We finally are to a point where we have budgetted well enough to have some money to put in savings. About 100 dollars a month. What would be a good long term investment? Thanks, Alice.
The first thing I did was to set-up an emergency fund. I created a 2nd savings account and called it my 'permanent' savings. I would have a certain amount direct deposited into this account and when it reached $500 I would put it into a 3-month CD. When I had enough money to open a 2nd CD I made sure it would not mature the same month as the one I already had opened. I did this until I had 3 3-month CD's that matured in different months. By setting my CD's up this way I knew that if I had an emergency I would have access to at least $500 every month. After I set up my 3-month CD's I started opening 6-month CD's. I did this until I had enough money to cover 6 months worth of bills. I know that CD's do not acquire very much interest these days. My 3-months are at 0.75%. But the money is tied up and I will pay a penalty if I take it out early and that is enough to keep my fingers off of it.
After I set-up my emergency fund I put the max allowed into my 104k. The remaining amount was split between my Roth IRA and my 'permanent' savings. If you are not comfortable putting that much into a 401k at least in put what your employer matches. It's free money for your retirement ' take it!
Look in to an ING Orange savings account at ing.com. The current interest rate is 2.35%, I believe. We switched to one of those and have enjoyed watching our savings grow more than it did at our regular bank. We also like it becuase 2.35% is equal to the rate on many CD's, but our money is never tied up. The Orange account is linked to our checking account so we can put money in easily over the internet. We could also transfer it to checking easily in case of an emergency.
I also think that IRA's are a good idea-- the earlier you start saving for retirement, the better! We split our savings each month between the Orange account and our IRA's.
becare ful about 401 ks i have heard stories from friends about the company going out of business and they loose their 401 k funds
also i would keep some money hidden somewhere at home to tie up all your money in the bank is unwise..if there was a war in this country or some terrible disaster how would you have access to your money..
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