Where to begin?

[claudius753]

Hi all, I'm new here.

I'm seeking some advice on where to begin saving my money.

I have very small amounts of money to work with, but I still want to put them to work.

Currently I have a ShareBuilder account worth about $650 invested in mostly (30%) Apple stock, with the rest in SPY, VTI, VWO, and EFA index ETFs.

I also have a savings account with HSBC Direct, but the current balance is only $100. I do not like HSBC's website and want to close that account. I am also expecting approx. $1000 when I file my tax return, and that too will be saved. I really need to get an emergency fund built up and the $1000 will help with that. I think I can also swing $50 per paycheck (bi-weekly) into some sort of savings.

I contribute 6% of my pay to my 401(k) plan, maxing out the employer match, so I do have some retirement savings beginning, and I do not want to open an IRA at this time for the extra cash I have each month.


I am thinking of using Emmigrant Direct for my new online savings account. Would it be a good idea to instead just put the money into my ShareBuilder money market account or use a separate bank account to hold my savings?

Also, would it be a better idea to stow all of my money into the savings account, or instead alternate $100 savings one month, $100 stocks/ETFs the next?

Thanks for any ideas, I can't wait to start getting some savings built up!

[safari]

You should not be putting any money into stocks, mutual funds and ETF's until you build up your emergency fund. Once you have sufficient savings for the short term, you can start thinking about long term investments.

[Ima saver]

I agree, you need to open an one line account at one of the banks paying a decent rate, and save until you have 3-6 months worth of expenses in it.

[maat55]

Can i piggy back this thread,

I'm getting ready to build an 10000 dollar EF and would like some ideas on where to put it. And would having some in high interest savings then some in low risk MF work. Also, advise on a car fund.

[project15]

I really like EmigrantDirect.com's website. That's the main reason I use them. Rates on all MMA and online savings accounts will be dropping soon - it's just their nature, don't worry about it too much in the terrible economy right now. The important thing is to build an EF that grows and has 0 risk.

maat55 - what advise do you want on a car fund? Figure out an amount you can contribute and save that every month so when you need a new car, you have a large down payment or a full payment for it. I also have a Car Maintenance fund that's separate from it.

[atomicrc11]

I wouldn't say you need all of your money 100% liquid and no risk for your emergency fund. I keep at least 1-2 months expenses in a Citibank MMA Savings. This way if I need it for loss of job or something like a car repair (which just happened to me) I have enough money to tide me over. Then the rest of my emergency fund is in CDs earning a higher rate of return.

As for risk, at this point I might even consider a bond fund as just letting your money sit in an MMA or CD that you just recently bought will barely be keeping up with inflation. You want money there you can use, but you don't want it to get eroded by inflation.

[Ima saver]

When I paid my car off many many years ago, I keep making that payment into a car fund every month. That allows me to either pay cash for a car or have a very large down payment!
Everyone on this forum that knows me, understands why I have a car payment , but no other form of debt!!

[scfr]

I wouldn't say you need all of your money 100% liquid and no risk for your emergency fund. I keep at least 1-2 months expenses in a Citibank MMA Savings. This way if I need it for loss of job or something like a car repair (which just happened to me) I have enough money to tide me over. Then the rest of my emergency fund is in CDs earning a higher rate of return.

Agreed - CDs are a great place to stick some of your EF. Read the fine print before you open one, but usually you can cash the CD out early (in event of a dire emergency) and the only penalty you will pay is losing some of your interest. You won't lose principal.

[maat55]

We will be putting 500 a month away for a car fund. We are a two car family so we will replace cars every 2.5 to 3 years which means 5 to 6 per car. If I knew it was safe I would put the money in mutual funds earning around 12% but cashing in every 2.5 years may be risky. I'm never invested in savings and cd's.

[rizzmo]

Replacing your cars every 3 years? I had my last car for 8 years and my new car I plan on having about the same amount of time. IMHO you could do much better investing that car fund money.

[Skooby]

Replacing your cars every 3 years? I had my last car for 8 years and my new car I plan on having about the same amount of time. IMHO you could do much better investing that car fund money.

I'm a car lease sorta guy. I know leasing a car isn't the most financially smart thing to do...but I just love the feel of driving a new car with all the new bells and whistles every 2-3 years.

[maat55]

Switching cars every three years is just a goal, we may, depending on the car keep them longer. Having a car that is two years old when bought then driving it 6 years ends up 8 years old. I have a motorcycle also that can stretch out one car.

[Broken Arrow]

I've been harping that the Apple stock is overvalued for some time now. Yes, they're hot right now (enough that I even read one article that suggests that it's a good recession shelter). However, I do NOT agree with that. I think it's already overdue as a sell... if you're into active investing that is. Actually, it doesn't make much sense to me as a long term, buy-and-hold position either....

Don't me wrong. I've loved Apple since Steve Jobs came back to the helm, and I even wished I could get in on the stock when I heard the nearly-confirmed rumors of the iPhone. Same thing when I saw the first iPod actually....

However, based on the latest Macworld keynote, I've mentioned that the stock is going to stagnate. I said a while back that they needed a small laptop replacement, and while MacBooks are good, I was betting that a Nano version would indeed come out. Well, it did, but the Air didn't get as good of a reception as was hoped, and now the stock is starting to sag.

I'm rambling, but seriously, people need to stop buying something just because "It's been doing well so far". The same goes for anything else similar to it such as Goldman Sachs, American Express (yes, I went there) or even commodities such as gold or silver. Sorry to rain on people's parades, but that's just my personal opinion.

[claudius753]

I bought the apple stock at $100 so to sell now I would realize about a 30% gain. I should have sold at $200 for a good gain but I was thinking more buy and hold at the time.

Would it be a good idea to sell off all of my holdings and use that to jump start my EF? After commissions I would have about $600 plus the $100 from hsbc and about $150 more I could add to it for $850 to start. I could then wait a few weeks to get the $1000 minimum for OneUnited which is offering a great rate. Selling my stocks would net me about a 12% gain after commissions for the ~8 months I have been investing.

Or should I leave the stocks for now, and use the $250 I have now to begin an EF immediately at an online savings account? Where would you reccomend? Emmigrant, SavingsSquare, or some other?

Thanks for any ideas.

[jIM_Ohio]

Hi all, I'm new here.!

welcome

I'm seeking some advice on where to begin saving my money.

I have very small amounts of money to work with, but I still want to put them to work.

Give a better summary of what small is.

Currently I have a ShareBuilder account worth about $650 invested in mostly (30%) Apple stock, with the rest in SPY, VTI, VWO, and EFA index ETFs.

I have a sharebuilder account too.

I also have a savings account with HSBC Direct, but the current balance is only $100. I do not like HSBC's website and want to close that account. I am also expecting approx. $1000 when I file my tax return, and that too will be saved. I really need to get an emergency fund built up and the $1000 will help with that. I think I can also swing $50 per paycheck (bi-weekly) into some sort of savings.

$50*26=$1300 each year. Is this all you can afford for EF and/or IRA? I see some issues here.

I contribute 6% of my pay to my 401(k) plan, maxing out the employer match, so I do have some retirement savings beginning, and I do not want to open an IRA at this time for the extra cash I have each month.

keep up the 401k and consider increasing contribution by 1% per year until you hit a 10 or 15% level.

I am thinking of using Emmigrant Direct for my new online savings account. Would it be a good idea to instead just put the money into my ShareBuilder money market account or use a separate bank account to hold my savings?

Yes, for a few reasons. I would use an account like sharbuilder after you have an IRA set up, after EF is mostly funded, and after overall retirement savings rate is between 10-15% to IRA and 401k combined.

Also, would it be a better idea to stow all of my money into the savings account, or instead alternate $100 savings one month, $100 stocks/ETFs the next?

I would have one plan, constribute to it each month, and stick to it.

Thanks for any ideas, I can't wait to start getting some savings built up!

Conclusion: consider changing withholdings so you get another $35 per check ($1000/26). Then you have $85 per month to move around in the budget.

I would list priorities as
a) set aside 10% of income to retirement. Teach youself to spend less than you earn. The 10% could be 6% to 401k and 4% to IRA, but 10% is where to start.
b) set aside some money into a savings after IRA is funded.
c) analyze spending and see what to cut


I would emphasize the need to set aside money for retirement. This is the longest of goals, and the money needs time to build. In addition if you try to budget first, then apply what ever is left to retirement, IMO that is a backwards goal.

Pay yourself first (10%) and pay yourself to retirement with that 10%. Then figure everything else out next.