<p>My 21 year old D was fortunate to have a full time paid internship over the summer, so she has some money that she would like to save/invest for the relative short term - perhaps 1-3 years. With traditional savings accounts paying close to no interest, where should a young person park money?</p>
<p>I’m interested in this as well. S is a few years out of school and has money sitting in a savings that earns next to nothing.</p>
<p>I’ve researched money market accounts. The ones with “high yields” have an APR in the 0.75-.090% for balances under $10,000 - $25,000. </p>
<p>CD rates are not that much better - 1 year rates are .6 to 1%, 2 year is at 1.25% </p>
<p>Look at Ally (online); their money market account is paying .85%. Everyone in my family has an account there. You can write checks on the account, but who does that any more?</p>
<p><a href=“Money Market Account: Compare Rates, Reviews | Ally Bank®”>http://www.ally.com/bank/money-market-account/</a></p>
<p>My kid in a similar situation opened a Roth IRA. The earnings can be withdrawn (I think after 5 years) for educational expenses or to buy a house, which were his two most likely options for the money. And contributions can be withdrawn at any time for any reason.</p>
<p>Agree with above posts about Ally and Roth IRA. </p>
<p>I-bonds may play also play a good savings role. They must be held for a year (really 11 months if you buy toward the end of the month and sell at the beginning). </p>
<p>The return fluctuates but is usually better than anything else for the time period you mention. </p>
<p>Right now money market rates are outpacing cd rates - so that is the place to park short term funds right now.</p>
<p>I had my son park money in Fidelity, and soon set up a Roth for him. Vanguard would be just as good. The advisers helped him find a diversified fund. </p>
<p>I have money “left over” from college in that the kids spent less than I budgeted. In order to encourage them to go to the most affordable school, I told them that money will be in a “parent bank” when they graduate for work, education or housing needs. So far, they have not drawn from it and I started investing (yesterday) it in a diversified index fund (domestic and international stock and bonds) at Vanguard. I only started with a small amount (12% of the total) as the stock market is flying high and IMO, is not a good time to buy. My plan is to slowly invest more. But, I am thinking it’s a short-term fund and my plan is to invest 2/3rds and keep the rest in savings. </p>
<p>The Roth is a great idea. Thanks for the suggestion. </p>
<p>Ally bank. Everyone in our family has an account.</p>
<p>Bumping this up. S is coming over today and he wants to talk about doing more with his Roth IRA. He has it just sitting at Wellls Fargo earning pennies a year.
Going to suggest he look at Vanguard and Fidelity.</p>
<p>Maybe a short term bond ETF like SPDR Barclays Short term high yield bond ETF or iShares Core Short Term bond ETF. Vanguard may also have one. </p>
Anyone else with experiences with Ally Bank or any others? I’m looking to place some funds that we would like to earn better interest than the current 1 or 2 basis pointss. The highest Money Market rate in the banks we currently hold is 40 basis points at USoCal Credit Union, but am checking things out before moving money.
Am thinking of a savings or money market account and perhaps a CD or something.
Thanks!
One possibility is the Vanguard GNMA fund.
Funny checking CC this morning and seeing this thread again. My S is easily distracted and he finally took some time to come over last night. We moved his savings from a traditional bank to Ally Bank. The regular savings account which is paying almost 1 percent.
We also started in motion the process of moving his Roth IRA from Wells Fargo to Vanguard.
Now I have to work on getting my D to move her substantial savings account from Wells Fargo to Ally.
In December I moved my youngest savings from Union Bank to Ally and her first interest payment beat what she had been getting for the entire year from Union.
We use Barclay’s online bank and haven’t had any issues.
Have read some really mixed reviews about Ally Bank and to some degree Barclays. Any other suggestions? Have noticed that a local bank gives up to 65 basis points 0.65% interest to savings. May inquire with them about moving funds to them.
Re: ROTH, not the earnings, it’s the original contribution.
I have a money market account at Ally. Good interest rate, but I haven’t tried to take anything out yet.
You can use bankrate.com to find the best rates. I think it also tells you the bank’s rating, which is important to me.