Best way to make 7,000 Grow

[Atreides]

Hi,

I am going to be a senior in college starting in the fall and this summer I will be making about 11 thousand at an internship. When all is said and done (after insurance, birthdays, credit bills (which i always pay in full)) I will have about 7 thousand dollars remaining (just over that). Now I will still make some money during the school year from tutoring so I can get by without the 7 thousand. So the idea I had was to hopefully put it somewhere to save for when I graduate in May and need to start saving for the day I move out. Where is the best place for me to put this 7,000 that it will grow the most in a year?

Thanks,
Michael

[noppenbd]

An online bank: Online Savings Accounts & Current Rates

Or possibly a 1-yr CD.

[sm808]

When do you think you will need the 7000? One option might be to open a Roth IRA and partially or fully fund it for 2008 and leave the balance in a savings account for more short-term use.

[Atreides]

I will probably need the money around fall of 2009

[sm808]

Then I would definatly just go with online savings. HSBC is offering 3.5% right now. I might not even lock into a CD b/c rates are low, so if you do want to put a portion into CD's possible a 3 or 6 month CD. PS Must be a good internship to be making 11k! I will be a sr in the fall too, but am not makign that much!

[anonymous_saver]

I agree with the other posters. Although I would consider opening up a Roth IRA with some of the money, just to get one started. Good job on being smart and setting this money aside!

[jIM_Ohio]

savings accounts or CDs. Possibly consider some inflation bonds at treasury direct.com, but I think your 1 year duration is not what would return best at treasurydirect.

[cooliemae]

You could always invest in melange. =) j/k

I think the CD's would be the way to go, but I would head to bankrate.com and look for the best value and it might not be that the best interest rates are at the year mark, look at the 6-9 month rates.

[rennigade]

If you're positive you won't need 5k of that money, stick it in an i bond. It's pumping out 4.84%. After october it will change though. I heard it will go up.

[Atreides]

Originally Posted by cooliemae

You could always invest in melange. =) j/k

Haha! I am always happy to hear other Dune readers! I wish I COULD invest in it, but I think everyone already would have.

I think I will check out that site, and I should probbaly check out bonds too, but I thought I've heard that, they can "lose value"??

[cooliemae]

Depends on the bonds, US Treasury bonds are considered virtually risk free. Bonds generally lose value if inflation is higher than the return, but inflation adjusted bonds such as I-bonds give you protection from inflation.

However, bonds generally have a 5 year period to avoid penalties for early withdrawal, so if you need the money in a year, you might look at CDs to avoid penalties.

[scfr]

I'd stick with a MMA or CD.

One other thing to consider: Could you possibly use a bit of it to pay for school expenses, so that you could reduce the amount of your student loan (if you have one) by a little bit?