I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do?
These are the basics in order: Max your employer contributions to your 401k if available Pay off any loans Contribute to an IRA  Perhaps max out your 401k Look into other investment options (refinance your mortgage, buy stocks) Those are the typical rules, special situations may need specials actions... Lets make some assumptions. You are not close to retirement.  You have no other debts.  You have a job.  You have no big need for the money.   You should invest that.  Do not invest with a bank, they are not as competitive on fees as a brokerage account. You can get specific answers that are different from every person, (so you should dig in and research a lot more if you care (and you should).  Personally, I would suggest you open an account with one of the low cost providers. Then, with that new investment account, put your money into a target retirement account.  File your statements away and tend to it once a year.  (Make sure it is there, that you can access it, that nothing alarming is going on).  You certainly have enough to start an investment account.  If you want to get more into it, ask a phone adviser what you should open. Finally, before you start investing, make sure you follow the advice of radix07 and have no debt, saving the most you can for retirement. A rule of thumb is your money will double every 72 months. Congratulations, you are a saver.  Investing isn't for you as the risk of investing is in conflict with your desire to preserver you money. Open a savings account or high interest checking account with a credit union, online only or local community bank.  Shop around no the web for the highest interest.  Don't get your hopes up though, the highest rate you see (that doesn't have strings attached) won't be much here late summer of 2012. "Aside from employer 401(k) matches (which may double your money immediately), paying off debts is almost always the best place to start. Paying off a debt early is a zero-risk operation and will earn you N% (where N is your interest rate). Is that a good deal for a zero-risk return? The closest equivalent today (Aug 24, 2012) is that you can earn about 2.68% on 10-year Treasury bonds. Unless you have a really, really good interest rate (or the interest is tax-deductible), paying off your loan will offer an excellent risk-adjusted return, so you should do that. The ""really good"" interest rate is typically a mortgage or student loans. (Mortgage interest is also tax-deductible, at least for now.) In those cases, you're not going to gain nearly as much by paying the loan early, and the loan is large - larger than the amount you want to have in risk-free investments. You want to invest for returns, as well! So you can save for retirement instead (in a 401(k) or similar account) and take on a little risk." First thing's first: migrate your savings to an interest-bearing savings account (such as from Ally Bank). While it still lags behind inflation, 0.84% is still better than 0.00%. Short-term CDs are also an option. I've personally thought about experimenting with peer-to-peer lending, but a few thousand in savings isn't all that much in the grand scheme of things, and you don't want it tied up in a risky, speculative loan when you might need it the most. As the others have said, the general savings rules apply too: pay off high-interest debt, divert more money into your 401k (especially if you aren't hitting the match yet), then work on either whittling down other debts or saving more for a big purchase in the future. Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate.  The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals.  My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you. I had some extra money, so I opened American express saving account. At the time which was offering .80%, now .90%. I put most of the money in the saving account. The remainder of my money in a investment account at my local bank. I was in touch once a week with investment, I learned allot how the stock market worked and tax deferment(401k, IRA, IRA Roth). My suggestion is to do test run and see if you like it. Side note, NOT ALL investment are created equal.
"As the OP expressed their thought it seemed to me they were suggesting anyones (or rather anyone who is ""Rich"" however *that* is defined*) non-invested money be taxed at this high rate and that strikes me as hopelessly naive. You don't think they would leave the country or ""invest it"" in a savings account earning .05% (or most likely spread across many so it was FDIC insured)?   &gt; I bet the rich would find something to do with that idle cash overnight if it was taxed at a 75% rate or so.    They were basically suggesting the US government sieze the savings of wealthy people.   The question of whether the highest effective tax rate **on income** should be raised is  a completely different discussion. Personally I favor a higher tax rate and some new tax brackets for the very highest earners. I don't really think it's necessarily *fair* in a progressive system to treat the rich as a ""piggy bank"" but it is what it is. They benefit the most so they are called to contribute the most.   I think I'd favor some kind of Alternative Minimum Tax for rich people so they had to pay a minimum of 30ish% of their income above some sort of cap (5 million per year? 100 million per year?) and capital gains  applied. This would close the Buffet loophole.   My biggest reason for this though is not because I don't think they *deserve* their money. It's because bottomless coffers basically guarantee that the legislation will be written for them and by them. There is always this tension between the poor and middle class that want more services and the upper class that wants to pay less taxes.   I am starting to get to the point where I think it might be better to have a smaller government (and less services) because they abuse their power (and our money) so much. ACTA, SOPA, NDAA, warrantless wiretaps, Afghanistan and Iraq wars, etc. I *do* like the idea of social safety nets but perhaps those should be more local.   Anyways, sorry for the wall of text." "The question posted was, ""Should I pay off a 0% car loan""? The poster provided a few details: I'm ahead on 0% interest car loan. I don't have to make a payment until October. I currently owe $3,000 and I could pay it all off. Should I do that or leave that money in my savings account that earns 2% interest? The question seems to seek a general rule of thumb for how to behave with smaller debts. And a general rule of thumb could be taken from one of two principles (which seem to be religious camps). The ""free money"" camp believes that you can invest (even small amounts) of money risk-free and receive high returns, tax free, for zero effort. The ""reduce debt"" camp believes that you should pay off debts so that you have the freedom to live your life unfettered. Which religion do you prefer? I tend to prefer paying off debts. The ""free money"" tent wants you to pay the car off over the next 6 months, earning interest. Suppose you can earn 2% interest (.02/12 per month), paying $500 per month for 6 months. So you earn interest on 3000 the first month, 2500, the second month, 2000 the third month, So, are you feeling rich, earning $13.13? How much time did you spending making the 5 additional payments? You could skip coffee once/month and make a bigger difference. The ""reduce debt"" tent would have you pay off the car. Suppose you change your deductible on the car (or drop collision) to save money, and you will also same time by avoid 5 bill payments, But do you still have enough money in your emergency fund, how do you feel about having less insurance coverage, and did you notice the time savings? We really need more information about the poster's situation. The answer should consider the relevant details of the situation to provide an informed response. Here are questions that would enable a response to address the whole situation. Why are these important? Here are a few reasons why the above might be important." "I am in a different situation, because I earn more than I spend, but I have found that I need to make the money inaccessible if I want to really avoid spending it.  I used to just throw my paychecks into a high-yield savings account, but eventually the balance was large enough that a ""large purchase"" didn't seem like ""that much"" (because I would have had so much left in the account after the purchase).  It was way too easy for me to spend way too much. Now, I invest my savings automatically.  The obvious benefit is my money has a much higher growth rate than a simple savings account (especially with fed interest rates so low).  I invest most of my savings in 401(k)/IRA retirement accounts, where there are severe penalties for withdrawing prior to retirement age.  Then, I invest a significant portion to a regular brokerage account, where the money is invested in stock and bond funds.  This money is accessible within a few days of whenever I need it.  The remainder of my savings goes into a savings account as cash I can get to at any time.  All 3 accounts grow with every paycheck (market fluctuations aside).   This 3-tiered system helps me to categorize my savings as ""Never, ever touch"" (retirement accounts), ""Touch, only if I can wait 3 days and am willing to pay taxes"" (brokerage account), or ""touch whenever you need it, with no penalties"" (Savings account).  If my savings account grows too much, I'll move money from there to the brokerage account (where it has more growth potential).  The longer my money is invested in the brokerage accounts, the less taxes I'll need to pay when I sell/withdraw the funds, so that's even more incentive for me to keep those funds where they are. I have credit cards, so in my opinion, having to wait 3 days for funds from my investment account to become accessible is considered ""accessible in an emergency,"" because my credit cards can be used to cover a large purchase for 3 days, and as long as I pay it off within the grace period, there's no interest charged. tl;dr investing is probably the smartest way to both grow your money and prevent the urge to spend it right away.  My advice is to start with a 401(k) or IRA as soon as you can, since the younger you are, the more time until retirement that your money has to compound.  Investing $100 more a month can mean hundreds of thousands of additional dollars in your account when you're ready to retire." "First off, you generally want to park your emergency fund somewhere that is ""safe"", meaning something that is not subject to market fluctuations.  Your emergency fund is something you need to be able to count on when times are tough!  That rules out things like stock market investments. Secondly, you need to think about how quickly you will need access to the money.  If you have an emergency, odds are you don't want to be waiting around for weeks/months/years for the money to become available.  This rules out most fixed-term investments (Bonds, traditional CDs, etc). If you are concerned that you will need near-instant access to your emergency money, then you probably want to keep it in a Savings or Money Market Account at the same bank as your checking account.  Most banks will let you transfer money between local accounts instantly. Unfortunately, your local bank probably has pitiful interest rates for the Savings/MMA, far below the inflation rate.  This means your money will slowly lose value over time.  Be prepared to keep contributing to it! For most people, being able to draw the cash from your fund within a few days (<1 week) is sufficient.  Worst case, you charge something on your credit card, and then pay down the card when the emergency fund withdrawal arrives. If ""money within a few days"" is okay for you, there are a few options: Money Market (Mutual) Funds (not to be confused with a Money Market Account) - This is the traditional place to keep an emergency fund.  These are investment funds you can buy with a brokerage account.  An example of such a fund would be Fidelity Cash Reserves.  MMFs are not FDIC insured, so they are not exactly zero risk.  However, they are considered extremely safe.  They almost never go down in value (only a few times in the past few decades), and when they have, the fund manager or the Federal Govt stepped in to restore the value.  They usually offer slightly better return than a local savings account, and are available in taxable and non-taxable varieties. Online High-Yield Savings or Money Market Account - These are a relatively new invention.  It's basically a the same thing as what your local bank offers, but it's online-only.  No local branch means low overhead, so they offer higher interest rates (2.0% vs 0.5% for your local bank).  Some of them used to be over 5% before the economy tanked.  Like your local bank, it is FDIC insured. One bit of caution:  Some of these accounts have become ""gimmicky"" lately.  They have started to do things like promo rates for a few months, only offering the high interest rate on the first few $K deposited, limiting the amount that can be withdrawn, etc.  Be sure to read the details before you open an account! No-Penalty CDs - Certificates of Deposit usually offer a better rate than a Savings Account, but your money is locked up until the CD term is up (e.g. 36 months).  If you need to cash out before then, you pay a penalty.  Some banks have begun to offer CDs that you can cash out with no penalty at all.  These can offer better rates than the savings account.  Make sure it really is no-penalty though.  Also watch what your options are for slowly adding money over time.  This can be an issue if you want to deposit $100 from every paycheck. Rewards Checking Accounts - These are checking accounts that will pay a relatively high interest rate (3% or more) provided you generate enough activity.  Most of them will have requirements like you must have direct deposit setup with them, and you must do a minimum number of debit card transactions from the account per month.  If you can stay on top of the requirements, these can be a great deal.  If you don't stay on top of it, your interest rate usually drops back to something pitiful, though. Personally, we use the Online High-Yield Savings Account for our emergency fund.  I'm not going to make a specific recommendation as to which bank to use.  The best deal changes almost week to week.  Instead, I will say to check out Bankrate.com for a list of savings accounts and CDs that you can sort.  The Bank Deals blog is a good place to follow rate changes." "Basically, you either borrow money, or get other people to invest in your business by buying stock or something analogous.  Sometimes you can get people to ""park"" money with you. For example, many people deposit money in a bank checking account. They don't get any interest or other profit from this, they just do it because the bank is a convenient place to store their money. The bank then loans some percentage of this money out and keeps the interest. I don't doubt that people have come up with more clever ways to use other people's money. Borrowing money for an investment or business venture is risky because if you lose money, you may be unable to pay it back. On the other hand, investors expect a share of the profit, not just a fixed interest rate." "Or here's a better idea: don't have a credit card at all.  They offer no real benefits and plenty of dangers.  Don't take my word for it, though: ""I tell every student class I get, high school students, university   students, you know, they'd be better off if they never used credit   cards""   - Warren Buffet (Net worth: $44 billion) Before anyone says anything about using credit cards ""wisely"" and getting the rewards points, I can save 15% on many kinds of large purchases ($100+) using cash.  You won't find a reward system offering that level of incentive.  Two recent examples of cash discounts: After I bought my house I needed a lawnmower and a my wife wanted a new vacuum cleaner.  Went to Lowe's and found the ones we wanted.  They were $600 combined.  Found the manager, stuck five $100 bills in his hand and said ""this is what I have, and that is what I need.""  16.6% saved. Bought my daugher a bed recently. Queen box spring and mattress were on sale for $300 but it didn't come with the rails, which they wanted $50 extra for.  Went to the bank and got $320 in cash from the bank, walked in, set it in his hand and said, ""I need the bed box spring and rails, tax included.""  He replied, ""Sorry man, I can't.  I'm already taking a loss on..."" Then he stopped mid sentence, looked down at the cash again and said ""Hold on. Let me ask my manager."" Manager walks over, guy explains what I said, manager looks at the cash and says ""Make it happen""  14.3 % saved. As for purchasing a home, it is a myth that you need a credit score to obtain a mortgage for a home.  Lending institutions can do manual underwriting instead of just relying on your credit score.  It is a little tougher to do and banks usually have stricter requirements, but based on the information the OP has given in this and other questions, I think he can easily meet them." In your scenario, I would do the following: If, in the short term, something should happen, you can always tap into a line of credit or even a cash advance on the credit card.  But, you should in no way be paying $70 a month in interest.   Assume you want to pay off the Credit card over 12 payments, you would need to pay about 450 a month, which costs 400 in interest.  At the end of the year, you have $5000 in savings, and $0 debt. The alternative, is to pay off the credit card right now, and put that $450 into savings, you would have $5400 in savings, and $0 debt. I'm usually the last to recommend a $0 safety net, but I make an exception in the case of retirable credit card debt.   In the worst case, you are no worse off than you are now, in the best case, you're up about $400 at the end of the year. You should have a separate business account. Mixing business and personal funds is a bad practice. Shop around, you should be able to find a bank that will let you open a free checking account, especially if you are going to have minimal activity (e.g. less than 20 of checks per month) and perhaps maintain a small balance (e.g. $100 or $500).