T Nation

Earning on Savings

I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?

um…

Depends on your focus, Long v. Short term. Your risk aversion and required ROI.

The safest is government paper. Not a great ROI though.

Real Estate over the long term is a good bet, and you can buy cheap now. Being a landlord can be very lucrative until you sell. But your not liquid, and will need to carry debt. The tax consequences can be tough to get around if your not a real-estate professional…

God the possibilities are endless… Diversification… I mean…

There is quite a bit that goes into this choice, and you should talk to a licensed professional rather than a weight lifting community if you have 500K to invest.

[quote]xXSeraphimXx wrote:
I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?[/quote]

If you have 500,000 the first move would be to move it in to 3 separate accounts.

I think F.D.I.C. is covering to 200k on each account,you would need to check on that.

I would tell you to find a financial adviser,but beware.

If you are serious go to Fidelity, Vanguard or some other low cost mutual fund. With 500,000 they will give you free planning, along with assessing your risk tolerance.

If you really want to play it safe you could go for jumbo CD’s. May be you could get 3 or 4 percent just remember to split the accounts up. As stated you could also go into treasuries.

Yeah… I’m guessing you don’t actually have 500K <_<

If I’m right, start by maximizing your 401K. If you don’t have a 401K… get one. This is what all of my adult-friends tell me. Most of them HUGELY regret not putting anything into their 401K for so long.

(401K is what I’m thinking of right? I’m going to be very embarrassed if it’s actually 301J or something <_<)

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[quote]Mick28 wrote:
xXSeraphimXx wrote:
I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?

The safest investment right now are Treasury Bills. The interest that they are paying is not all that high but the safety factor outweighs everything right now.

What ever you do DO NOT invest it in the stock market right now…it will be dropping even further.

Good luck.[/quote]

On the contrary, do invest in the stock market. It will continue to drop but while you will experience short term losses, you will gain long term in a big way.

I have not researched these prices but am giving an example.

Say Coca Cola averages $60 / share. Right now it is worth $30 / share and you buy ten shares.

The price drops to $25 / share and stays there for two years when the market rebounds and coca cola is again worth $60 per share.

Your invested three hundred dollars is now worth six hundred even if it did drop below three hundred in value for a short time while you were not using it.

Of course with 500k, you would be doing this on a much larger scale.

And when coca cola drops to 25/share, buy more. It will still come back to sixty and you bought it even cheaper than the current price of$30.

Diversify your money though. If you play stocks, play blue chip for security in these wacky times. The stalwarts of our economy are not going anywhere, they are just licking wounds for awhile.

Check out up and coming energy companies with oil and gas operations coupled with a strong future of alt energy as well.

Invest in mutual funds along with individual stock for security and do check out bonds and t-bills.

I would say avoid real estate unless you have a working knowledge of the industry. There aren’t as many checks and balances to protect your investment as their are in financial markets.

I do not have 500k yet, I have a bit more than half. I am looking into ways to get the best annual return on saved money for early retirement. If someone had 5 million at 4% he/she could live of the interest. I am sure even 500k is not enough to live off interest but I like to have an idea of how much I would need. I am young and have just begun to learn about finances.

[quote]daudowen wrote:
xXSeraphimXx wrote:
I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?

If you have 500,000 the first move would be to move it in to 3 separate accounts.

I think F.D.I.C. is covering to 200k on each account,you would need to check on that.

I would tell you to find a financial adviser,but beware.

If you are serious go to Fidelity, Vanguard or some other low cost mutual fund. With 500,000 they will give you free planning, along with assessing your risk tolerance.

If you really want to play it safe you could go for jumbo CD’s. May be you could get 3 or 4 percent just remember to split the accounts up. As stated you could also go into treasuries.[/quote]

It is 250,000 per person per bank for FDIC coverage. If you have someone joint on your account, it could be double but I don’t suggest keeping that kind of money in one bank.

[quote]FormerlyTexasGuy wrote:
Mick28 wrote:
xXSeraphimXx wrote:
I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?

The safest investment right now are Treasury Bills. The interest that they are paying is not all that high but the safety factor outweighs everything right now.

What ever you do DO NOT invest it in the stock market right now…it will be dropping even further.

Good luck.

On the contrary, do invest in the stock market. It will continue to drop but while you will experience short term losses, you will gain long term in a big way.

I have not researched these prices but am giving an example.

Say Coca Cola averages $60 / share. Right now it is worth $30 / share and you buy ten shares.

The price drops to $25 / share and stays there for two years when the market rebounds and coca cola is again worth $60 per share.

Your invested three hundred dollars is now worth six hundred even if it did drop below three hundred in value for a short time while you were not using it.

Of course with 500k, you would be doing this on a much larger scale.

And when coca cola drops to 25/share, buy more. It will still come back to sixty and you bought it even cheaper than the current price of$30.

Diversify your money though. If you play stocks, play blue chip for security in these wacky times. The stalwarts of our economy are not going anywhere, they are just licking wounds for awhile.

Check out up and coming energy companies with oil and gas operations coupled with a strong future of alt energy as well.

Invest in mutual funds along with individual stock for security and do check out bonds and t-bills.

I would say avoid real estate unless you have a working knowledge of the industry. There aren’t as many checks and balances to protect your investment as their are in financial markets. [/quote]

This is banking on a bear market and the companies not going bankrupt. If the company goes belly up, you lose your money. Given, something like Coca Cola isn’t likely to file bankruptcy, but it hasn’t dropped that much in price.
High risk-high profit if successful, low risk- low profit but safer.

[quote]xXSeraphimXx wrote:
I do not have 500k yet, I have a bit more than half. I am looking into ways to get the best annual return on saved money for early retirement. If someone had 5 million at 4% he/she could live of the interest. I am sure even 500k is not enough to live off interest but I like to have an idea of how much I would need. I am young and have just begun to learn about finances.[/quote]

Your best bet is to find a local community college offering finance classes and enroll in one. Learn the what and why behind investing principles and theories.

The $150 or so for community college semester hours will be well spent as you learn what to do with the rest of your money.

There is no sense in waiting until you have 500k to invest. Do it now and hit that mark even sooner than you are planning.

[quote]Blaze_108 wrote:
FormerlyTexasGuy wrote:
Mick28 wrote:
xXSeraphimXx wrote:
I was recently reading up on best ways to keep money saved,and was wonderig what is the best way to earn on saved money. Say you have 500K saved, what can one do to earn the most interest on it while keeping it from being lost(insurance)?

The safest investment right now are Treasury Bills. The interest that they are paying is not all that high but the safety factor outweighs everything right now.

What ever you do DO NOT invest it in the stock market right now…it will be dropping even further.

Good luck.

On the contrary, do invest in the stock market. It will continue to drop but while you will experience short term losses, you will gain long term in a big way.

I have not researched these prices but am giving an example.

Say Coca Cola averages $60 / share. Right now it is worth $30 / share and you buy ten shares.

The price drops to $25 / share and stays there for two years when the market rebounds and coca cola is again worth $60 per share.

Your invested three hundred dollars is now worth six hundred even if it did drop below three hundred in value for a short time while you were not using it.

Of course with 500k, you would be doing this on a much larger scale.

And when coca cola drops to 25/share, buy more. It will still come back to sixty and you bought it even cheaper than the current price of$30.

Diversify your money though. If you play stocks, play blue chip for security in these wacky times. The stalwarts of our economy are not going anywhere, they are just licking wounds for awhile.

Check out up and coming energy companies with oil and gas operations coupled with a strong future of alt energy as well.

Invest in mutual funds along with individual stock for security and do check out bonds and t-bills.

I would say avoid real estate unless you have a working knowledge of the industry. There aren’t as many checks and balances to protect your investment as their are in financial markets.

This is banking on a bear market and the companies not going bankrupt. If the company goes belly up, you lose your money. Given, something like Coca Cola isn’t likely to file bankruptcy, but it hasn’t dropped that much in price.
High risk-high profit if successful, low risk- low profit but safer.

[/quote]
Correct. As mentioned in my post, invest in blue chip stocks for security. Also as mentioned, I had not researched the actual prices, only gave an example.

While most blue chip companies have not dropped 50% or more, they are currently valued lower than their average and the principal holds true.

Buy while cheap, even if they head lower for the short term, and you come out a long run winner which is his goal as he is asking about retirement from a young persons perspective.

Most likely if the big companies do find they can’t survive, they will merge with a stronger company and he wins again, typically two fold.

Hell, with the way it’s been going and the fact we elected a socialist to office, he can probably rely on the gov’t and ultimately tax payers to provide the stock value the market can’t support right now.

Anyways, this is all pretty standard stuff. I do recall reading a Warren Buffet article recently as well where he says to “be greedy” and start buying up stocks left and right.

If Buffet is in agreement with the bear philosophy during todays trials, I’m all for it.

[quote]xXSeraphimXx wrote:
I am young and have just begun to learn about finances.[/quote]

Even with 250,000 you could retire a millionaire.

The market will hit a bottom soon if not all ready.

Do you want to get in at the Dow at 8,000 or at almost
14,000 as it was in 07. Yes it may move sideways for a
while,you must be patient.

Go to Borders and buy finance books- my pick would be Warren Buffet or John Bogle. Buy John Bogles new book and really absorb what he says. Mr Bogle created the Vanguard group and was a pioneer with indexing.

Go for it-investing can be fun

Correct me if I am wrong but although stocks and real estate are good investments they are long term. Unless I am getting dividends or renting out my properties I will not be recieving money yearly, so if I put my into them I will have to continue to work because if I take money from the stocks I will lose value.

I am looking into stocks and funds for long term earnings, but the reason I asked about interest is for the semiannual pay. 1 million dollars at 5% interest would give me 50k a year enough to live off of.

I could be wrong about some of these things like I said I am still learning.

You should be earning over 3% right now anyway unless you have that money stashed in your mattress. Etrade Bank, Capital One, and others have high yield savings accounts.

You’re not going to find a consistent, safe 5% return. Not in this economy. CDs are the best you can do. Look online, you might find some in the 4% range.

Also, you either make too much money or don’t buy ANYTHING. No one, except for the financially misinformed, just have $250K laying around doing nothing. You would think you’d have a decent brain just to save that much money.

I think with ING Direct you can open up a savings account at 2.75% interest and then drop a sizeable chunk into their 4.75% CD… that way your money is at least earning something while you decide what you really want to do with it.

If you truly have 500k to invest then it would be silly not to invest (purchase or open) in a small to medium size business or businesses. you could easily generate 100k+ in passive income annually while retaining and building equity at the same time.

this is superior to real estate due to the passive income being potentially so much higher. this would of course require some work, potentially a lot, but I am a 26 year old business owner and can not tell you enough how valuable being my own boss is in so many ways even more than just financially.

calling stocks investments is really poor thinking considering the history of the stock market. just ask people how their 401k is doing now. it is more of a speculation than a true investment, and unless you are a guru, i would avoid jumping right in.

if you do choose stocks, do some research, lots of research, “how to make money in stocks” by william j o’neil is a great book that can help you tremendously.

good luck

[quote]msd0060 wrote:
I think with ING Direct you can open up a savings account at 2.75% interest and then drop a sizeable chunk into their 4.75% CD… that way your money is at least earning something while you decide what you really want to do with it.[/quote]

Accurate.

[quote]The Bambino wrote:
msd0060 wrote:
I think with ING Direct you can open up a savings account at 2.75% interest and then drop a sizeable chunk into their 4.75% CD… that way your money is at least earning something while you decide what you really want to do with it.

Accurate. [/quote]

Agreed

[quote]toughcasey wrote:
you could easily generate 100k+ in passive income annually while retaining and building equity at the same time.

this is superior to real estate due to the passive income being potentially so much higher. this would of course require some work, potentially a lot, [/quote]

Not arguing with your statement as much as nit picking.

Your contradicting yourself. When you run/manage/materially participate in the business, the income is not passive. And this is a good thing. You can often tax plan your business to near zero or a loss. If the income is passive you cannot claim the loss, but if it is active you can take the loss. In general there are three types of income, GAAP, Tax, & cash. All three can be vastly different.

[quote]countingbeans wrote:
um…

Depends on your focus, Long v. Short term. Your risk aversion and required ROI.

The safest is government paper. Not a great ROI though.

Real Estate over the long term is a good bet, and you can buy cheap now. Being a landlord can be very lucrative until you sell. But your not liquid, and will need to carry debt. The tax consequences can be tough to get around if your not a real-estate professional…

God the possibilities are endless… Diversification… I mean…

There is quite a bit that goes into this choice, and you should talk to a licensed professional rather than a weight lifting community if you have 500K to invest.[/quote]

I bench 500k bitch!!!