I was wondering if anyone can suggest any MMAs or any other relatively safe vehicles to store some money in? I am looking to gain some interest in $5000, but I am not ready to put that money into stocks or higher risk products. The best rates I found at BankRate.com were at ING Direct, 3.44% APR 3.50% APY. Also any suggestions on this topic would be greatly appreciated.
ING Direct is the way to go. For the longest time, they were offering a $50 gift deposit to anyone opening an account. You may want to check whether that offer is still going. MMA's are very low risk (about as low risk as you can get) and are set at $1.00 a share. Although the value can theoretically fall below that, the reputable firms will hold the price at $1.00 a share just to keep their risk-adverse customers from abandoning ship. But MMAs almost never have trouble. On the flip side, they don't earn as much either. MMAs give risk adverse people a chance to be "in the market" without serious risk - kind of like bungee jumping from your bed to the floor. ING Direct may require a minimum deposit ($1K or more) from which the balance cannot dip below, and most firms do. There are a FEW other MMAs that will allow monthly automatic payroll deposits for as low as $50 a month while earning the going yield, but those companies are tough to find. You may want to check out T. Rowe Price if you need that option.
Thanks - can you suggest any other places to store money? I'd be willing to take on some risk but not anything that I'm not ready for - stock market specifically.
Sure, your bank and your mattress come to mind. 1. Your bank savings: FDIC insured, but yields are terrible. In order to get yields worth talking about, you have to have a serious minimum deposit ($5K+). 2. Your bank CD: FDIC Insured, and good yields, but your money is stuck for the specified amount of time until maturity and the longer CDs generate the better yields. 3. Your mattress: not insured unless you own a shotgun or Old Yeller, and no yields. Seriously, MMAs are the best and safest choice you can make as a risk adverse person. Like I said, they are as risky as leaping from the bed to the floor and calling that a "bungee jump". And if you are young, there is no reason to be afraid of the stock market (with wisdom, of course). The time to be paranoid with your money is when you start hitting 50+. Otherwise, take a few risks in moderation (certain mutual funds, a step above MMAs, for example, are a good start and fairly safe) to get the most out of the market. Talk with a financial advisor at your company about your 401K (for free) and ask for a brochure on how to invest, given your reservations. Or join Motley Fool (www.fool.com), and get a free initial consultation with American Express. Hope this helps,
Savings bonds yield more interest than MMAs, but your money won't be as accessible. You can buy them online: www.savingsbonds.gov
