I am 24 years old and have had my money in a CD for the past 2 years - accruing interest.
I've heard that someone my age shouldn't have their money in a CD. I don't know why.
What is the best way to be accruing the most money for someone my age?
I don't need much access to the money because it is purely my savings right now. I am not using the money at this moment.
2007-03-16 08:00:48 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
They say a CD is not the best because of the return rate on the investment. But it is safe. At your age you have time for up and down turns in the market.
The best option is a Roth IRA. With a Roth you will not have to pay taxes on profit when you pull the money out. Spread your money out. Many money managers suggest a simple S&P 500 index fund. It is low cost and the S&P historically beats most money managers guesses.
#1 Make sure that you have 6 months cash reserves in case of emergencies. Put this in a sepparate account that you don't see and will not be tempted to touch.
#2 investment should be your 401k at work up to the amount your boss will match. Doubling your investment every year can't be beat.
#3 Max out your Roth every year
#4 You might want to pull out money pretax in your 401k up to what you can afford. Money unseen is easily saved.
If you still have more that you want to invest then you should work with an investment councilor.
2007-03-16 08:23:23 · answer #1 · answered by Bryan H 3 · 1⤊ 0⤋
People said that because you're still young. You can afford to take some risks. CD is good. It's steady and guarantee a small return on your money. But it's not the best investment for a 24 yo if you ask any financial advisers. If you don't need this money at all in the short term. Put them in some mutual funds or even stocks. BUT do your research before putting money in any mutual funds or stocks. Good luck ;)
2007-03-16 16:05:08 · answer #2 · answered by C L 5 · 0⤊ 0⤋
If your savings will be put to use within the next few years - to buy a car, take a vacation, purchase real estate - then a CD is a great option to choose.
2007-03-16 15:04:18 · answer #3 · answered by West Coaster 4 · 0⤊ 0⤋
You may be able to get a higher rate with an Orange account at ING.
http://home.ingdirect.com/
2007-03-16 15:21:16 · answer #4 · answered by ropman1 4 · 0⤊ 0⤋