Advice on maximizing my interest earnings

[twins0203]

I'm looking for some advise on the money that I have saved up. I'm wanting to make the greatest return possible and I do not really plan on touching the money for many years. I'm debating on what's the best route to go with. I currently have it all tied up in a Capital One High Yield Savings account making 3.75% APY, which is close to $35k. I also have a Discover Bank Money Market account that a higher return rate, depending on the amount in it, but with the interest changing almost weekly now on these accounts I'm not sure if it is worth swapping back and forth to the highest rate. I'm currently making around $110 in interest monthly. Of course I want to make the most, but don't want to take the risk of losing my hard saved money. Is the money market accounts probably my best bet? I appreciate any and all advice. Thank you.

[JBinKC]

Re: Advice on maximizing my interest earnings

I would look at treasury bills they now yield about 4% can be purchased to be held as little as 4 weeks and are state tax free to boot.

[sweeps]

Re: Advice on maximizing my interest earnings

I'm wanting to make the greatest return possible and I do not really plan on touching the money for many years.

Have you considered opening a Roth IRA? You can invest in any number of things including money markets and CDs, but you'll save a bundle on taxes.

On a side note -- If you're really not planning on touching your money for many years, consider investing at least part of the money in a stock index fund.

[twins0203]

Re: Advice on maximizing my interest earnings

I appreciate the replies. I'm going to look into those options and so some reading up on them and see what I can decide on.

With the Roth IRA, is the money that's invested in it held for any certain amount of time or until you are a certain age, or if another better paying opportunity were to come up, could the money be moved from the Roth IRA to the other opportunity?

Is there any place that you recommend to checking into the stock index fund?

Thanks!

[sweeps]

Re: Advice on maximizing my interest earnings

Any money that you contribute to a Roth IRA can be withdrawn at any time without penalty. Earnings can be withdrawn after you turn 59 1/2 and the Roth has been active for 5 years. If you withdraw the earnings before then, you'll have to pay taxes plus a 10% penalty (unless you die, become disabled, or use the money (up to $10,000) for purchasing your first home). The earnings can also be used for education without penalty, but you'll still be taxed on the earnings.

I'm a fan of Vanguard's stock index funds because of their really low expenses, but other companies offer good ones as well. Vanguard's Total Stock Market Index, for example, covers practically the whole U.S. stock market but has a ridiculously low expense ratio of 0.19%.

Yes, please do the research. These are just suggestions.

[PennyPincher]

Re: Advice on maximizing my interest earnings

First of all, great job on saving!

I just wanted to provide some less-agressive options, in case you'd feel more comfortable... These could at least be considered until you ultimately decide how to save/invest it.

Transfer your money from your Capitol One savings account to Emigrant Direct, which currently pays 4%. The extra .25% will earn you at least an extra $87.50/year!

Consider CDs...very 'safe'. ING Direct is offering the following rates:

1 year: 4.35%
2 year: 4.7%
3 year: 4.75%
4 year: 4.8%

Best of luck on making a decision...

[dealsaver]

Re: Advice on maximizing my interest earnings

Some of the best places to find high yield cd's are:

CD thread, Now self updating
Bank Deals - Best Rates and Deals
Bestcashcow.com

None of these sites are comphrensive, but in general they are way better than the alternatives like bankrate.com. For those who know how to search, 6% and higher yields have been available most of the year on federally insured cds.