Best option for savings/small amounts?

[MotherGoose]

In the near future, we should be able to start setting aside a little $$ each month for savings. It won't be anything extreme, perhaps $100/mo. (Gotta start somewhere!) I have a savings account w/ ING, though its mainly used to hold $$ temporarily - such as putting aside rent money durin the month.

 

This is $$ we shouldn't need, but would want to have access to it 'just in case'. I see that ING has both CD's and Mutual funds (would probably go w/ moderate risk) that have no minimum to invest. Which do you think would be better?

 

The goal would be long term savings.

Edited October 22, 2005 by StaciMM

[8004me]

In the near future, we should be able to start setting aside a little $$ each month for savings.  It won't be anything extreme, perhaps $100/mo.  (Gotta start somewhere!)  I have a savings account w/ ING, though its mainly used to hold $$ temporarily - such as putting aside rent money durin the month. 

 

This is $$ we shouldn't need, but would want to have access to it 'just in case'.  I see that ING has both CD's and Mutual funds (would probably go w/  moderate risk) that have no minimum to invest.  Which do you think would be better?

 

The goal would be long term savings.

<{POST_SNAPBACK}>

You have to decide how you want to invest the money and your risk level.

You indicate that you want it as a long term hold but seem to want liquidity as well.

If the long term hold is more important you should consider if you have fully funded your 401K, assuming you have or this account is designated for an alternative use I would open an account at Emigrant but also look at IBonds

http://www.savingsbonds.gov/

 

IMO the most important thing with starting a savings is getting in the habit of doing it each month !

At $100 per month with the ease of transfer that ING and Emigrant offer make it especially attractive.

 

Though some will argue that a mutual fund, CD other investment vehicles are better and perhaps they are but if liquidity and limited risk are important then your time horizon has to be short term 3-16 months.

 

IBonds may offer the best of both worlds even if you take the penalty for early withdrawal after a year.

 

I applaud you for pushing forward with a structured savings plan.

Keep your eye on developing the savings habit then as your funds grow you can designate a portion of them to move to more intricate long term hold investments.

 

Good luck

Edited October 22, 2005 by 8004me

[54regcab]

Look into opening a Roth IRA through an investment company. I belive Trowe Price will let you start out with $50 per month.

All of your gains are TAX FREE if you wait until 59 1/2 to withdraw them.

You can pull contributions at any time without taxes or IRS penalty.

Edited October 23, 2005 by 54regcab

[MotherGoose]

Thanks for the info... DH is contributing a small amount to his 401k and we'll likely increase that a litte. I don't have a 401k now, and won't be eligible for a while.

 

I know that ING has a good reputation-is Emigrant sound? The thought of putting my $$ somewhere unknown makes me a little nervous.

 

I guess I want the best of both worlds... I hope to be able to set the $$ aside and NOT need it, but I also want to be able to get to it if an emergency strikes. I know ultimately the goal is to have 3-6 months worth of living expenses in a short term solution, and the rest in something long term. Gotta work up to that though!

 

PS-I will look into a Roth IRA. I've heard the term, don't know much about them-but always thought there was a larger minimum.

Edited October 23, 2005 by StaciMM