i'm 22 and have a decent job. i'm starting to think about how i can put some money to the side (In case of Emergency), and i've seen a couple of online savings banks such as ING and others. would anyone help me find the best with a good interest rate that'll put my money to work smartly and safely?
2006-06-21 04:43:44 · 3 answers · asked by Izzo_3x 2 in Business & Finance ➔ Personal Finance
Currently HSBC Direct is the best with 4.80%, Citibank Direct is next best with 4.75% APY.
For better savings, consider signing up for your company's 401k (free money, if company contributes as well).
2006-06-21 04:45:24 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Your question is concerned with planning for retirement. But, your subquestion material addresses building a liquid emergency fund. These are two separate issues.
To build up retirement capital, your best choice is to participate into your company's 401K at least up to the company's matching level (usually between 3% to 6% of your income). The company's 401K matching gives you an immediate guaranteed 100% return on your money. Additionally, your investment is tax deferred until you withdraw these funds when you retire. Another good option is a Roth IRA where you can invest up to $4,500 annually free of any income tax ever.
To build up an emergency fund and earn an adequate interest rate, the ING savings account you saw on line is just fine. However, I think an even better choice is a Vanguard money market fund such as their Prime Money Market Fund. This is because the money market fund earns competitive yield driven by current yield on short term money market instruments (commercial paper, bankers acceptances, wholesale CDs) that are held by the actual money market fund. Meanwhile, the ING savings account attractive interest rate could drop at any time at the discretion of ING. In summary, the ING savings account high rates may not be reliable. Meanwhile, the Vanguard Prime Money Market Fund rates will always be competitive because they are not controlled by the marketing decision of a single bank, but reflect institutional market rate/yield at all time.
2006-06-21 04:58:28 · answer #2 · answered by Gaetan 3 · 0⤊ 0⤋
Congratulations on thinking about your future early in your career.
Go to your library, check out and read "The Automatic Millionaire" by David Bach. You're at the perfect age to read it.
It talks about retirement along with emergency funds. You can probably read it in 2-3 hours as well.
2006-06-21 14:50:26 · answer #3 · answered by MarleyTheCat 3 · 0⤊ 0⤋