Have extra $9k in checking. How do I make it grow?

I don't know why everyone on here is such a c ock. This guy has it together and is fortunate, THE END. Why is it so hard to believe that someone who is 23 yrs old and makes $65k could save a measly $9K?

I graduated 20 yrs ago and after working for 1 yr, I had paid off my Student loans (granted they were a measly $3600) and my car (granted it was only a $6600 car) and bought two houses (one rental and one for me).

I only made $32K to start and it was 1 yr before I got a raise to ... wait for it ... $33,600. I am not bragging, just showing you what can happen when you don't waste 40% of what you make on worthless stuff.

He wasn't bragging, he just wanted to crowdsource some advice. If you don't have any experience in this area and can't offer any real-world advice, just leave it alone, don't take every opportunity to tear somebody down.

Especially when you turn out to be wrong.

My guess is he is an engineer and lives near Detroit.

$65K breaks down like this:

$ 5417 GROSS a month.

10% to 401k = $4875 GROSS after 401k

20% for withholding = $3900 a month NET

subtract $1000 for rent, $260 for car, $200 for insurance and gas, $300 for utilities, $500 for food.

$1640 a month X 6 mos = $9840

Are you starting to see how someone could save $9K?

Well hell, you can get a mobile home and prepay a year of lot rent. Why are you still working?

RacistX wrote:

Why's everyone telling him to go 'conservative' in his situation? If I were in your shoes I'd choose a well-managed small-cap fund and invest the whole 9K and then not look at it for the next 10 years. You'll be glad you did.

The reason I say to go with conservative index funds is how do you know if a small-cap fund is well managed? How do you find a well managed fund? So yes, if you want to do a lot of research on stocks/funds then this is a good route, but that time might be spent "better" elsewhere. I spent 10/hours per week researching stocks and funds when I was younger and I was not a penny wealthier for it*. Perhaps he can do better, but from my experience, most people are better off sticking it in an index fund and doing something else with their time.

*Granted I probably could have if I had stuck with it, but how much richer 1, 2%. On $9,000 that is 90-180 dollars (per year). Would you spend 10hours/week to earn 180 dollars? Hell no, that is like 30 cents on the hour.

The Overexplainer wrote:

Now I remember that you said you want your savings to GROW. Try this ...

http://www.ally.com/about/investor/demand-notes/

I have been in them for years and there is no risk and the returns are about 5X better than Bank savings accounts. Still not gonna get rich off $9000 in the account, but better than CD rates and they even give you a check book that you can write checks from the account. Pretty handy.

Good luck!!

"Demand Notes are unsecured debt obligations of Ally Financial offered in the U.S. by prospectus (PDF) only. It is one of the easiest, most convenient ways to invest with a leading U.S. financial services firm.

Demand Notes:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value

Are Not Deposits Are Not Insured by Any

Government Agency Are Not a Condition to Any

Banking Service or Activity"

Haha, "unsecured debt" & not FDIC insured or bank guaranteed does not = "no risk", as you claim.

Alliant Credit union pays 0.8% interest on savings. It is Federally insured, at least.

Fair enough "gotta get that"... but I have held $20,000-$60,000 in there for 20 years and it has never lost value.

I guess I should have been more worried in 2008, but like I said, it has never happened.

Hope he didn't pot all 9k on Oregon... how about them buckeyes!?

trying2invest wrote:

I may a monthly car payment of like $260. I dont live too extravagantly after that. Im working on establishing a monthly budget on Mint.com but think I should be able to sock away about 1k/month in extra investments with my current income and lifestyle.

Your original post said you "do not have any loans".

If you have a monthly car payment, you have a loan, dude. Pay off that debt.

How much is left on your car loan?

Do you have any other "monthly payments" for things you already bought that aren't "loans"? lol. If so, that is debt. Pay that off.

put it in my bank account.

Flagpole wrote:

Once you have the emergency fund in place AND you are putting 15% into retirement accounts made up of stocks in mutual funds, and you have ZERO other debt, THEN you pay down the house. You are simply eliminating risk AND saving yourself money that is guaranteed.

Once the house is paid for, you can now sink a TON of money into the market if you want.

Yes, because paying off ("investing in") a home loan with a 4% rate of return rather than making long-term market investments that are likely to yield 6-8% is a financially sensible plan.

Compound interest is powerful. You want to get as much TIME as you can. I have no interest (heh) in spending money on subsidized student loans and my mortgage, all of which are under 4% APR. Let that money grow!

Enjoy the money. You can live a miserly existence when you are old. Is missing out on great experiences when you are young really worth a few extra bucks in your checking acoc*** when you are 70?

Use your brain wrote:

Flagpole wrote:

Once you have the emergency fund in place AND you are putting 15% into retirement accounts made up of stocks in mutual funds, and you have ZERO other debt, THEN you pay down the house. You are simply eliminating risk AND saving yourself money that is guaranteed.

Once the house is paid for, you can now sink a TON of money into the market if you want.

Yes, because paying off ("investing in") a home loan with a 4% rate of return rather than making long-term market investments that are likely to yield 6-8% is a financially sensible plan.

Compound interest is powerful. You want to get as much TIME as you can. I have no interest (heh) in spending money on subsidized student loans and my mortgage, all of which are under 4% APR. Let that money grow!

Yes, compound interest is powerful...this is why you invest WHILE you are buying your house, AND you don't NEED to do more than 15-20% into retirement accounts assuming you began early enough, SO once all other debt is gone, it IS a good idea to diversify your financial situation by getting rid of the mortgage. For many people, that is $600, $1,000 a month or more. Once the mortgage is gone, you can then either invest more or you can actually go have some fun and spend some of it. Having as little outgo as possible allows you more flexibility with your money. Take a huge trip, invest more, retire earlier, remodel the kitchen, etc.

RISK has to be taken into account.

TLW wrote:

Max IRA for year, 5.5k, use there remaining 3.5k for an index funds, overall market.

Since it is still January he can contribute $5,500 as last years contributions until April. What I would to is put $5,500 into a vanguard IRA (VTSMX) for 2014 and contribute the rest for 2015. I would then up your 401k to the 20%+ range and save 25%+ percent of your contributions on your taxes. You can fill out the last 2k to your RothIRA throughout 2015 and once it is up to 10k you can switch it to the VTSAX fund which has a .05% fee. The great part about a RothIRA is you can pull out your contributions(not gains) at any time without penalty so it is very liquid and you could use it for a house down payment if you wanted. Do that for about 10 years and you can retire.

You are doing great, and that $9K is large enough to be a cushion, but not so large you are losing much by not investing it better. Yet.

First, be realistic on rate of return. 1% more than inflation, after taxes, is not a bad return in the long run.

Second, get some attitude about dealing with people in banking, finance, and real estate. Most promise to help their clients, but only help themselves. "Industries" that produce no net value take well over 1/3 of all corporate profits in USA, and they do so by delivering bad service at high prices. For stocks, go some combination of low fee index fund, and do it yourself mutual fund. For the latter, you need to decide whether or not you want to put the time in to do it right. (I recommend A Random walk on Wall Street, for a start.)

Third, get some attitude on taxes and the IRS. Do it yourself taxes are often easy for a few years, but most tax accountants will cheat their fee out of the IRS, so you will likely still be ahead of the game. Don't feel guilty, honesty will sometimes get you audited, and the IRS will cheat you if it gets a chance.

Fourth, prepare to lose your job several times during your career, and be unemployed or seriously underemployed for a total of years. If it doesn't happen, so much the better. Keep the attitude enough is enough.

Fifth, you don't need to buy a house right away. Two job changes in the first six years is common, and the cost of moving when you own is not small.

Sixth, beware of gold diggers. Financially, you are a good catch, so don't advertise this. Don't be too stingy, but the more money you flash, the more a honey expects.