Tag Archives: savings

Where should I park my money?

One of the more popular questions I’m often asked is – “Where should I put extra money to get the best returns? ”

While things like stocks and mutual funds can provide seemingly high average returns, the problem is that – as average returns increase, the risk also increase.  To minimize any losses, we have to ‘lock up’ our money over longer periods of time.

To answer that question properly, we have to first identify our time horizon as to when the funds are needed again, and then, allocate those funds properly.

Here are some suggestions for where to put money into, based on the time horizon you may have in mind – starting from the shortest (i.e. we’ll need to access the money soon) to the longest (i.e. targeting towards retirement).

Less than 3 years
Recommend: Savings & Chk accts
Risk: Negligible, as accounts are FDIC Insured
Average return: Up to 3% (GuaranteedSee how here: “Credit Unions: Your Best Bet for High Interest, FDIC Insured Accounts”)

3-5+ years
Recommended: Bonds / P2P lending / Notes
Risk: Low-to-Medium. Investment can lose value from time-to-time over short periods, but will generally rise over time
Average return: 7% (Losses & defaults included)

8-10+ years
Recommended: Index / Mutual Funds
Risk: Medium.  Investment can lose value for several years in a row, but over the long span, value will rise over time
Average annual returns: 8-10%

Looking for even higher returns for your dollars?  Consider purchasing Real Estate or running a business!

Unlike the other investments above, these options absolutely require additional work to achieve higher returns. Returns received can almost be correlated to the effort / labor inputted, plus also requires a significant amount of education. These are definitely not a ‘set and forget’ type of investment like the options above – and they generally require extended, long term time commitments.

10-30+ years

Recommended: Real Estate
Risk: High, but variable depending on skill level
Average annual return: 5%, increasing to 20+%*

Recommended: Starting a Business / Purchasing a Franchise
Risk: Very High – Variable, from 100% loss to infinite gain
Average annual return: 100% loss to infinite gain*

Have a better idea?  Or, another alternative that should be added to the list?  Comment below!

Credit Unions : Your best bet for High Interest, FDIC Insured Accounts

Every so often, I get asked:

“Where should I put my money?  Which investments should I pick to get the best returns?”

Before jumping into this topic – which has a hundred different answers, all dependent on your risk tolerance, time line, and other aspects unique to each person – let’s determine where we can best put our cash.

Savings / Checking Account

Your local bank where you have a savings and/or checking account may be the obvious starting point, but anyone with a decent chunk of change would be encouraged to keep looking – as far better rates can be had.

At the time of this writing (Q1’2015), interest rates for a regular savings account are honestly pretty abysmal, with an average return of 0.10 to 0.50% at best.  It’s better than zero.. but it’s still not much.  Let’s review all of our options, and see what we find.

Certificate of Deposit

The next option that comes to mind (or, recommended by an officer when you visit your local branch) is a Certificate of Deposit, or CD.  In short, you give a bank a sum of money, for a period of time of your choosing, in exchange for a higher-than-normal rate.  This sum of money can be as little as $500, but some banks may have much higher minimums, of even $25,000 & up.

The best rate with smallest minimum deposit, according to Bankrate.com (at the time of writing) – that can be found is:

1 Year CD
APY 1.30% / Rate 1.29%
Min. Dep. $1000

My e-BAnC by BAC Florida Bank
2 Year CD
APY 1.35% / Rate 1.30%
Min. Dep. $500

(For longer time periods of 3-5 years.. consider Peer-to-Peer lending.  See my Prosper.com articles to learn more)

“Wow, only 1.3%?  That’s less than inflation!”

Indeed it is!  I think we can do better.

Credit Union “Insert-promo-term-here” Checking Accounts

Based on my experience, the best and highest yielding accounts can always be found in Credit Unions.

If you’re in Long Island, NY, open up a Bonus Checking account with the Bethpage Federal Credit Union (BFCU), which currently gives APY 1.00% return.  Granted, it’s not a great return – but unlike a CD, you can put new money in and pull out money at any time.  You DO have to have direct deposit & use their Debit Card at least (10) times a month (These 10 swipes can be easily done anytime without setting foot in a store – more on that in another blogpost).

But – what if you’re outside of New York?  Or, are there even better returns available?

If we’re pursuing the highest returns – here are the best options:

Inova FCU : Ovation Checking
APY 3.00%, Up to $20,000, Min. Bal of $1500
– (5) signature-based debit card transactions of $50+/ea. per month
– Direct Deposit
– E-Statements

Lake Michigan Credit Union : MAX Checking
APY 3.00%, Up to $15,000
– (10) Debit Card transactions/month
– Direct Deposit
– E-Statements
– Minimum of 4 logins to home banking per month

Do you know another, higher-rate, FDIC-insured option?  Share it with us!

Happy Savings!

Direct Links:

BFCU Bonus Checking:

LMCU MAX Checking:

INOVA – Ovation Checking: