Saving for house (payment, rate, deposit, accounts)
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All things aside, my primary financial goal for the next year is to save for a townhouse/condo. I'm a student living at home for the summer and will be working and saving up cash. If you were me, where would you park this cash? I have an account with ING but I'd like a little better return on it, especially since I don't need it to be liquid at least for another year. Thoughts?
Congrats to you on your decision to buy a property. I think an online savings account is the best route to go. I would go to bankrate.com to determine which bank yields the highest return. You can also do a comparison with CDs or money markets. A year is not enough time to do anything else. Good luck!
I agree with the previous poster. Put the money for your down payment and other closing costs somewhere without much volatility. Prior to when I bought my house, I put all my "house money" in an ING account that "back then" earned 3-4% or something like that. When the market came crashing down, sure my other investments took a hit, but that was cash I had no intention of using in the short term (and they have bounced back).
But, my "house savings" was still sitting pretty through all that, but the interest rate by 2009 was under 1% at that time.
i think americanexpress personal savings is the highest rate right now @ around 1.15%. not all that much more than the ING account, so if it's not worth the hassle to you, don't switch, but i would (i'm a penny pincher about such things though).
above posters are right though...this is pretty much the way to go for a house fund. CDs rates aren't any higher unless you do a 12 or 24 month CD.
All things aside, my primary financial goal for the next year is to save for a townhouse/condo. I'm a student living at home for the summer and will be working and saving up cash. If you were me, where would you park this cash? I have an account with ING but I'd like a little better return on it, especially since I don't need it to be liquid at least for another year. Thoughts?
If you need the money in a year or so, just take it easy and don't get greedy.
Look into a 1 year bond or some other safe item.
I put 1k a month into a mutual fund when I was 23 and working my first job. (I lived in a house with many others, no car, verrrrry frugal.) After 12 months.....I had about 10k because I'd put it into a somewhat risky mutual fund.
Meanwhile the stockmarket has been hot lately so the possibility of a correction may be a bit higher than normal.
IMO all interest-bearing savings accounts are useless these days. If 1.15% is the best rate that can be had, that is sad. Even if the OP puts $20,000 into that account, it's only going to earn $230 in a YEAR! This is hardly considered a nice gain, and is very immaterial when buying a new property. I am 26 yo and don't concern myself with interest rates on savings accounts too much. In fact, right now I have $13,000 sitting in a Bank of America money market account earning only 0.2% interest. It only makes up about 0.01% of my full financial picture. That's terrible, but I don't care in the slightest. In the grand scheme of things, interest earned on a savings account does not materially change someone's financial situation.
IMO all interest-bearing savings accounts are useless these days. If 1.15% is the best rate that can be had, that is sad. Even if the OP puts $20,000 into that account, it's only going to earn $230 in a YEAR! This is hardly considered a nice gain, and is very immaterial when buying a new property. I am 26 yo and don't concern myself with interest rates on savings accounts too much. In fact, right now I have $13,000 sitting in a Bank of America money market account earning only 0.2% interest. It only makes up about 0.01% of my full financial picture. That's terrible, but I don't care in the slightest. In the grand scheme of things, interest earned on a savings account does not materially change someone's financial situation.
i'll take $200/yr over $20/yr any day. does it mean i can go buy a BMW? no. but maybe i can go out to a couple dinners for FREE. the money has to sit somewhere, why not in a location that gets you the best you can get?
IMO all interest-bearing savings accounts are useless these days.
And few would disagree with you at least as regards the yield.
But the yield isn't what this discussion is (was) about.
This discussion was (is) about making the pattern of regular savings deposits (or transfers) as easy as possible for the six-twelve months it takes to accumulate enough to actually do anything with...
and for the general purposes of having this habit established in our lives.
The OP in this thread wants to save for down payment and closing.
Once that is accomplished there will be other uses for the savings he should continue to be in the habit of adding to... forever.
we get like $2.20 per month per $1000 at our local bank but I guess this may not help you if you dont have direct deposit (one of the requirements) and 10 debits per month...
Last edited by joe moving; 05-06-2011 at 12:57 PM..
What about using the money to invest in an ETF? Would approximately 1 year be too short of a window to make it worth while?
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