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Thread: Getting a small return on semi-liquid savings.

  1. #1
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    Default Getting a small return on semi-liquid savings.

    My small business is very hit or miss. In the boom times I pay myself lump sum bonuses and life is good, in the lean times I take 0 salary. This can go for months (and sometimes months and months and months). Because of this I need more liquid savings than the avg Joe. Reading around on SW it seems like a lot of dancers face the same kind of boom or bust cycles I do so I thought I'd share my little trick.


    It's pretty simple and I highly doubt I'm the first person to think of it. Keeping more than two or three months expenses in checking or a .05% savings account is just giving money away, so I stagger CD's. Right now I have 8 CD's, 4 1 year CD's that mature about every 3 months, and 4 2 year CD's that mature about every 6 months. So if times are bad I'm never more than 3 months away from a cash infusion, or 6 months away from a more substantial chunk. It's not perfect as I'm up to 2 years away from cashing it all out (w/o penalty) but cashing it all out is not in my plans or something I think I'll be forced to do, so it's kind of perfect for me.


    Say you've got an extra $40K sitting in checking right now and you want to do something like this. I'd advise putting $10K in a 1 year, $20K in a 6 month, and $10K more in a different 6 month in 3 months. When the first 6 month matures open a new 1 year with $10K. Now you've got a $10K 6 month CD maturing every 3 months, and a 1 year every 6 months.


    You can play around with the numbers based on $ amounts and how often you want cash available. If you don't need to be as liquid as my example you can forgo the lower interest 6 month CD's and plop more of it in 1 or 2+ year CD's. If you want to be more liquid you could just spread everything into (6) 6 month CD's, and so on and so forth.


    As an added benefit I've found this helps cut down on dumb spending and is a good way to save for a house. Just make sure you start cashing these out and back into checking/savings in time to actually use the money for a house or any other major purchase.

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    Default Re: Getting a small return on semi-liquid savings.

    This is a really great idea. I feel like investing can be a pretty daunting thing to tackle for many people and I've only just begun making time to learn about opportunities - there's so much to learn!

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    Veteran Member domina's Avatar
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    Default Re: Getting a small return on semi-liquid savings.

    Where do you recommend buying CDs?

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    Default Re: Getting a small return on semi-liquid savings.

    Quote Originally Posted by domina View Post
    Where do you recommend buying CDs?

    Good question and I'm glad you asked because I felt like I left an important detail out of the OP. There's two ways to go:


    1) Convenient, simple, easy (and probably lazy) and that's just to do everything through whatever bank you use for checking and savings w/o shopping around. Next time you go into the bank for any reason tell the teller you want to talk to someone about CD's.

    2) Shop around, brick and mortar and online. There's always a ton of promotional offers out there. I have no doubt I could hunt down twice the return if I wanted to shop around every time a CD matured or I had enough funds to start a new one. The problem is I'd be moving money around and managing new accounts and passwords. Bleh, it's not really all that hard and typing this out has me feeling pretty lazy. It's just that #1 is super fucking easy and convenient!


    I guess you'll get out of this what you put into it. Someone who puts no effort in gets their 0% in checking. My minimal effort nets me a point or so. If you want to hustle the banks you could do better.

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    Default Re: Getting a small return on semi-liquid savings.

    I've been doing this for years. I use my credit union. They usually have lower or no fees, and better rates. The drawback to credit unions is they have a cross collateralization clause that says if you default on any loan to a CU, the CU can, without notice, take the default from any other accounts you have with the credit union. So, if you are borrowing money from the same credit union where you do your savings and checking, don't default.

    HTH
    Z

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    Default Re: Getting a small return on semi-liquid savings.

    I'm really glad I made this post because it got me thinking about digging deeper, doing some research, and not being so lazy about all this. I'm transitioning everything to high yield online banks and getting a much better return. I mean you can get up to 2.25% today w/o even locking up in a CD. I'd be more than happy to give more details or specific recommendations if anyone's interested. lmk

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