What should I do with my money?

[techlover828]

Hey guys,

I'm 15 and have a job at my families farm, I calculated that I'm going to make around $3000 this summer and I plan on working next year and the following year, I already have my MBP and would like to but it away so that I can build up some interest, I'd obviously like something with APR so I can build up some cash, what do you guys think the best thing to put my money, and how much can I expect to get for a percentage. Thanks for your help!

 

[TEG]

An ING orange savings account would be nice. Safe, with some nice APR. Alternativly, talk to a bank about getting into a CD.

TEG

 

[techlover828]

An ING orange savings account would be nice. Safe, with some nice APR. Alternativly, talk to a bank about getting into a CD.

TEG

I was thinking more like a mutual fund, at least a 10% yield.

 

[agbot]

ING and HSBC are also nice if you want to avoid minimum balance requirements.

Here's a helpful site for looking for good deals on CDs or savings accounts:

http://www.bankingmyway.com/?option=com_content&Itemid=37&fFormType=CD

 

[shu82]

I was thinking more like a mutual fund, at least a 10% yield.

Good luck in this market! An ING account would be much safer. With 3K you aren't looking at too much interest as a whole. And at your age, if you aren't looking super long term, I would go with an ING. ~ 4.5%

 

[techlover828]

Good luck in this market! An ING account would be much safer. With 3K you aren't looking at too much interest as a whole. And at your age, if you aren't looking super long term, I would go with an ING. ~ 4.5%

well at that point I may as well get a cd. The market will go back up eventually so I'd like to go for something that'll have some high APR potential over a 10-15 year period.

 

[Nabooly]

Thank God this isnt another one of those "I want an iPhone but my dad wont let me get one!!!!!! " thread.

That said, your making a great decision to save it all up. you won't regret it

 

[techlover828]

Thank God this isnt another one of those "I want an iPhone but my dad wont let me get one!!!!!! " thread.

That said, your making a great decision to save it all up. you won't regret it

Thanks!

ya, I'd like to think I'm general good with my money and savings.

 

[a104375]

saving your money is very smart!! it will come in handy when it comes to going to college... which costs a fortune

 

[ucfgrad93]

Open an IRA. By the time you are 67 you would have a million dollars.

Let's suppose that you are 16 years old, in high school, and willing to work. Let's also suppose that you can clear about $2,000 over the course of a summer, if only because a doting grandparent puts money in the Roth while you take your earnings to school. If you invest in a Roth IRA, it will grow, tax-free, for as long as you have the account. All withdrawals from the account after age 59 1/2 will be tax-free.

If your money is invested in common stocks and you achieve the average compound annual rate on large-capitalization U.S. stocks, 10.7%, your account will grow to $9,378 at the end of the fourth year. You will be 20 years old. Invested in the same way, with no additional savings, the account will grow to:
$25,917 by the time you are 30
$71,625 by the time you are 40
$197,943 by the time you are 50
$547,037 by the time you are 60
And $1,114,423 by the time you are 67
And you will have started and finished all of your saving before turning age 21.

http://moneycentral.msn.com/content/Investing/Startinvesting/P73751.asp

 

[techlover828]

Thanks!

ya, I'd like to think I'm general good with my money and savings.

ya, I've seen that before, pretty crazy, that's what I'd like to do I guess, but I'd kind of like to put it towards the down payment of my first house. Which'll be in like 10 years, we'll see, thanks for the ideas.

does anyone have any experience with a specific mutual fund that has risen consistently in the past few years?

 

[nickster9224]

what is a cd

 

[shu82]

CD = certificate of deposit. Gives a fixed interest and is no risk.

Don't go with any mutual funds right now. I have a feeling we haven't seen the bottom yet. Maybe in a few months.

 

[rhsgolfer33]

does anyone have any experience with a specific mutual fund that has risen consistently in the past few years?

Honestly, I don't think you should go with a mutual fund or stocks at this point. While you are young and can afford to take the risk, I think you'd be a little pissed if you lost some of the money. I echo what everyone else has said, put it into a CD or a high yield savings account. You'll make a couple of bucks without risking losing that money. While the stock market consistently rises over the long term you will probably not make the 10% return per year that you want, especially with such a minimal investment; you may be able to turn about 6%, but in the current market this might not even be terribly likely. Stick it in a savings accounting earning about 4% APY and leave it there for a while. I've got an online savings account that earns 4% APY at Washington Mutual. Since they have a lot of locations in my area it is much more convenient than HSBC or ING when it comes to accessing my money and the rate isn't much lower.

 

[techlover828]

CD = certificate of deposit. Gives a fixed interest and is no risk.

Don't go with any mutual funds right now. I have a feeling we haven't seen the bottom yet. Maybe in a few months.

Honestly, I don't think you should go with a mutual fund or stocks at this point. While you are young and can afford to take the risk, I think you'd be a little pissed if you lost some of the money. I echo what everyone else has said, put it into a CD or a high yield savings account. You'll make a couple of bucks without risking losing that money. While the stock market consistently rises over the long term you will probably not make the 10% return per year that you want, especially with such a minimal investment; you may be able to turn about 6%, but in the current market this might not even be terribly likely. Stick it in a savings accounting earning about 4% APY and leave it there for a while. I've got an online savings account that earns 4% APY at Washington Mutual. Since they have a lot of locations in my area it is much more convenient than HSBC or ING when it comes to accessing my money and the rate isn't much lower.

hey thanks guys, I just saw a savings account with 4.25% yield and I'll probably go for that, plus it will be easier to put money in as I make it.

just found this savings account: http://www.prosper.com/prm/lender_m...&ovkey=high interest savings account&prm=1002

what's the catch?

 

[Music_Producer]

just found this savings account: http://www.prosper.com/prm/lender_m...&ovkey=high interest savings account&prm=1002

what's the catch?

Are you kidding? That's not a savings account, it's about making unsecured loans to people. You might as well give the $3000 to me, I promise to give you a 15% return, ok?

Just put the money in the 4.25% you are getting.. that's a good rate right now. If it's a CD, even better.. as Feds are poised to cut rates next week.

 

[techlover828]

Are you kidding? That's not a savings account, it's about making unsecured loans to people. You might as well give the $3000 to me, I promise to give you a 15% return, ok?

Just put the money in the 4.25% you are getting.. that's a good rate right now. If it's a CD, even better.. as Feds are poised to cut rates next week.

ya, after more reading I realized that, why is a cd better? again thanks for all your help and forgive my inexperience.

 

[CalBoy]

ya, I've seen that before, pretty crazy, that's what I'd like to do I guess, but I'd kind of like to put it towards the down payment of my first house. Which'll be in like 10 years, we'll see, thanks for the ideas.

If you put the money in an IRA, withdrawls for a house are valid and are exempt from penalty.

A Roth IRA would be a good bet, but you have to be wiling to go without the money in the short term (ie, other than a valid emergency, you won't be able to use it). If you've got everything you want, and have no idea what else to do with the money, then a Roth IRA is a good idea. You're likely to retire in about 50 years. Like that chart shows, your money will have grown quite well over those years.

If you want some personal perspective, I just opened a Roth IRA with Vanguard even though I know the markets are bad at the moment. The way I figure it, a short term loss will be peanuts in 5 years, 10 years, and especially 50 years.

Again though, you have to feel comfortable without the money. It's probable that $2000 or $4000 won't make a huge difference school wise (your loans will be a lower rate than the earnings on the mutual funds in most cases), so don't count school as a major reason not to go with a Roth (and school expenses happen to be a valid withdrawl FYI).

 

[rhsgolfer33]

ya, after more reading I realized that, why is a cd better? again thanks for all your help and forgive my inexperience.

The rate on a CD will be "locked in" for a certain period of time even if the fed cuts the rate. Say your money is in a savings accounting earn 4% and the fed cuts the rate by .25%, your savings account rate will probably go down to about 3.75%. But say you put your money into a 6 month CD at 4% and the fed cuts rates by .25% next week, your CDs rate will still be 4% for a tleast the next 6 months. The disadvantage of the CD, however, is: if you put your money in a 6 month CD, you won't be able to get it out for 6 months without paying a penalty; you also won't be able to add to the CDs balance for those 6 months. So if you open a CD you may also want to open a savings account so you have some money that you can access in case you need it.

 

[shu82]

If you put the money in an IRA, withdrawls for a house are valid and are exempt from penalty.

A Roth IRA would be a good bet, but you have to be wiling to go without the money in the short term (ie, other than a valid emergency, you won't be able to use it). If you've got everything you want, and have no idea what else to do with the money, then a Roth IRA is a good idea. You're likely to retire in about 50 years. Like that chart shows, your money will have grown quite well over those years.

If you want some personal perspective, I just opened a Roth IRA with Vanguard even though I know the markets are bad at the moment. The way I figure it, a short term loss will be peanuts in 5 years, 10 years, and especially 50 years.

Again though, you have to feel comfortable without the money. It's probable that $2000 or $4000 won't make a huge difference school wise (your loans will be a lower rate than the earnings on the mutual funds in most cases), so don't count school as a major reason not to go with a Roth (and school expenses happen to be a valid withdrawl FYI).

Oh, I almost forgot about a Roth IRA. Since you are young you really should look into setting one of those up ASAP. You pay taxes up front instead of at the back end. You are young= no taxes right now, when you get older you will be paying taxes out the ear, but not on a Roth. I would go ahead and set one up now, the dems will be taking these away from us soon. But, if you already have one, you will be grandfathered in!

 

[Melrose]

First of all it's great that you're thinking of investing at your age! It's smart and sensible.

One thing to keep in mind is that the higher the returns generally the riskier the investment.

I read in some financial book that you can put it in CDs and yet still keep a chunk of it available every year: Look into revolving CDs at one, two and three years, put in a chunk the first year for one year, put in another chunk in CD #2 for two years, and so on for three or four years... etc.

So your CD setup looks like this:

$1,000 in CD #1 for one year (when it ends roll into a new three-year CD)
$1,000 in CD #2 for two years (when it ends roll into a new three-year CD)
$1,000 in CD #3 for three years (just keep rolling)

Every time one ends roll it into a new three or four year CD. This way you collect compound interest (of sorts) and yet have the availability of a bit every year.

At least that's what I read. Otherwise, take Warren Buffet out to dinner at Arby's and hope for the best...

 

[Motley]

financial stuff..

It's called "laddering".

There are also some good mutual funds that haven't been beaten up by the current economic "mess". You just have to look. I found a great performer and was going to put some money into it until I saw the minimum investment, just $1,000,000 . No wonder it had a lifetime rise of 40% and was doing 30% over the last 3 months (also it was considered moderately risky).

But there are good ones with minimums of just $2500 that are considered "low risk" (then again so was all that sub prime crap) and have been doing well.

 

[Xfujinon]

Open an IRA. By the time you are 67 you would have a million dollars.



http://moneycentral.msn.com/content/Investing/Startinvesting/P73751.asp

Tell me more.

My wife and I have been saving several thousand in CDs, ING, etc. for awhile now, but we have not yet considered the IRA. Like the OP, I am interested in squirreling the monies rather than blowing them on stuff.

If the OP is considering this, I should also consider it, so how does one go about the process?

 

[jb60606]

no offense, but working for family usually means you'll get roughly half of what you're expecting, unless they're relatively rich. Never work for family kid

(unless you can get them to sign a contract or something)

 

[CalBoy]

so how does one go about the process?

You can open a Roth or Traditional IRA at most banks, financial institutions, and large investment companies (ie Vanguard, Fidelity).

If your current taxable income is on the lower end and you project making more money in retirement (you have a government pension or other assets that will be worth a lot by age 59 1/2) the Roth is for you.

In my situation for example, I paid very little in taxes this year, so it made sense to put money into a Roth IRA (limited to the amount you earn or $4,000-whichever is less- for 2007) because by the time I retire, I'll have other retirement savings working for me (401k, other assets).

If you are making good money now but don't forsee making that much in retirement (high salary at the moment but no pension plan), a traditional IRA will allow you to take a tax credit for the year you open it that's equal to the amount you put into it. However, there is a limit on this that's tied to your 401k (assuming you have one). With a Roth IRA, you can maximize both your 401k contributions and your Roth IRA contributions.

When it comes to where to invest your money in an IRA, I think an investment firm like Vanguard is a good idea. They offer a lot of funds that you can diversify your money with. Target Funds are a great idea if you don't know what else to do with your money. They are managed by a fund manager and meant to adjust the risk:safety ratio as you age (Target Funds are named by the year you want to retire, eg, Target Fund 2030 or Target Fund 2045).

I highly recommend speaking with someone from an investment firm. If you're interested in opening an IRA, they will be willing to offer you advice and tips, which is always valuable.