financial literacy?

**Scanner** · 06-22-2008, 11:44 AM

My primary questions are:

1. What is the best way to maximize the return on my short-term savings? I've seen online high yield savings accounts .5% higher than I'm getting, but the extra $15/month doesn't seem worth the added complexity of spreading accounts around (all finances currently handled by a single credit union). Given the short-term of savings, could I do substantially better?

I would agree with you - you could "ladder" CD's. . .but I am not sure the headache is worth it.

2. Is there more I need to consider regarding retirement planning?

You should learn the concept of "asset allocation" and how your retirement portfolio is deployed (diversified across a few/couple of sectors)

3. Any suggestions on easy-to-understand books/websites to give me a foundation?

Any advice would be greatly appreciated.

Yahoo! Finance

Kiplingers Guide to Personal Finance - not sure if it is in print or not.

**maat55** · 06-22-2008, 12:30 PM

Your doing about the best you can with your short term investments. 12 to 24 months is a very short time in this market. Your head is in the right place so just be patient. Long term, maintain a minimum investment of 10% so that you stay ahead of the game. Remember, always live on no more than 90% of your income and you will prosper.

**responduser** · 06-23-2008, 03:46 AM

1. What is the best way to maximize the return on my short-term savings?

Invest in Stocks.

2. Is there more I need to consider regarding retirement planning?

There are many pension plans available by which you can earn after retirement. You can choose any one of them.

3. Any suggestions on easy-to-understand books/websites to give me a foundation?

There are many information available on the web and it is always good to educate yourself before investing in any fund. But a better option is to take professional help who can guide you in your financial decisions.

**aida2003** · 06-23-2008, 04:46 AM

Originally posted by responduser View Post

Invest in Stocks.

IMO, it's a very bad advice to tell someone to invest in stocks for short-term savings.

Just my 2 cents.

**creditcardfree** · 06-24-2008, 01:16 PM

I agree aida2003, do not put house savings in stocks. If you do, expect to lose money. You need a high yielding money market account or a combination of CD's

**jIM_Ohio** · 06-24-2008, 01:49 PM

Originally posted by homebound View Post

Short term planning: I'm basically saving all I can and dumping all money into a "high yield" savings account that is bringing in a whopping 3.0%. I've put aside 35K and save $1400-2200/month. I'll need between 60-90K for a house (includes downpayment and related initial expenses).

Long term planning: I'm in academia and the institution retirement system gets me 11%/year (with 3% of my own contribution). I put another 6K a year into a supplemental tax deferred savings plan.

My primary questions are:

1. What is the best way to maximize the return on my short-term savings? I've seen online high yield savings accounts .5% higher than I'm getting, but the extra $15/month doesn't seem worth the added complexity of spreading accounts around (all finances currently handled by a single credit union). Given the short-term of savings, could I do substantially better?

2. Is there more I need to consider regarding retirement planning?

3. Any suggestions on easy-to-understand books/websites to give me a foundation?

Any advice would be greatly appreciated.

My basic advice is always to deal with long term planning first, then fit short term and mid term goals and planning in once the long term plan is in place.

Basic financial planning requires you spend less than you earn.

Goal 2 is to set aside 15% of income to complement Goal 1. You are setting aside 3% of your income now. The match kicks in another 8%. In addition you suggested you set aside 6k in addition to the 3%??

If you make 100k, I would expect to see 15k being directed towards long term financial goals (retirement). Long term is more than 20 years, IMO.

I see 17k being set aside per year for long term goals, 9k by you (3k+6k) and 8k from employer. You meet the 15% guideline (set by T Rowe Price among other financial advisors). This assumes I interpreted numbers correct.

You did not list any other long term goals.

Short term goals-
you suggested you need between 60-90k for a house, and could come up with that money in 12-24 months? You have 91k to budget on (because you are sending 9k to long term planning needs), good for you if you can amass 90k of savings in 24 months (4k per month savings??).

I would keep this money in 3,7 or 13 month CDs or a high yield money market. I suggest CDs to tie money up and prevent access to it. If you know the purchase date of house, I would open a CD which matures a month or two before closing.

I would not worry about interest rate/yield on the savings accounts. over 24 months, the difference of 1% on 90k is $900- this won't buy you a bigger house or make a difference to what house you can afford.

The part of the plan I did not see:
1) what is the asset allocation of the long term plan?
2) what is the timeline for the long term plan (how long is long term)
3) what is the cost of the short term goals (cost of house)?
4) what is your current budget?

financial literacy?