You probably have a few goals on your life list to learn things. A new language? Guitar? Should one of your goals be to learn about investing?
A few years ago I got the religion that if I learned how to maximize return on the money in my savings accounts, I could retire earlier. Duh! I bought Suze Orman’s Nine Steps to Financial Freedom and took the pledge to empower myself to not only learn about and monitor my finances but shift my money as it made sense. Managing the money you’ve already saved should be just as important as doing the work at your job. Maybe more so.
Who This Post is For: All my friends and anyone else whose IRA or savings are underperforming in CDs, savings accounts, or mutual funds that are providing low returns. And it’s for all the people on SuperViva who want to improve their financial situations.
(Note that I am not a financial expert. I’m sharing my own thoughts and knowledge to give you a nudge.)
TAKE ACTION NOW:
FIRST: DO NOT BELIEVE THAT BECAUSE YOU’RE YOUNG IT DOESN’T MATTER IF YOUR IRA IS GETTING A LOW RETURN! OK now that I got that out of my system.
Is Most of Your Money In One Institution?
If so then don’t hesitate to contact a representative to ask their advice on stable funds that give the best return. At times with all the choices it seems impossible to figure this out yourself. They’ll often know right off the bat!
Play With Online Financial Tools to Help You Optimize
Try Etrade’s Intelligent Cash Optimizer
It’s time I took a new look at Etrade. They have lots of tools to help you, beyond their Intelligent Cash Optimizer which helps you “maximize your uninvested cash by instantly calculating its earning potential.”
MSN MoneyCentral has a mutual fund quiz that might be a good place to start your financial education.
ING’s ShareBuilder offers a portfolio builder tool to help you figure out how to allocate your money.
Compare Top Rated Mutual Funds and Savings Accounts
Question your savings account or CD!
For example ING Direct has great rates. But I recently discovered a series of funds at Fidelity Investments that ensure you won’t get hit with the AMT tax. The tax equivalent yield on the Fidelity California AMT Tax-Free Money Market Fund
(FSPXX) is 4.9%. This fund has a stable $1 price. However it has a $25,000 minimum.
Fidelity Cash Reserves, which is a $1 fund you can add or withdraw from at any time, currently has a 4.28% 7-day yield, which is taxable.
Don’t let all this talk about these brokerage-oriented companies stop you from exploring good savings deals at traditional banks. Citibank has the “Ultimate Money Account” which has no minimum balance and is FDIC insured – currently returning 4.25%. Check their site for the fine print.
If you’re saving $25K, over a year’s time you’ll save a few more bucks by watching which fund is getting the higher return and moving it. There’s often no penalty for moving your money, but check with your bank.
Funds I’ve Done Well With*
While Mutual Funds fluctuate with the markets, if you’re saving a chunk of money for the long term it’s worth taking an hour to find funds that can pay off over time. Every bit counts.
US Eastern European (EUROX), which has had a 10 year 22.28% return.
Fidelity Canada Fund – $2500 minimum to invest.
Fidelity Capital Appreciation Fund (FDCAX) – also $2500 minimum
From this link you can search for Morningstar Highly Rated Funds based on your investment goals.
You can also browse funds, and sort the columns based on number of stars. Click the fund name to see the return for different periods.
Even if financial things give you hives, it’s worth reading the blurb about the mutual fund’s objectives. Why I’ve even been known to read about the fund manager!
Move Your Money When It Makes Sense
Many financial institutions also let you transfer money between other institutions with no fee.
For example on ING Direct you can set up accounts for online transfer, which is effortless once it’s set up. It’s very likely the bank you primarily bank with also lets you do this.
Also, did you know you can open a Brokerage IRA account? You can trade stocks but will only end up paying tax when you cash out your IRA. If you hone your stock picking stills, playing the stock market as part of an IRA from which you don’t plan to cash out for many years may be less risky than using funds from your savings.
Now Read More About Investing
More links to investment advice sites.
*Well if they can say “past performance is no guarantee of future results” then I can too! Take any advice you read here at your own risk.
Got financial tips? Please share them!