters tell me that I should invest it in the stock market (specifically AAPL), but I don't think I have enough money to even start an account (my sisters told me I need $2500), and I'm not sure if I want it all swallowed up in the market anyways. There's also always the savings account, but the interest rate is so low, and there are probably a lot of other fees, that I don't think that's worth it.

Should I just keep it tucked away inside the whiskey bag in my closet?


(I also see Lufthansa is having a sale, haha)
Click to expand...

i hate banks i only ut money in them when i have to. 2 months ago i had around 1100 cash in a fake book i kept under my mattress. but that was only there for a week and then i paid off my credit card and some other stuff. its al gone now. since were both 16 im pretty sure we have one thing in common. we both enjoy looking at money :D unless u can find something that will produce at least 50$ or so in one year then i think its pointless. be aware that some banks offer higher interest but u have to pay monthly fees.
enjoy your money man :D
 
I don't know what to do. I don't see any reason why I should put it in a savings account that will only yield me a dollar a year. I don't have enough for a Fidelity account, either, which requires a minimum of $2500 upfront.

The most appealing thing right now is an off-season fare to Frankfurt on Lufthansa. The fares are dirt cheap from October till March, and I'd probably have enough to last me over there (hotels, meals, transport, etc.) I just don't know if I can go over there on my own.
 
I started another thread a week or so ago concerning high-yield savings accounts. I ended up opening an account with HSBC because of the positive reviews other MacRumors users have had in addition to the high (3.5%) APY. This doesn't seem like an option for you since you're under 18 though.

Nevertheless, I'd suggest putting it in a savings account, or buying a CD. The downside to a CD is that you can't really touch the money until it matures (you can access it, but you'll be penalized for it).

You might also want to look into mutual funds.

Seeing as your 16, you'll be in college in a few years, so it might be best to plan for that. I'm not necessarily talking about student loans or the actual price of college, I'm talking about what you might spend your money on while in college. I'm a junior in college and am now getting a handle on my spending/budgeting. I'm not in credit card debt or anything like several of my friends, but I did go through quite a bit of my savings on frivolous things. That's not to say that I didn't enjoy myself, and I think that it was somewhat worth it. Just plan ahead to that time, because you probably won't take many gadgets and toys with you to college, and if you do, you probably won't have much time for them.

Overall though, while I would say put at-least some of it in savings, at the very least, put the money in a safer location. Perhaps invest in a safe bolted down to the floor (again a bank is an even better option). But having it tucked away in your closet presents the possibility of it getting stolen, and then you have nothing to show for it.
 
Meh, I've thought about it, and I think I'm just going to sit on the cash for now. I might do something in about a year or so, but I'm not prepared to invest it in the market (especially with the current mood of the market), and a savings account doesn't seem like it's worth the hassle.
 
You do realise that every year you sit on cash the cash loses about 3% of its value? Inflation does that.

So even if you only get 3% you breakeven.
 
furious said:
You do realise that every year you sit on cash the cash loses about 3% of its value? Inflation does that.

So even if you only get 3% you breakeven.
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I wouldn't even get 3%. The only savings accounts I found that I could start paid out less than 1% interest.

Plus, I don't see sitting on it for more than a year or two.
 
take a nice holiday :) see the world! or just keep it where it is until you can put it in a bank. Maybe put it towards a car or something?
 
iMacZealot said:
I wouldn't even get 3%. The only savings accounts I found that I could start paid out less than 1% interest.

Plus, I don't see sitting on it for more than a year or two.
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ucfgrad93 said:
Here is another one, with ING.

http://home.ingdirect.com/products/products.asp?s=OrangeSavingsAccount
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I'm relatively young, so I thought I'd share what I do.

My college gives me around 10k/semester. (Graduate School.) Tuition is around 3-4k so I'm usually left with 6k. Out of that I pay my monthly bills. (like 1200/month)

The only problem is that I get a large chunk of cash at once that I can't afford to lose and need access to. I wanted something with access to the money so a CD was out of the question. I ended up putting the cash in an high yield savings. It's not the highest rate in the world at 3%, but I'm happy. (ING)

The interest rates in the US are nothing that great, but it's secure and a non-risk investment. That's why I would suggest either a CD or high yield savings.

Here is a list of some of the rates around the county. Here

I suggest HSBC. It's a well known bank, with a 3.5% rate. It'll be better than sitting in a closet.

If you put your $1,200 in there, you will have $1,242 by years end. In two years, $1,285.47.

It's not much, but if you keep adding it'll amount to something.
That is your best bet.
 
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