Personal Finance

[WRAPradio]

I've recently started investing (yes, you can thank me for the impending market correction), but I've got a question for those that do (and don't I guess) invest.

 

1.  Typically, how many bank accounts should someone have?  i understand it's different for everyone, but I've read anywhere from 2 to 8 different accounts (checking, savings, brokerage, 401k, IRA, Spending)

 

2.  Where's the best place to keep an emergency fund?  In a savings acct. it's not making any interest, is a mutual fund liquid enough, should you just invest it in a money market?

 

Any and all opinions are welcomed.

 

Thanks!

[Tigris]

Is this for pure stock market?

[Tigris]

Maybe not directly related, but it is a financial question.

 

My brother and I have went back and forth with this before. He suggests putting extra monies into a CD. The money stays in there a certain amount of time and can't be taken out, I believe, but they are guaranteed a $ increase. I know the amount wasn't something that interested me but whatever it was, it must have made sense to him. Anyway, I say that is a bad idea. Why not keep it in an interest paying savings account? First, you will get your interested, which is never much unless you have a TON of money, and if you do, that interest isn't going to mean much in the grand scheme of things anyway. Second, you can withdrawal whenever you want to make a quick turn and gain a quick profit. For instance, you have $1,000 in savings, you can buy a car for $500 and flip it for $750. Why not pull the $500 and put the $750 back in the next week? You just profited somewhere around $250 and the account is there and waiting for the next time something comes around.

 

I flipped a semi in something around 4 weeks one time doing this. Dude was in a BAD spot and gave me his semi for $1500 (well, $750 to me, I went halves with my brother) and we sold it for $6000. Now, I may never do that again, but I have a little account I never touch except for this insurance I need for some side stuff I do for extra money. Having it there is pretty nice in case i can find something on the cheap ever again. It makes way more sense than a CD... to me anyway.

 

Sorry. I know this isn't what you were looking for but I wanted some opinions on my situation as well. I know nothing about stocks.

[WRAPradio]

Is this for pure stock market?

 

I'm not sure I understand what you mean.  This is for everything from the stock market to basic checking & saving accounts.

[WRAPradio]

Maybe not directly related, but it is a financial question.

 

My brother and I have went back and forth with this before. He suggests putting extra monies into a CD. The money stays in there a certain amount of time and can't be taken out, I believe, but they are guaranteed a $ increase. I know the amount wasn't something that interested me but whatever it was, it must have made sense to him. Anyway, I say that is a bad idea. Why not keep it in an interest paying savings account? First, you will get your interested, which is never much unless you have a TON of money, and if you do, that interest isn't going to mean much in the grand scheme of things anyway. Second, you can withdrawal whenever you want to make a quick turn and gain a quick profit. For instance, you have $1,000 in savings, you can buy a car for $500 and flip it for $750. Why not pull the $500 and put the $750 back in the next week? You just profited somewhere around $250 and the account is there and waiting for the next time something comes around.

 

I flipped a semi in something around 4 weeks one time doing this. Dude was in a BAD spot and gave me his semi for $1500 (well, $750 to me, I went halves with my brother) and we sold it for $6000. Now, I may never do that again, but I have a little account I never touch except for this insurance I need for some side stuff I do for extra money. Having it there is pretty nice in case i can find something on the cheap ever again. It makes way more sense than a CD... to me anyway.

 

Sorry. I know this isn't what you were looking for but I wanted some opinions on my situation as well. I know nothing about stocks.

 

CDs are cool and you can withdraw the money early, but there's a penalty if you do and you'll probably lost most if not all of the interest you've earned up until that point.  Some people go with a ladder-approach with CD...for example if you have $1000, you put $250 in a one-year CD, $500, in a two-year and the other $250 in a 3-year.  That way if you do have to withdraw money you're not sacrificing all of the interest.

 

I think the point of the market is to have your money work for you.  In your example you pretty much flipped a car.  While it might not be a lot of work, you still had fix the car up, find a buyer, etc.  In the market, you have to research what to invest in, but generally the blue-chip stocks will grow consistently throughout the years.  I could be wrong, but I think the average is 3% growth per year.  So you'll have some great years and a few bad ones sprinkled in.  

[Jason]

Right now my wife and I have 1 joint checking account.  We pay the bills and any activities we do together out of that.

We have a savings account that we put money into out of every paycheck.

We are with PNC Bank and those 2 accounts are part of our Virtual Wallet account that also has a "reserve" account that is another savings account tied directly to the primary checking.  We use that mostly as our overdraft protection account.

We also each have our own checking account that is our allowance.  We each get $150 per paycheck in that account.

 

We also have 401k accounts through our jobs.

 

We have been working on getting out of credit card debt the past 2 years (we will be done no later than the end of May).  Once that is done, what we save, and what goes into our 401ks will go up.  Right now we don't have enough other money to make a CD or IRA worth it, but by the end of the year we should (with our CC debt paid).

[Bengals1181]

I'd say find a stock you can trust.  We have a small amount in Procter and Gamble and add more as we can. It's a fairly consistent and safe stock.  It's not a high reward stock but its a pretty low risk one and will yield you more annually than the money sitting in the bank.

[WRAPradio]

Right now my wife and I have 1 joint checking account.  We pay the bills and any activities we do together out of that.

We have a savings account that we put money into out of every paycheck.

We are with PNC Bank and those 2 accounts are part of our Virtual Wallet account that also has a "reserve" account that is another savings account tied directly to the primary checking.  We use that mostly as our overdraft protection account.

We also each have our own checking account that is our allowance.  We each get $150 per paycheck in that account.

 

We also have 401k accounts through our jobs.

 

We have been working on getting out of credit card debt the past 2 years (we will be done no later than the end of May).  Once that is done, what we save, and what goes into our 401ks will go up.  Right now we don't have enough other money to make a CD or IRA worth it, but by the end of the year we should (with our CC debt paid).

 

Cool, good info, thanks.  I think I like the "allowance" accounts where you and the Mrs. have money I'm assuming  you can spend on whatever you'd like.  

[WRAPradio]

I'd say find a stock you can trust.  We have a small amount in Procter and Gamble and add more as we can. It's a fairly consistent and safe stock.  It's not a high reward stock but its a pretty low risk one and will yield you more annually than the money sitting in the bank.

 

I agree, I'd love to get some P&G stock, it's just a little high right now and with Fidelity you pay $7.95 per transaction.  I bought some Coke (KO) and it's performed pretty well for me...easily my best choice so far outside of and ETF (USMV) I'm trying out.  I know Fidelity offers a bunch of commission-free ETF and Mutual funds and I'm starting to be attracted to a few of those.  I think they're generally a little safer and less volatile than individual stocks.  

 

So far my portfolio has BAC (this has been the Cleveland Browns of my portfolio, in other words it sucks), KO (winner), CSCO (eh...), CNK (pretty good), SKYW (pretty good, but super volatile) and USMV (winner #2).  I don't have a ton of shares of any of these, baby steps I guess.

[Jason]

 

Cool, good info, thanks.  I think I like the "allowance" accounts where you and the Mrs. have money I'm assuming  you can spend on whatever you'd like.  

 

Yep.  That way we can also buy each other birthday and Christmas gifts without the other seeing and knowing what they are getting.

[gatorclaws]

I have a checking account I get paid into with direct deposit, a 401K through work, online savings/cd's through ally. I leave my checking account with enough money to cover any bills and transfer the rest to Ally.

 

I'm a big fan of Ally. Their online savings rates beat pretty much any bank and their CD's only have a 60-day interest penalty if you have an emergency and need the money.

[sois]

pay off your debts first before putting shit in CDs or stocks.  You aren't going to make enough of a return in the market to offset the opportunity cost of paying off your debts.

 

Shoot for six months expenses in a savings account.  Start slow, it's not feasible, but it's possible if you work at it.  

[Tigris]

Good call, sois. Interest from debt could cancel out any "made" interest from CDs, savings, whatever.

[Jim Finklestein]

pay off your debts first before putting shit in CDs or stocks.  You aren't going to make enough of a return in the market to offset the opportunity cost of paying off your debts.

 

Shoot for six months expenses in a savings account.  Start slow, it's not feasible, but it's possible if you work at it.  

x100000000000000000000000000000000000000

[-GoBengals-]

I'd say find a stock you can trust.  We have a small amount in Procter and Gamble and add more as we can. It's a fairly consistent and safe stock.  It's not a high reward stock but its a pretty low risk one and will yield you more annually than the money sitting in the bank.

 

 

P&G has made me a "fuck ton" of money in the last 20-25 years.

 

my parents started me off with a few thousand in PG stock when i was a wee boy, when i started working i started tossing a few bucks in here or there. The year after i got it, it split ('92-93ish) so every share turned into two and drop half in price.. then 4-5 years later, it split again, so every original share now is 4 shares, then like 6-8 years later it split again, so every original share i had is now 8 shares, so that couple with what i added and the price increases over the years would have turned (for example) 10k into over 80k.

 

its also at its value, if not a few bucks higher, than it as before the economy took a shit, so if you have everything in PG stock then and now, and didnt cash anything out, you lost nothing..

 

did i mention it pays dividends, which i think is 56 cents per share, so every qtr i get a few free shares via my dividends..

 

PG stock is one of the best... it will be a huge part of my retirement..

 

 

ANYWAY..

 

as for bank accounts, i have:

 

Shared checking(majority of funds goes here from both paychecks for spending/mortgage)

A utilities account, checking, exct amounts go here to cover gas, electric, water, etc with aut pay setup

a car payment account, for my wifes car, exct amounts from each check goes here and auto pays car payment.

shared savings - this is a dream account, money goes in, but pretty much always ends up being transferred out to pay for something.

we both have 401k and IRA money market accounts at our jobs, both companies match 401k, so we do the max that they will match or more

and then the PG stock account is just in my name..my dad transfers shares for gifts for bday and xmas and stuff instead of getting gift cards, so it gros from that..

 

i think the discrepency between saying you need 2-8 accounts is what is being considered an account, i have close to that 8 as far as all those accounts, but 3-4 actual bankking accounts at a bank..that i sue regularly.

[Bengals1181]

 

 

P&G has made me a "fuck ton" of money in the last 20-25 years.

 

my parents started me off with a few thousand in PG stock when i was a wee boy, when i started working i started tossing a few bucks in here or there. The year after i got it, it split ('92-93ish) so every share turned into two and drop half in price.. then 4-5 years later, it split again, so every original share now is 4 shares, then like 6-8 years later it split again, so every original share i had is now 8 shares, so that couple with what i added and the price increases over the years would have turned (for example) 10k into over 80k.

 

its also at its value, if not a few bucks higher, than it as before the economy took a shit, so if you have everything in PG stock then and now, and didnt cash anything out, you lost nothing..

 

did i mention it pays dividends, which i think is 56 cents per share, so every qtr i get a few free shares via my dividends..

 

PG stock is one of the best... it will be a huge part of my retirement..

 

 

ANYWAY..

 

as for bank accounts, i have:

 

Shared checking(majority of funds goes here from both paychecks for spending/mortgage)

A utilities account, checking, exct amounts go here to cover gas, electric, water, etc with aut pay setup

a car payment account, for my wifes car, exct amounts from each check goes here and auto pays car payment.

shared savings - this is a dream account, money goes in, but pretty much always ends up being transferred out to pay for something.

we both have 401k and IRA money market accounts at our jobs, both companies match 401k, so we do the max that they will match or more

and then the PG stock account is just in my name..my dad transfers shares for gifts for bday and xmas and stuff instead of getting gift cards, so it gros from that..

 

i think the discrepency between saying you need 2-8 accounts is what is being considered an account, i have close to that 8 as far as all those accounts, but 3-4 actual bankking accounts at a bank..that i sue regularly.

 

 

yea my inlaws give my kids P&G stock every year.  They will have a nice tidy sum by the time they turn 18.  That's the great thing about their stock.  You can rely on it to raise, split, raise again, split again, etc...

 

 

Like I said we add when we can.  We don't have a lot in, but we made about $180 profit in 2012.  Not a lot, but a heck of a lot better than it being in the bank.

[-GoBengals-]

 

 

yea my inlaws give my kids P&G stock every year.  They will have a nice tidy sum by the time they turn 18.

 

 

Like I said we add when we can.  We don't have a lot in, but we made about $180 profit in 2012.  Not a lot, but a heck of a lot better than it being in the bank.

 

 

no doubt, i just looked up the history, looks like it split 2:1 5 times when my pops worked there, so every 1 shared from his first 5 years turned into 32!! over the years..

 

i really wish i could afford to put more in, im only adding $100-300/yr on my own...i think it grabs $10/paycheck or something... if they let you pick the exact DATE theyd take the money for auto-deposit i could do so much more... but they typically take a few days after the mortgage is due so im typically flat broke at that point..

[ThurmanMunster]

if you cant afford P&G stock CFC stock is also worthwhile. They have raised their dividend every year. It is around $48-50 right now. They have long been a good stock to own, and the company is making a lot of positive changes that will boost their stock over the next year or two. I think it will be splitting once it gets in the 60-70 range.

[Vol_Bengal]

I work in this field, granted on the IT side of it... my comments would be:

 

1) Use a Credit Union... not a bank.  Banks are around to turn a profit.  Period.  Pick a credit union close to you that you're comfortable with - they have your best financial interests in mind.  I guarantee it.  And, they'll have home banking, mobile banking, etc. very similar features to banks.

2) Right now... if you're debating between buying CD's or not... I'd lean not.  Return is absolutely garbage.  You're better off, especially if you're talking $5,000 or more of liquid cash, put it in a Money Market savings account.  It'll give you a better return than basic shares while still making it completely liquid with no penalties.

3) My wife and I have Basic shares and checking (where I'm direct deposited) that bills are paid from... also have a "mad money" account that I have part of my paycheck auto-transferring into... fun money, etc., escrow account where my mortgage escrow accumulates and is paid from by my credit union.  I have two other actual separate savings accounts with attached checking and I'll generally use those for "project" types of accounts... i.e. when we remodeled our house I had all the funds transferred to that savings account and moved, as needed, the funds into the checking account to pay contractors, HD/Lowe's runs, etc.  And, then I have 401k where work automatically puts 7% and then matches to an additional 3%... and I get a set amount of money each year from work to put into an IRA of some sort be that a CD or what have you...

[Montecore]

Roth IRA. Everyone should have one. Money grows tax free and you can withdraw your contributions at any time without penalty. It's like a Savings Account but with a much higher potential return.

 

Sure, you can lose it all if you're not careful, but it's not too hard to pick out 10-20 stocks that pay good dividends and are fairly safe (Coke, P&G, McDonald's, Microsoft etc.).

[The PatternMaster]

I work in this industry, so here's my two cents...

 

 

pay off your debts first before putting shit in CDs or stocks.  You aren't going to make enough of a return in the market to offset the opportunity cost of paying off your debts.

 

Shoot for six months expenses in a savings account.  Start slow, it's not feasible, but it's possible if you work at it.  

 

This x's 100 billions being debt free is the first way to go, but you can also start investing while you pay down your debt so you aren't missing out on the time value of money, basically the sooner you start investing the better.

 

 

I've recently started investing (yes, you can thank me for the impending market correction), but I've got a question for those that do (and don't I guess) invest.

 

1.  Typically, how many bank accounts should someone have?  i understand it's different for everyone, but I've read anywhere from 2 to 8 different accounts (checking, savings, brokerage, 401k, IRA, Spending)

 

2.  Where's the best place to keep an emergency fund?  In a savings acct. it's not making any interest, is a mutual fund liquid enough, should you just invest it in a money market?

 

Any and all opinions are welcomed.

 

Thanks!

 

1. That all depends on your personal needs, ideally you would want to have a checking, savings, and 401k atleast. If you want to invest I recommend starting a brokerage account with a company like Scottrade, E-Trade, or ING(Capital 360). CapitalOne has a type of  account called CapitalOne  Sharebuilder that I personally use and it's the Moobs..They give you 50 bucks for opening the account and you buy and sell investements from it as well. I set up two for my kids, here is a link...https://home.capitalone360.com/investing Don't let the fact that it's a shitty credit card company deter you, this account is legit and a great way to get started investing.

 

2. I would say the best place to keep an emergency fund would be a savings account, preferrably with a credit union, so that you can have easy access to the funds in case of an emergency and you won't incur a penality or tax liability if you need to use the money. Here is a good website that will show you the different types of saving accounts available and the type of rates you can expect to get...http://www.money-rates.com/savings.htm

 

What should you be investing in is really up to you and your investment needs, but I would recommend investing in mutal funds instead of individual stocks because you mitigate the risk of that one stock going down with a mutal fund. The risk with investing in a particular stock, like P&G for example, is that you are tied into their performance and if they have a bad year or quarter, like P&G just reported they missed their 3q estimate and is getting crushed today because of it, then you will lose money. In mutual funds you have less risk, which is what you should be concerned with when investing. It's all about risk vs. reward.... A nice large cap mutal fund should do the trick, I can recommend some if you want. That way you can own P&G, Apple, Microsoft, etc...for a fraction of the price.

 

Here is a link to a great website that will help you on your journey through personal finance..http://www.investopedia.com/personal-finance/..the more you know, the more empowered you will become and be able to make the best decisions for your financial situation; plus you can avoid paying someone for something that you can do for yourself.

[The PatternMaster]

Also another thing to consider is your asset allocation, basically not putting all of your eggs in one basket. Ideally you would want to have a mix of stocks and bonds, what percentage of each depends on your investment needs and goals.

 

Equities are the best investment currently because of the Fed's monetary policy, QE is putting a beating on most fixed income investments making them not very attractive places to put your money. Once the Fed stops QE would be a good time to go into fixed income investments, however.

[sois]

A good technique if you can do it:

 

• Get a 0% interest credit card.  They often have promotions.
• Transfer your high interest CC balance to this card.
• When the promotional period is about to expire, roll it to another card with a new 0% interest promotion.
• ???
• Profit

 

If you can do this, you can get a moderate sized 0% interest loan.  You have to be disciplined and have good enough credit to get lots of these 0% offers.  Oh yeah, don't do it if they charge a lot for the balance transfer.  Shop around.

[sois]

Roth IRA. Everyone should have one. Money grows tax free and you can withdraw your contributions at any time without penalty. It's like a Savings Account but with a much higher potential return.

 

Sure, you can lose it all if you're not careful, but it's not too hard to pick out 10-20 stocks that pay good dividends and are fairly safe (Coke, P&G, McDonald's, Microsoft etc.).

 

Have to wait till your 59.5 years old to pull out earnings.

Also, withdrawals on earnings are not tax free until the asset has been held in the account for 5 years.

 

Earnings is a key distinction.

 

And yes, everyone should have one.  

[JBandJoeyV]

Find a financial advisor you can trust and go from there.

 

You need to figure out your risk tolerance, your investment goals, your time horizon, priorities, etc. Each person has different goals, responsibilities, risk tolerance, etc so getting blanket advice online probably isnt the best way to go. No offense.