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Basically I'm tired of money just sitting there doing nothing. Is it wise to open a savings account with my bank (Chase)? Should I take it elsewhere? Should I get into stocks? Do I even have enough?

If you were in my position, what would you do?

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    How much risk will you tolerate (are you willing to risk it all for big returns, or do you want something safer)? Is this a one-time investment, or will you be adding to your position over time? How liquid do you need this investment to be? How long do you plan on investing the money for? – user7027 Aug 21 '12 at 20:42
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    You have too many questions here, IMHO, and not enough detail. "Do I even have enough" is impossible to answer without alot more detail about yourself. And has nothing to do with the starting question of how to have that 12K earn interest. – Patches Aug 21 '12 at 21:29
  • @Patches - in the context of "getting into stocks" the question about having enough makes sense. Lots of brokerages have minimums in the multi-thousand dollar range. – MrChrister Aug 21 '12 at 22:00
  • @T1000 I don't know how to make any of those judgment calls. I'd have to model things in terms of utility, I suppose, but I don't know how much is OK to risk. I don't know how liquid I need it, and I don't know how far out I want it. I just feel like I'm missing out. I'm paying student loans and not investing in anything, just working fulltime. Trying to save up a nest egg but it takes forever. Trying to see if I can put the money I'm not using to good use in the meantime to help build additional wealth. – IAmBatman Aug 22 '12 at 16:08
  • @MrChrister hrm. I didn't think of that, good catch. – Patches Aug 24 '12 at 4:02
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These are the basics in order:

  • Max your employer contributions to your 401k if available

  • Pay off any loans

  • Contribute to an IRA

  • Perhaps max out your 401k

  • Look into other investment options (refinance your mortgage, buy stocks)

Those are the typical rules, special situations may need specials actions...

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    Well if you can't put your money somewhere that pays more interest than your student loans, your money should probably go there. Unless you can get some sort of deal/exemption on your loans due to your profession or circumstance. – radix07 Aug 22 '12 at 15:04
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    That's exactly what I am saying. Why bother putting the tiny returns from a 3-4% investment towards a loan that has a 6% interest rate? Putting that extra money directly towards your high interest loans is like a guaranteed 6% return on your money. – radix07 Aug 22 '12 at 16:18
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    Investing while also paying off the loan can get overly complicated and is a losing battle in the end. I suggest taking the money that is sitting there in your checking account and use it to pay as much of your loans (typically highest interest rate first) as you feel comfortable with. – radix07 Aug 22 '12 at 16:39
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    It's not the fun answer, but it's likely the best route to go. It could take less than 4 times as long as it took you to save that 12k. As far as how much, that is another question and depends on personal preference and situation. It has likely been covered on this site a quite a few times already. – radix07 Aug 22 '12 at 16:49
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    There are no right and wrong answers for these types of questions, it goes along with how much risk you are willing to take. If you are comfortable with a 6 month emergency fund then by all means send any extra to your loans. Sending only your extra 1k per month towards your loans would pay them off in just over 3.3 years. Not too bad... – radix07 Aug 22 '12 at 17:16
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Lets make some assumptions.

You are not close to retirement. You have no other debts. You have a job. You have no big need for the money.

Your $12,000 isn't set aside for any particular purpose

You should invest that. Do not invest with a bank, they are not as competitive on fees as a brokerage account.

You can get specific answers that are different from every person, (so you should dig in and research a lot more if you care (and you should). Personally, I would suggest you open an account with one of the low cost providers.

  • Vanguard
  • Charles Schwab
  • Fidelity

Then, with that new investment account, put your money into a target retirement account. File your statements away and tend to it once a year. (Make sure it is there, that you can access it, that nothing alarming is going on). You certainly have enough to start an investment account. If you want to get more into it, ask a phone adviser what you should open.

Finally, before you start investing, make sure you follow the advice of radix07 and have no debt, saving the most you can for retirement.

A rule of thumb is your money will double every 72 months.

OR you are saving your $12,000 for a house or car or new paint ball gun set

Congratulations, you are a saver. Investing isn't for you as the risk of investing is in conflict with your desire to preserver you money.

Open a savings account or high interest checking account with a credit union, online only or local community bank. Shop around no the web for the highest interest. Don't get your hopes up though, the highest rate you see (that doesn't have strings attached) won't be much here late summer of 2012.

  • I have student loans. I am mid-twenties. I don't have an immediate need for the money other than paying bills/etc which I can currently afford (I work fulltime and this account is where I pay/get paid). I just feel like I don't need ALL of that money just sitting in a checking account at once and would like some of that money to earn more money. – IAmBatman Aug 22 '12 at 14:41
  • Great! I voted for money.stackexchange.com/a/16547/91 because that advice about paying off any outstanding loan is the better option than saving. – MrChrister Aug 22 '12 at 17:48
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Aside from employer 401(k) matches (which may double your money immediately), paying off debts is almost always the best place to start. Paying off a debt early is a zero-risk operation and will earn you N% (where N is your interest rate). Is that a good deal for a zero-risk return? The closest equivalent today (Aug 24, 2012) is that you can earn about 2.68% on 10-year Treasury bonds.

Unless you have a really, really good interest rate (or the interest is tax-deductible), paying off your loan will offer an excellent risk-adjusted return, so you should do that. The "really good" interest rate is typically a mortgage or student loans. (Mortgage interest is also tax-deductible, at least for now.) In those cases, you're not going to gain nearly as much by paying the loan early, and the loan is large - larger than the amount you want to have in risk-free investments. You want to invest for returns, as well! So you can save for retirement instead (in a 401(k) or similar account) and take on a little risk.

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First thing's first: migrate your savings to an interest-bearing savings account (such as from Ally Bank). While it still lags behind inflation, 0.84% is still better than 0.00%. Short-term CDs are also an option. I've personally thought about experimenting with peer-to-peer lending, but a few thousand in savings isn't all that much in the grand scheme of things, and you don't want it tied up in a risky, speculative loan when you might need it the most.

As the others have said, the general savings rules apply too: pay off high-interest debt, divert more money into your 401k (especially if you aren't hitting the match yet), then work on either whittling down other debts or saving more for a big purchase in the future.

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Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate.

The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals.

My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor.

You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.

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I had some extra money, so I opened American express saving account. At the time which was offering .80%, now .90%. I put most of the money in the saving account. The remainder of my money in a investment account at my local bank. I was in touch once a week with investment, I learned allot how the stock market worked and tax deferment(401k, IRA, IRA Roth). My suggestion is to do test run and see if you like it. Side note, NOT ALL investment are created equal.

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