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We will be receiving some money from my grandpa's will and are trying to decide how to best use it. Most of it is going to house repairs and debt. But we want to save about $1000 for future moving expenses or ??? We don't want to put it into anything long term in case something comes up but want to make as much on that as we can. What are some good investments that we can withdraw in 6 mos if needed but still make a little bit? We may not need it in 6 mos. but need the option just in case. I'm not sure what savings account rates are and if there is a better idea out there....
Posts: 1132 | Registered: A Long Time Ago!
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Wendy, for that amount and the fact that you want it accessible, I'd just go to the bank and ask them for recommendations. If it were more than $3K, I'd recommend a Vanguard money market account invested in a GNMA fund. I don't know who you bank with, but we like Washington Mutual.
addited: Also, one thought...it's great you're going to save the $1K. If you could commit to add even just $5 per month to that amount, you might be surprised at how quickly it will grow. Consistent saving (even of small amounts) is a great habit to get into. It will transform the way you think about money. www.crown.org offers lots of encouragement for saving habits, budgeting, and how to steward the money you have.
Posts: 5948 | Registered: Jun 2001
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Why a moneymarket with an underlying Ginnie Mae? A regular money market would be fine. A GNMA is good if you are looking for monthly income, but a standard Money Market with a good rate of return is fine. The short term debt instruments that most Money Markets use are typically also safe US Goverment investments like T-Bills. There's really no reason for the GNMA.
A money market is a good idea, however. They have extremely high liquidity. Some even allow check-writing priviliges (though typically in high dollar amounts). If you need your money in 6 months, it's not a bad idea.
Paypal actually has a pretty good Money Market. I think it's pulling in about 2.5% interest, which is excellent for any MM. You may want to check them out.
If you need any more advice, please feel free to email me. I'm actually registered by the NASD to offer limited investment advice (I can't help you with stocks). I would need to know more information first.
Posts: 4753 | Registered: May 2002
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Yeah. Though, my credibility here sucks. I'm such a jackass all the time, I wonder if anyone even takes me seriously.
If it's any consolation, I don't screw around when it comes to people's money. It's serious business.
Posts: 4753 | Registered: May 2002
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Make sure you set aside enough to cover taxes on that money. Once I get to work tomorrow I can ask my probate attorney boss whether the inheritance is taxed as a gift or as normal income and try and find out percentages for you.
Posts: 4515 | Registered: Jul 2004
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PC, you recommended PayPal, so I guess you're OK with online banking. Are there any that you would be leary of? I noticed that the Capital One online bank has a MM at about 3.2%.
Posts: 4625 | Registered: Jul 2002
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Our current favorite is my company's Employee Stock Purchase Plan, which guarantees at least a 15% return every quarter. I'm still looking for the string. Meanwhile, we're plugging as much as we can into it.
Posts: 5957 | Registered: Oct 2001
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My emergency fund plan is CD's. I've not done it yet (I'm still in the dramatic debt paydown portion of the Dave Ramsey plan) but after that, I'm going to set up a month's worth of expenses in three 90 day CDs that are laddered such that one of the three becomes available on the first of each month. If I need some of it, I'll pull it out, if not, back in it goes. It will be accessable only once a month, meaning I can get to it, but not for impulse buys.
Posts: 1894 | Registered: Aug 2000
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Dang - no kidding, afr. I save 15% in the company 403(b), but I'm not getting any return like that. I wish I could.
Posts: 26077 | Registered: Mar 2000
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Well its not directly from the will. He left my mother some bonds that are maturing so she is cashing them and distributing some to her kids. That was his intention was to have her give us some of the bond money so that we didn't have to worry about inheritance taxes.
So really its my mom giving us some money to help us out. I know she is working with an attorney about the taxes and such she may have.
Thanks for the advice. We do want to get better about saving so maybe this would be a good time. We just have so much debt to pay off that its hard to save when we're paying interest on credit cards.
Posts: 1132 | Registered: A Long Time Ago!
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That would be okay - it's the retirement money, so I wouldn't need it before two years. *sulks*
Posts: 26077 | Registered: Mar 2000
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I'll have to look at the 90 day CDs. We want to be able to reach it if we need it but want to make it harder so we don't be irresponsible with it.
Posts: 1132 | Registered: A Long Time Ago!
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Yah, steep taxes, but it's still basically 60% a year on our money. Or something like that.
I'm also plugging money into our 401(k), which gets a 3% match by the company. Can't beat free money. :)
Posts: 5957 | Registered: Oct 2001
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I wouldn't invest in an investment offered by a company I'd never heard of or who didn't have any credibility. Paypal has shown itself to be a credible financial institution. It's used by millions of people every day. I have no problem investing my money there.
Capital One is also another institution I wouldn't mind investing in. I'd just check it out. I am always leary of credit card companies since they light to tie some kind of nasty fee onto everything they do.
AFR, who is offering that retirement plan? I work for a retirement services company and I've never heard of a plan that guaruntees a return of 15%. If it actually does, holy crap. I don't know what they're doing. They must be losing tons of money. The market has absolutely sucked YTD.
Posts: 4753 | Registered: May 2002
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Okay, then it's a regular gift from your mother instead of an inheritance. I can answer part of that without having to ask Howard She has an $11,000 annual per donee exclusion. Gifts under that amount are automatically excluded from gift tax. If she gives you more than $11,000 each, then she has to file gift tax returns to have the excess credited toward her annual lifetime exclusion, which is currently at $1.5 million. This is the amount of her estate excluded from death taxes when she passes. The more she gifts during her life, the less exemption her estate has available. It would still be a good idea for her to file returns on these gifts as precautionary documentation. But I'm sure her attorney has filled her in on all of that.
As for your receiving the gifts and how to handle reporting, I haven't yet had a chance to sit down with Howard and ask him.
Posts: 4515 | Registered: Jul 2004
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The ESPP isn't a retirement plan. It just lets employees buy stock in the company. Every quarter, you take all the money you've set aside and buy shares with it. What makes the deal sweet is that you get to buy your shares at either the stock price at the beginning of the period or 85% of the current asking price, whichever is lower. Then you can turn right around and sell your shares at full market value.
I did the same kind of thing with another company, and that's how it worked. Except at that company, I could only do it twice a year. This is four times a year.
I guess it gets more shares into the market. I'm not enough of a financial whiz to know why they can offer a program like this.
Posts: 5957 | Registered: Oct 2001
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Primal Curve, I recommended the GMNA because the rate of return is over 4%, where a standard MM is only around 2.
Posts: 5948 | Registered: Jun 2001
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PC - I am looking at the Capital One high yield savings account and money market. They look like they offer about the same amount in interest with the advantage of the MM being the ATM accessibility and the check writing. Though the high yield savings allows you to transfer directly into a checking account. All I've done so far is look at the info on the website and read through it. Have you looked at their stuff yet? I have a little while before I get the money so I have time to plan. In the past we've always just spent what we received, mostly on debts. We have a lot of debt to pay but feel like we need to get something saved as well.
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She has an $11,000 annual per donee exclusion. Gifts under that amount are automatically excluded from gift tax. If she gives you more than $11,000 each, then she has to file gift tax returns to have the excess credited toward her annual lifetime exclusion, which is currently at $1.5 million. This is the amount of her estate excluded from death taxes when she passes. The more she gifts during her life, the less exemption her estate has available. It would still be a good idea for her to file returns on these gifts as precautionary documentation. But I'm sure her attorney has filled her in on all of that.
