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  1. #1
    Join Date
    Dec. 16, 2002
    Location
    CO
    Posts
    265

    Default Personal finances & starting that "rainy day" fund.

    I'm graduating soon, don't get a chance to ride much as it is, and probably won't for at least another year. But I'm absolutely itching to get back in the saddle with a horse of my own, and if I can't do it now I might as well prepare, right?

    I want to start a fund for a rainy day, and in general put my money to work so that I can feel financially secure when I start shopping. I'm looking for something like a high-interest savings, but I will be the first to admit I am not familiar with this type of thing. Any recommendations?



  2. #2
    Join Date
    Dec. 16, 2002
    Location
    CO
    Posts
    265

    Default

    Bump?



  3. #3
    Join Date
    Jul. 4, 2000
    Location
    Maryland
    Posts
    1,850

    Default

    Talk to your bank or credit union to see what they have available. For someone just starting out, the easiest thing to do is set-up a savings account and have an automatic deposit made from your paycheck every payday. It can be as little as $10 if things are tight. The point is to do it; you can increase the amount as your financial stability increases.

    The usual recommendation is to have an amount equal to 6 months of your basic expenses stashed away in a savings account. While that may seem like a large amount now, it will accumulate quickly if you do the automatic deposit. Once that 6 months is saved you can start working on saving for any other big purchase you might want to make.

    *star*, who currently has about 5 years worth of expense money stashed away ... but I'm old and conservative ....
    "Avoid loud and aggressive persons, they are vexations to the spirit."
    - Desiderata, (c) Max Ehrman, 1926



  4. #4
    Join Date
    Apr. 1, 2006
    Posts
    452

    Default

    I recommend ING. Only need a $1 to open an account, has one of the highest rates of any bank or credit union, and it easily links up to your checking account. I've used them for years. You can also have multiple accounts, so for me I have an emergency fund, a horse fund, and a house fund and have money automatically deposited in each account every month. There website is www.ingdirect.com



  5. #5
    Join Date
    May. 25, 2001
    Location
    Queens, NY
    Posts
    1,997

    Default

    High Yield online savings offer around 1.35% interest (HSBC Direct; ING Direct is 1.30% right now) compared to traditional bank savings accounts at 0.4%. I have to tell you, even high yield is not a whole heck of a lot. Just to put in perspective, 3 years ago I banked a $10,000 gift for law school - since then it has made exactly $529 in interest (and the interest rate has been reduced 4 times since I opened it - originally it was over 2%). I'm not complaining, but I'm just saying - even if you had $1,000 to put aside today you'd only make like $13 in interest over a year.

    Unfortunately, if you believe you will need the money in a year you are not going to do a heck of a lot better than that. Products (like Certificates of Deposit AKA CDs) that offer higher guaranteed yield require you to keep the money deposited for 2-5 years with penalties for early withdrawal.

    Its great to maximize the productivity your savings, but the best thing to do for money you plan to need in a year is maximize the amount you set aside.
    Proud Member: Bull-snap Haters Clique, Michigan Clique, and Appaloosa Clique!



  6. #6
    Join Date
    Mar. 12, 2006
    Posts
    4,343

    Default

    Back a few years ago, a bunch of places had great interest rates, now they are lower. I keep 2 savings accounts- one is easy to access and I keep about $1000 for an emergency in it. I can shift that money to my checking online very easily. My second savings account is my real rainy day fund. I can't easily get to it- no ATM cards or checks. It accrues variable interest. The key is that it stays out of site and out of mind, so won't go for a new saddle or to buy groceries and get whittled down. It is basically a worst case scenario fund.

    My advice? Get a price on board and shoes in your area, and strive to put that away each month into savings, when you can save that PLUS fund your retirement account, plus save another 10% or so- you are prepared to buy a horse.

    My income is down 20% this year (ugh) which has cramped my savings. Luckily I can still fund retirement and all my extra savings are full. It is nice to have those back ups, and i honestly wish I had double in both. My 2010 goal is to fund an HSA and get some additional tax advantages.



  7. #7
    Join Date
    Jul. 19, 2007
    Location
    Michigan
    Posts
    10,632

    Default

    If you can swing it, I like Schwab's high-yield investor checking. MUCH higher rates than HSBC (though I have one of those as a near-impossible-to-raid piggy bank that I just let sit there and accrue interest) and unlike many high-yield bank or credit union accounts there are no direct-deposit or check-card minimum use requirements.



  8. #8
    Join Date
    May. 28, 2002
    Posts
    2,865

    Default

    Gold.
    Savings rates are dismal.
    Inflation is certainly going to roar its ugly head.



  9. #9
    Join Date
    May. 25, 2001
    Location
    Queens, NY
    Posts
    1,997

    Default

    Quote Originally Posted by danceronice View Post
    If you can swing it, I like Schwab's high-yield investor checking. MUCH higher rates than HSBC (though I have one of those as a near-impossible-to-raid piggy bank that I just let sit there and accrue interest) and unlike many high-yield bank or credit union accounts there are no direct-deposit or check-card minimum use requirements.
    Uh... Schwab High Yield Investor Checking is offering 0.75% interest right now.
    http://www.schwab.com/public/schwab/...nding/checking

    half of ING/HSBC Direct rate.
    Proud Member: Bull-snap Haters Clique, Michigan Clique, and Appaloosa Clique!



  10. #10
    Join Date
    Feb. 28, 2006
    Location
    The rocky part of KY
    Posts
    9,507

    Default

    In the late '70's early '80's gold and silver were very high due to some intense speculation. I can't say gold is good. It doesn't increase in value fast enough to keep up with inflation. Doubt you will lose money as you might with some stocks but it is not perfect.

    As far as putting together a nest egg, my old trainer told me to start saving the equivalent of a month's board. I think another poster suggested that in more comprehensive form. Served two useful functions, one it let me know whether I could actually afford to keep a horse and two it built up consistently.
    Courageous Weenie Eventer Wannabe
    Incredible Invisible



  11. #11
    Join Date
    Feb. 9, 2005
    Location
    Upper Midwest
    Posts
    6,024

    Default

    For money you KNOW you will need and with the timeframe you lay out, if it were me, I would not invest in commodities, equities, etc. Look into the higher yield savings accounts mentioned. Then when you have your rainy day fund--the omg I need 4 new tires asap fund, etc., start looking at other types of investments.

    If you want some recommendations on books on investing give me a pm.

    Good for you btw.
    Siouxland Sporthorses: http://slsfarm.blogspot.com/

    DIY Journey of Remodeling the Farmette: http://weownblackacre.blogspot.com/



  12. #12
    Join Date
    Aug. 7, 2006
    Location
    The not-so-frozen North
    Posts
    1,675

    Default

    I personally do ING Direct... have kept a savings account there for some time, try and bank about 3k a year (maybe more if I can swing it) and just let it build. While interest rates aren't *amazing*, hey, at least it's more money than I had before - and I didn't have to work for it!



  13. #13
    Join Date
    Oct. 19, 2006
    Location
    CNY
    Posts
    76

    Default How about ally?

    http://www.ally.com/index.html

    Here are some of their rates as listed today:

    high yield CD
    1.89 % Fixed APY 12 months

    no penalty CD
    1.44 % Fixed APY 9 months


    online savings
    1.59 % Variable APY

    money market
    1.55 % Variable APY



  14. #14
    Join Date
    Dec. 16, 2002
    Location
    CO
    Posts
    265

    Default

    Quote Originally Posted by HelloAgain View Post
    High Yield online savings offer around 1.35% interest (HSBC Direct; ING Direct is 1.30% right now) compared to traditional bank savings accounts at 0.4%. I have to tell you, even high yield is not a whole heck of a lot. Just to put in perspective, 3 years ago I banked a $10,000 gift for law school - since then it has made exactly $529 in interest (and the interest rate has been reduced 4 times since I opened it - originally it was over 2%). I'm not complaining, but I'm just saying - even if you had $1,000 to put aside today you'd only make like $13 in interest over a year.

    Unfortunately, if you believe you will need the money in a year you are not going to do a heck of a lot better than that. Products (like Certificates of Deposit AKA CDs) that offer higher guaranteed yield require you to keep the money deposited for 2-5 years with penalties for early withdrawal.

    Its great to maximize the productivity your savings, but the best thing to do for money you plan to need in a year is maximize the amount you set aside.
    I apologize, I know my original post implied I'd be shopping in the next year or two, but as much as I would love that it probably won't be happening (grad school). So, I guess my time line is more like 3-6 years.

    Thanks for all the suggestions on high-interest savings. I've got a separate retirement fund going, so I don't need to worry too much about that. Can someone talk to me more about a CD; what should I be looking for?



  15. #15
    Join Date
    Dec. 12, 2007
    Posts
    4,099

    Default

    Though the eventual goal is equine financial security, this topic really isn't horse-related, so we're going to close it.

    Thanks!
    Mod 1



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