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Thread: What do I do with 15k?

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    Default What do I do with 15k?

    My bank is scowling at me for having $15,000 in my non-interest checking account sitting there doing nothing for the past 6 months. It's been sitting there because I don't have a clue how to invest and make it grow on it's own. I only know how to keep piling more wages on top of it.

    They said their rates for investments were like 0.01%apr and advised me to put it somewhere where it will grow.

    I set up an ING Direct savings and checking account and moved $4k there because they looked like they had one of the higher rates of interest.

    Now I need advice.
    Should I just move everything out of my regular bank, no interest paying checking to my new ING Direct checking?
    Should I sign up for their Sharebuilder account and invest in stocks?
    Is there something more I should be doing that I don't know about?

    I've never invested in anything before so I don't even have a clue how to start at this.
    I THINK - THEREFORE I AM

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    Default Re: What do I do with 15k?

    I don't know too much about investing but I set up a 3 year CD with 1k when I was 15 and had my first job. you could try doing that but I'd set up a savings account and leave about 3-5k in there in case of an emergency.

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    Default Re: What do I do with 15k?

    If I do it through ING it won't be worth it because I'd get the same returns as it being in their savings or checking account.
    I THINK - THEREFORE I AM

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    Default Re: What do I do with 15k?

    Do you already have an emergency fund with 6 months worth of savings in it?

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    Default Re: What do I do with 15k?

    Make a tax deductible charitable donation to www. tempestssatanicspawn.org
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    Default Re: What do I do with 15k?

    This is strictly a personal opinion ...

    First, calculate how much money you would need to make it through paying one month's worth of bills / cost of living. Leave this amount in your local bank savings / checking account so that it is 'immediately accessible'. Admittedly the interest rate will be near zero. I would also opt to stay with a local bank, where it's possible to walk up to a teller and make a withdrawl ( i.e. you never know which banks might get in trouble these days - you never know when international funds transfers might be temporarily stopped i.e. ING Bank ). The other option which is even better from an availability standpoint but slightly riskier from a security standpoint is to forget the local bank savings account, keep 2 weeks worth of money in the local bank checking account for liquidity purposes, and also keep 2 weeks worth of money at home - in cash !

    Next, allocate six times that amount to purchasing Certificates of Deposit on a staggered monthly basis. These can be in any financial institution that pays a decent interest rate ( With ING currently paying 1% ). The object here is that after six months worth of consecutive purchases, you will then be able to 'roll over' each 6 month CD as it matures if you don't 'need' the money ... and basically have a month's worth of bill / cost of living money becoming available each months for up to 6 months if you do ! Obviously there will be a 'time delay' involved in actually 'getting your hands on' your CD money ... but in the context of an emergency fund this is a good thing ( as long as you have enough money in a local bank / under your mattress to cover that time delay )

    Put another way, if your monthly bills / cost of living amount to $2,000 ... then leave $1000 in your local bank checking account and put $1000 ( in smallish bills like 20's ) under your mattress. Also, this month and for each of the next 5 months purchase a 6 month term $ 2,000 CD from ING ( or another higher interest / foreign bank ). At that point, you will have $14,000 spread out as your 'emergency' fund where $1000 is truly immediately available, where another $1000 is available within a day, but where the remaining $12,000 is really only available ( without penalty ) on a monthly basis spread out over the next 6 months. With this setup, if anything should happen that affects your income, you're covered for up to 6 months.

    Once these objectives are accomplished, THEN you can start thinking about exploring other investment options with higher risks and rewards. Given the current precarious state of the world economy and world 'politics', it might not hurt to consider investing in some physical gold or silver or alternate currency ( like the Swiss Franc or Chinese Yuan ) next - but again that's purely a personal opinion !

    ~
    Last edited by Melonie; 11-27-2010 at 02:07 AM.

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    Default Re: What do I do with 15k?

    Do USians get tempted to do the carry trade nowadays? 6-7% per annum over here in Aussie land, and we all know the AUD/USD is going up
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: What do I do with 15k?

    ^^^ unfortunately for most Americans, getting involved in the currency 'carry trade' typically also carries a fairly hefty minimum buy-in ... like US $10,000 ... for direct ownership of a foreign currency CD. As with muni bonds, there is also the option to buy shares of currency ETF's at a much more affordable price. But also like muni bonds, the commissions / fees / 'spread' typically provides a significantly lower potential rate of return.

    At the moment, the future of the Aussie : US Dollar exchange rate is heavily ... and I mean HEAVILY ... dependent on the continued growth of the Chinese economy. The Aussie has benefitted from rising commodity prices as well as export sales of commodities to China. Thus a Chinese slowdown ... which the Chinese gov't is attempting to cause ... would be a 'double whammy' for the Aussie dollar. You can also add North Korean artillery shells and profit squeezes of Chinese exporters to the potential list of 'destabilizing influences'.

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    Default Re: What do I do with 15k?

    Oh yes, there's a lot of shit around the world just waiting to hit the fan, but I'm just thinking that keeping your money in one country's currency / institutions mightn't be the safest thing in the world, not matter what country. Personally, I'm going to reduce my exposure to our stockmarket index for the short term.

    Last time I checked, some Aussie banks had accounts that could be owned by non-residents... I haven't looked into it myself. If you can do that without getting robbed on exchange rates, it could be an option. (Disclaimer: I do not currently work for a bank)
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: What do I do with 15k?

    ^^^ well be sure to read the fine print ... that as a result of the UBS Swiss gov't versus IRS US gov't 'crusade' over offshore accounts of US individual citizens, these days opening a foreign bank / brokerage account requires the following ...

    - physically travelling to the foreign country in order to 'prove' your identity to make the opening of the foreign account possible ( thanks to the terrorist anti-money laundering treaty )

    - reporting the existance of the foreign account to the US state dept', plus reporting the transactions / income to the IRS, with backup reporting to the IRS by the foreign bank ( thanks to the new financial regulations law )

    - 30% 'withholding' tax to be applied by the foreign bank to any profitable transactions ( thanks to the US national health care law )

    Because of these 'onerous' new reporting and withholding requirements being imposed on foreign banks who maintain accounts for US citizens, generally speaking those foreign banks are closing / turning down new accounts for US citizens involving 'small' amounts ( i.e. less than perhaps $1 million ). This also typically means additional US customs reporting of moving 'cash' in and out of the USA.

    However, the above only apply to foreign banks who also maintain a US business presence. Thus if an American citizen is content to travel to a foreign country to open an account with a bank that does NOT have any US business presence, and is also content to travel again to a foreign country to make every single deposit and withdrawl re their foreign bank account ( since said foreign bank cannot have a US business presence with which to transfer funds back into the USA), , then it's still possible for US citizens to open accounts involving 'small amounts' i.e. <$10,000. Unfortunately, this is really only practical for expatriates who permanently relocate to a foreign country.

    However, certain US banks do offer foreign currency denominated CD's that sidestep all of the foreign account issues. The best known is probably . However, as you can see from the link, a $10,000 minimum 'buy-in' is involved.

    Of course there are 'proxies' for actually purchasing and holding foreign currencies. The best known for the Aussie dollar is . However, as is also the case with muni bond mutual funds and ETF's, participating in 'low priced' FXA shares involves both paying a commission to a broker for purchase and sale, plus paying a 0.4% management fee to FXA for as long as the shares are held, which erode the potential rate of return.

    Also, gold and silver are again acting as 'currencies of last resort'. It's possible to purchase physical gold and silver in relatively small denominations with a relatively affordable 'spread' versus the spot market price ( i.e. the functional equivalent of a broker's commission ). Obviously gold and silver are free of management fees etc. that erode potential rate of return for 'small time' investors. IMHO owning some physical gold and silver is an almost equally valuable / profitable 'hedge' re future US dollar devaluation as owning foreign currencies, without most of the complications or high ticket minimum 'buy in'. Perhaps most important IMHO is the fact that having gold and silver in your personal safe is one of an extremely short list of investments that is NOT subject to the gov't declaring 'bank holidays', to the (inter) national financial transaction network going offline, etc. Of course, gold and silver owners are not totally free of gov't intervention ( i.e. FDR's confiscation of privately owned gold at $24 an ounce ... with immediate revaluation of gold to $35 an ounce once in gov't hands ... during the 1930's ).

    ~
    Last edited by Melonie; 11-28-2010 at 08:25 AM.

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    Default Re: What do I do with 15k?

    Quote Originally Posted by Melonie View Post
    This is strictly a personal opinion ...

    First, calculate how much money you would need to make it through paying one month's worth of bills / cost of living. Leave this amount in your local bank savings / checking account so that it is 'immediately accessible'. Admittedly the interest rate will be near zero. I would also opt to stay with a local bank, where it's possible to walk up to a teller and make a withdrawl ( i.e. you never know which banks might get in trouble these days - you never know when international funds transfers might be temporarily stopped i.e. ING Bank ). The other option which is even better from an availability standpoint but slightly riskier from a security standpoint is to forget the local bank savings account, keep 2 weeks worth of money in the local bank checking account for liquidity purposes, and also keep 2 weeks worth of money at home - in cash !

    Next, allocate six times that amount to purchasing Certificates of Deposit on a staggered monthly basis. These can be in any financial institution that pays a decent interest rate ( With ING currently paying 1% ). The object here is that after six months worth of consecutive purchases, you will then be able to 'roll over' each 6 month CD as it matures if you don't 'need' the money ... and basically have a month's worth of bill / cost of living money becoming available each months for up to 6 months if you do ! Obviously there will be a 'time delay' involved in actually 'getting your hands on' your CD money ... but in the context of an emergency fund this is a good thing ( as long as you have enough money in a local bank / under your mattress to cover that time delay )

    Put another way, if your monthly bills / cost of living amount to $2,000 ... then leave $1000 in your local bank checking account and put $1000 ( in smallish bills like 20's ) under your mattress. Also, this month and for each of the next 5 months purchase a 6 month term $ 2,000 CD from ING ( or another higher interest / foreign bank ). At that point, you will have $14,000 spread out as your 'emergency' fund where $1000 is truly immediately available, where another $1000 is available within a day, but where the remaining $12,000 is really only available ( without penalty ) on a monthly basis spread out over the next 6 months. With this setup, if anything should happen that affects your income, you're covered for up to 6 months.

    Once these objectives are accomplished, THEN you can start thinking about exploring other investment options with higher risks and rewards. Given the current precarious state of the world economy and world 'politics', it might not hurt to consider investing in some physical gold or silver or alternate currency ( like the Swiss Franc or Chinese Yuan ) next - but again that's purely a personal opinion !

    ~

    This seems overly complicated.

    If her monthly expenses are 2k, then she should aim to have 12k put away as an emergency fund. If that were the case, then I'd park 12k of that 15k away in a 6 mth CD. The other three should be in a passbook savings account to be immediately accessible.

    I would never tell someone to have more than a thousand dollars on their person or in their home unless 1k is a small amount of money to them. I'm guessing 1k is not small change to the OP. If there is a fire, theft...dog eats...or whatever...she loses it...it's gone. Keep that money in a bank.

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    Default Re: What do I do with 15k?

    I don't know if this is specifically true of the OP or not, but typically speaking newly launched 'professional dancers' don't own homes ( and thus don't face multi-thousand dollar surprises via leaky roofs or dead furnaces ). They also typically handle at least $1000 a week in cash club earnings. However, something that newly launched 'professional dancers' struggle with is a lack of long term financial discipline versus having 'too many dollars' immediately available for discretionary purchases ( which the staggered maturities of the CD's is meant to discourage ). And while the differential is debatable these days, the CD's do offer a higher interest payout.

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    Default Re: What do I do with 15k?

    OK I'm taking notes.

    I worked out that monthly my bills, food and travel expenses totalled come to about $500 a month.
    I put $1000 in ING Sharebuilder and set up my account to invest a tiny amount monthly in Apple, McDonalds and Amazon.
    I also bought one share of Google.

    I invested $1000 each in a 6, 9 and 12 month ladder CD and in 2 months time will lock up the same amount in another 6,9 and 12 month CD.
    Now I want to buy gold. Where do I go?
    Last edited by charlygirl; 12-14-2010 at 07:32 PM.
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    Default Re: What do I do with 15k?

    Melonie - do you know what the minimum CD purchase is in Canada. I've read that it's 5k. That's way too much for me to put away every month. 2k would be ideal, but I don't know if it's possible up here....

    Also, I like the idea of keeping a months worth of cash at home. Would you recommend buying a safe though? Under a mattress seems kinda sketchy...

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    Default Re: What do I do with 15k?

    Charlygirl, it certainly sounds like you are on the 'right track'. As to buying 'small quantities' of gold, I personally have made online purchases at , but there are many other online sources as well.


    As to minimum amounts for CD / GIC purchases from Canadian banks, Scotia Bank absolutely offers $1000 minimums because I use Scotia bank down here way south of the border ! Certain other Canadian banks probably offer $1000 minimums as well.


    As to the matter of a home safe, I actually have two. One ( fairly large size ) is kept in a very conspicuous place and I keep exactly $200 in it. I also have another ( fairly small size ) that is extremely well hidden where I keep my serious 'valuables'. My approach is that if anybody should figure out that as an (ex) dancer I might have quite a bit of 'valuables', and thus make a good 'mark' for a burglary / robbery, they will 'waste' their time on the large conspicuous home safe while not even thinking of the possibility that my 'valuables' are actually kept elsewhere !!!

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    Default Re: What do I do with 15k?

    And having posted that on a public forum, your second safe is empty and all your valuables have been moved to a sock under the mattress?
    Once again, the conservative, sandwich-heavy portfolio pays off for the hungry investor
    - Dr John Zoidberg

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    Default Re: What do I do with 15k?

    ^^^ fortunately, down here way south of the border, virtually all of my 'neighbors' have problems reading English !

    However, they don't have ANY problems reading the meaning of a .40 S&W !!!

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