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Hey since I'm living at home with my parents and I have a decent job I want to start saving up for a house or a condo while I'm here. I'm looking at about a $200,000 place and want to out about 10% down. My biggest question is what type of savings account or bank account should I open to start depositing money into as the checks roll in. Since the money will be sitting for awhile while I save up what type of account nets the best interest.
No one knows yet. If you ask people in five years which account you should have put your money into today, they'll be happy to go on in glorious detail, but as of right now, those folks have no clue either.
Hey since I'm living at home with my parents and I have a decent job I want to start saving up for a house or a condo while I'm here. I'm looking at about a $200,000 place and want to out about 10% down. My biggest question is what type of savings account or bank account should I open to start depositing money into as the checks roll in. Since the money will be sitting for awhile while I save up what type of account nets the best interest.
Shop around on the internet and you'll soon see which one is best for you. You won't earn much interest, but you will get some. Just make sure your savings account can be easily linked to your checking account.
We use Capital One 360, and we like it.
The way we do it:
We have our paychecks (we're retired now, so it's our SS & retirement checks) directly deposited to Capital One. Then, on the first of the month, we transfer the amount we are going to spend to our checking account. That way we are never waiting for a payday and that sort of thing. It has proven to be a very effective money management tool for us.
We're older than you, so we have more money, but just to give you an example, last month we took a trip to Bermuda. This month (last week) I transferred the money to checking and paid off the Visa. No waiting for payday; no interest charges; no surprises.
Bankrate.com tracks the rates by bank. The last time I looked American Express savings had the highest rate, but they limit transactions. Capitalone360 had the next best, and they are very easy to use (I use them).
You can set up direct deposit into almost any sort of account at all. It's just another form of walking in the front door with a paper bag full of money. The primary questions are over the interest that will be paid on account balances and the means and convenience of getting cash back out again as you need it. There are many accounts that are not checking accounts that still offer check-writing privileges. You could for instance pair up a mutual fund and a money market fund from a fund family that doesn't charge a fee for account transfers, then set up DD into the mutual fund and use online transfers to keep the money flowing around as it needs to.
[Just to note that it would be both my personal and professional opinion that aside perhaps from a safe deposit box, there is never a need for a personal relationship with a bank at all. There is almost always some other entity out there that can provide the same sort of services on better terms.]
Last edited by oaktonite; 06-10-2013 at 08:18 AM..
Rates are so low it's not going to be very meaningful. Living at home with your parents, you're talking what, six months or a year? Money market, maybe a CD.
I'm living at home with my parents and I have a decent job I want to start saving up...
Since the money will be sitting for awhile while I save up what type of account nets the best interest.
First get the nice pile saved up (pile = excess of $10,00).
Then worry about where to put the several piles you'll have.
Any savings account will be fine for quite a while.
If the expectation is to USE the money fairly soon (less than 2-3 yrs?)...
there really aren't a lot of choices beyond savings accounts.
Or at least none that are an appreciably better yield (without risk).
Here's what we would do -- and did. We opened a savings account (which granted isn't much interest, but hold on) and figured out what our payment would be. A 200K house with a 10% down makes the mortgage 180K and the payment at todays average 30 year rate -- 846.94 -- 847 a month. That's your monthly savings goal. It will take you 2 years to save a little over 20K -- and you know you can afford the payments because you are already making them.
You want to up the ante? Get an estimate of your annual property taxes and insurance and add those in, divided by 12 (since those are paid yearly) and add that to your mortgage amount -- and you can be sure you can really afford the home.
When you buy -- if you get paid twice a month, divide the mortgage amount in half, and prepay that half into your savings account, so at your next paycheck, you can take that half payment and not feel your whole paycheck goes to your mortgage.
As for investing that down payment money -- only in short term CDs, because any money that isn't longer term isn't good for the stock market.
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