edgeprod

I just checked my savings account history (I did it on a goof, I usually look at the checking account history to scan for fraud, but tried it with savings to see what it did). It showed all these deposits like "interest credited" for every month, at the end of the month.

It's almost $400, though! Am I really making $300-$400 every month just for keeping money in the bank? What the fuck?

Does anyone know how this works? What's the general way to figure out how much you get for a certain balance, etc? I'd call the bank, but it's 3:57am on Sunday, haha.

Also, anyone know if CD's earn a lot better, how they work, and if there is a better option (no-risk) than CD's? "The stock market" isn't the answer I'm looking for here.

woj

If you are making $300-$400 in interest every month, you are probably keeping $100k+ in that account... If so, what the fuck is wrong with you? invest that money somewhere dude....

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Manowar

Find out the interest % of the account then work it out from the total you have in there or the total you want to see the interest for per year

edgeprod

I know zero about this.

Any ideas where I don't lose money when the market tanks?

Rhesus

Man, what the...! "Interest, how does it work?" LOL, you're from the stone age?

edgeprod

When I kept $100,000-$200,000 in the account, it made $30-40/month in interest, I believe. They called me to say it wasn't FDIC insured anymore, and sent a letter -- I still have it. I dunno if that affects anything.

LiveDose

$300-$400 in interest from a savings account. You are losing money by keeping that amount in savings.

You don't know what a CD is? Trust fund baby? Just checking...

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studiocritic

most savings accounts only earn like 1.4% per annum..

some earn as much as 3-4%, like ING Direct (used to, dunno what it is now)

you should move as much of that money as the bank will let you into a money market account.. you might earn 2-3x as much interest and it's insured up to $100k usually (though in all reality there's no risk to your money unless the dollar collapses.. in which case we're fucked anyway)

so anyway..

400 * 12 = 4800

4800 1.4
--- = ---
x 100

1.4x = 480000
--- --------
1.4 1.4


you've got $342,857 in a savings acct? wtf?

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studiocritic

oh, your FDIC post was after i started mine..


that likely means they converted your account to a money market for you, they're not FDIC insured..

hit me up on icq bro.. i'll give you some tips on how to move this around

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edgeprod

HAHA, I know how interest works, but I am cracking up because that "stone age" part just tickled me for some reason.

I meant is it graduated on some scale, i.e., if I split it into 3-4 accounts, am I better off, is it better in a CD, interest-wise, do they have some sort of "sliding" scale for amounts, etc.

I just assumed I was making pennies on it -- but $400/month, hey, shit, that's a new 30" monitor every 4 months just for being loyal to one bank. I think I can do better, I just have always been afraid of the risks involved. I know a lot of GFY'ers have some pretty nice setups, just don't know how to go about it.

edgeprod

Eh, I *wish* I had a trust fund. My money is from SexKey.

I know I'm losing money, I've just been afraid of the risk, and don't understand CD's at all.

edgeprod

It's more than that, so I must have a REALLY shitty rate ...

The bank has been fucking me, clearly. Time to change banks.

lazycash

You've got a few 100k sitting in the bank earning the minimum interest rate? I think it might be wise for you to seek out a financial advisor. There's many different places to put your money that will guarantee you a decent return free from market volatility.

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woj

It sounds like you have a nice chunk of $$ to invest, your best bet is to hire an accountant or financial advisor... it will cost you a few bucks upfront, but you will easily make it back within a month or 2...

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edgeprod

If it was only $100k, I wouldn't worry about it.

I just kept adding to it, not really paying attention.

I know, I've been stupid with it. studiocritic just showed me it should be earning $3,000/mo .. fuck, I thought $400/mo was awesome.

I appreciate all the help everyone's given, BTW. I am lost on this shit.

woj

on a side note, how old are you by the way?

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edgeprod

I had one, but he robbed me blind. Then, I went to American Express, and they stole some dough when their servers were down, and it's the principal of the thing for me now -- I can't trust them, and had a bad taste in my mouth.

Maybe I should seek out a local guy ...

Manowar

At the end of the day, listen to what you want to do. It might be better to have $400 a month than risk your hard earned cash for the extra interest.

edgeprod

I'm 27 -- since April.

edgeprod

Yeah -- I have been burned, so I got nervous and just "shut off" -- probably cost myself SO much money.

lazycash

I appreciate your candor, sounds like you are open to help. I really feel like you have to start by changing your attitude of "if it was only 100k, I wouldn't worry about it." Even that much properly placed can have a dramatic impact on the amount you'll have available for retirement. I would at least try and do some diversification and split the money up as you suggested with some held in traditional conservative places while putting other amounts in higher yielding places with a little more risk. Deciding where to put certain amounts is what a financial advisor should be able to help you with. Do you own any real estate?

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edgeprod

Not only am I open to it, I really appreciate it. It'd sound corny if I said "I feel like I can trust fellow webmasters" .. but it's true.

The risk is something I've been squeamish about because of past experiences. I guess I just have to get over it.


I do, but nothing "major" really.

lazycash

Have you considered buying a home? If you're convinced you want to stay conservative, at least put your money into a high yielding certificate of deposit - cd. Take 100k and put it into a 12 month or longer cd from an established online bank, ie www.ingdirect.com and you can lock in your interest rate at 5 - 6% and at least make $500/mo in interest off of that. As bad of an experience as you may have had with the stock market, you're only 27 and you should think long term. There's mutual funds that you can invest in that have averaged 10%+ over the last 50+ years. Sure they may have a down year and only earn 5%, but the next year they may earn 15%, you can't view it as a short term investment. With the kind of cash you are talking about having on hand there's no reason why you shouldn't have a few million in liquid funds by the time you are 40 if you invest intelligently now.

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rants

What are good options? I'm retarded and don't know jack either... There are so many options; stocks, mutual funds, cd's ...

My friend showed me these financial self help books on amazon.com I guess I should get them

edgeprod

That's pretty much what studio and I just talked about on ICQ. I've squandered cash in the past on a lot of stupid things -- $6k/month property rentals, stupid cards, etc. I really want to fix that.

I don't really understand the FDIC thing -- the bank says I can only insure $100k per social security number, and it makes me paranoid to have so much "uninsured" over that $100k "magic number."

Bobert

Is your residence paid for? If you're renting just put all that down on a downpayment. Interest rates are at best around 4.5% if you put that money down you're earning 4.5% on it and your property value will go up every year so you're actually earning like 10% on it safely. If the market tanks too bad, you still have your investment. Try buying something for cash. You can always borrow it back if you feel you can invest it for better then 5%. Just get a home equity loan!

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Bobert

If you own your house then buy a rental property for cash again. You should at best get $1k/month from your rental if you buy it for $350k!!!! Say you buy a single family residence you should be able to get at good family in there. Depending on where you are, you might split that in two chunks for 175k and get two properties and two families rented. You still might have a mortgage but it's still safe because you should earn at minimum 2k/month and that will pay the rest of whatever is left for mortgage (which should be minimal). Assume all my numbers are low. Shit you should get 10% min on any real estate investing and then you also get appreciation on your property. I figured it was something like 20-25% on all appreciation on the properties that I currently have.

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Bobert

Next option, put 35% down on a large apartment building! You'll get up to 1 million in value so that's 100k/year and assume 50% of that will be for expenses/year. So you'll be left with 50k to service your dept. Just hire a good property manager who will find a good landlord. You shouldn't have to do anything, just sit back and pay off the million dollars with the tenants money. In 20 years you should have it paid off and make 50-100/year as a retirement fund.

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edgeprod

Holy shit -- $700k+ on a down payment? Is that safe? What if my income dried up, and I couldn't afford the mortgage? I'm likely over thinking this ... although, I know the guy to talk to -- I think he might be battoning down the hatches for a storm right now, though.

edgeprod

Good idea. Good tenants are the key.

I live in Connecticut, and rent in my area (by Greenwich/Stamford/New Haven) is $2k+/month for any place you'd remotely want to live in -- and if it's a house, figure $3k+/month if you want something even HALF way nice .. about $5k+/month for something you'd invite someone over to.

Rental property of a decent level starts at about $500k and scales on up from there, if you add multi-family style dwellings.

Tdog

Most banks will give you 1% on your savings.

Inflation increases by 4% per year, so every year your negative -3%.

Inflation is caused by the Inflating of the Money Supply. Inflation is the hidden tax that no one talks about.

edgeprod

That idea, I like.

Thanks for taking the time on 3 great responses.

pussyluver

Bingo. You must be one fucking moron to have that much money and plain not know what to do with it at what age? Think you said 27. Idea! Take some financial planning classes so you know when some one is ripping you off.

You do need a financial planner. A Certified Financial Planner to be more specific. When they fingure out how little you know, they may take advantage of you too?? So you have to find someone to trust. It prolly won't be a bank.

Investing involves risk. Buying a house is a risk. Read the news, some markets are sliding backwards. So if you are going to take risks, spread that risk around a bit. There are mutual funds, bonds, futhures and all kinds of investment instruments. The bigger the risk the bigger the return (maybe). So things with minimal risk have little return on investment. So you need a portfolio of investments. To do that can NOT be expalined in a post or on a board very well. It's that trust worthy planner you need to find.

Good Luck.

edgeprod

I seem to be getting about half that -- time to switch banks for sure!

abshard

i get about 4% interest on my washington mutual checing account.

Tdog

When inflation is going up at 4% you are gaining nothing.

edgeprod

Agreed -- but I've been super fucking busy. I'm not trying to use that as an excuse, but I was doing the Silicon Valley while simultaneously building a porn business in the 90's, working 20 hour days in the 00's, and busting my ass consulting for adult companies since 2003. I just ended a major contract, took a breath, and realized my investments are nil, and I'm sitting on what is an irresponsible amount of liquid dollars.

And to think -- I wouldn't have even REALIZED it if I hadn't looked at what percentage I am getting on my savings account.

Not really an excuse (again), but here it is -- I live in Connecticut, and that's not really considered a large amount of money like it is in other parts of the country/world ...

It's 10am, I need to get some sleep. Been comparing all kinds of things, looking at diversity, etc. for a while tonight .. burnt out.

ONCE AGAIN: Everyone has come up huge here, some great advice, it means a lot to me.

fitzmulti

This became an "interesting" thread! :P

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pussyluver

Go to sleep and come back to the thread when your up.

wdforty

I'm guessing edgeprod isn't the only one getting benifit from this thread...

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pussyluver

If you buy a house and that sound like it is in your plans. Could be a wise move as long as you have money in other places besides the house.

Make sure you have an agent representing your interest. That would be a real-estate agent. There must be two!!! A buyers agent and a sellers agent. You can use an attorney, but typically smarter to have an agent that knows how to negotiate on your behalf. The seller is welcome to do what ever they want -- sell it on there own or have an attorney. Attorneys know the law, but may not be the best negotiator when it come to property. Exceptions to every rule of course.

Having the same agent handle the transaction is typically bad for the buyer IMO and you can end up leaving tons of money on the table.

Bobert

Dude you're already a millionaire (you just need time to iron out the rest). Just wait, get somethign worth a million dollars i.e. borrow it on real estate and have your tenants pay it off.

Try for 15 year payment schedule on some type of real estate. See you can pay it off in 25 years or 15 years or 10 years or whatever. The payment difference on 25 vs 20 years isnt much at all so you're better of increasing your payments and cut off 5 years worth of interst (best bet is 17 years). Like I said, if you like the idea go with an apartment building and just plan to pay it off as quick as possible. With 35% down I think you could safely pay it down in 17 years. In 17 years as long as you have insurance on your building and tenant income insurance and keep it rented and in good repair, you'll be a millionaire. It's really as simple as that. In teh US too you can trade up in value without paying captial gains tax so you can wait until it's value increases then trade up.

THe safe bet is to put 375k or whatever on your 500k house and collect rent from one person. That guarantees you'll be worth 500k in 15-25 years and means only one tenant and oen unit to maintain. It depends on how big you want to go. Shit you'll have about 1k in mortgage payments and property tax on 500k so that should give you 3 k or so left in profit to pay for repairs and maintenance (which shouldnt be that much at all). That's way better then 1% in what you have now.

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Bobert

Sorry, that's 3k/month not year!!

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lazycash

He won't be guaranteed that if the house devalues to 300k. You've given him lots of good suggestions on some aggressive real estate buying, but you have to step back and realize that you're asking someone who right now is only comfortable with a bank savings account to make a huge leap. He needs to at least venture first into some traditional conservative investing methods like cds and maybe something like fixed annuities or treasury bonds where he can earn a higher fixed interest without giving up his sense of being secure.

Edge I understand you wanting that feeling of being secure, but you really need to not be so concerned with the FDIC. Those who have become wealthy didn't do it on bank savings accounts. You're young, if you put 300k today into something that returned 7% annually and you added 2k/mo, you'll have 2.25 million in 20 years. If you do that exact same thing, but only get 2% in interest then you're amount after 20 years would only be 1 mil, huge difference and why you should seek out alternative ways to invest your money. A good financial planner should be able to get you at least 7% return on your money considering the amount you have to invest.

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Marshal

couldn't agree more!

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Bobert

Yes, real estate isnt for everyone. I'm 27 as well and had real estate for 5 years now. I used my school money to buy my first, plus savings and a loan from my family. It's never depreciated in value, but no big deal if it does because they made money from day one. First lesson in real estate, make sure it makes money the day you buy it!

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pussyluver

At the level he is able to play, it's called investment property and should prolly be in a LLC or family partnership or ? Now someone that doesn't understand FDIC is not ready to jump into a bunch of property. A house to live in is a different matter.

His ability to make money is on the web, not in managing money. So why not play the strength in making money and put a team together to handle the cash assets. That would be Estate Planner, Lawyers, Financial Planner etc.

I would suggest large umbrella insurance coverage to protect assets. The LLC or another way of limiting liability is required too.

Hard to believe someone didn't understand bank interest or FDIC with that much liquid cash available????? But that has been answered. Please tell me this isn't some fake drama shit.

Love Sex

http://finance.yahoo.com/

http://finance.yahoo.com/mt?u

edgeprod

A lot of this sounds good -- again, I really appreciate it. This week, I am going to seek out a financial advisor to run some ideas by in person.

bdld

if you want a quick fix, with complete security.. put 100k at hsbcdirect.com, ingdirect.com and gmacbank.com each. all are fdic insured up to 100k. all have interest rates higher than 4%, you're probably earning 0.4% right now