$700 guaranteed to not be touched for 15 years+, should I put it anywhere other than a savings account?
"(Since you used the dollar sign without any qualification, I assume you're in the United States and talking about US dollars.) You have a few options here. I won't make a specific recommendation, but will present some options and hopefully useful information. Here's the short story: To buy individual stocks, you need to go through a broker. These brokers charge a fee for every transaction, usually in the neighborhood of $7. Since you probably won't want to just buy and hold a single stock for 15 years, the fees are probably unreasonable for you. If you want the educational experience of picking stocks and managing a portfolio, I suggest not using real money. Most mutual funds have minimum investments on the order of a few thousand dollars. If you shop around, there are mutual funds that may work for you. In general, look for a fund that: An example of a fund that meets these requirements is SWPPX from Charles Schwabb, which tracks the S&P 500. Buy the product directly from the mutual fund company: if you go through a broker or financial manager they'll try to rip you off. The main advantage of such a mutual fund is that it will probably make your daughter significantly more money over the next 15 years than the safer options. The tradeoff is that you have to be prepared to accept the volatility of the stock market and the possibility that your daughter might lose money. Your daughter can buy savings bonds through the US Treasury's TreasuryDirect website. There are two relevant varieties: You and your daughter seem to be the intended customers of these products: they are available in low denominations and they guarantee a rate for up to 30 years. The Series I bonds are the only product I know of that's guaranteed to keep pace with inflation until redeemed at an unknown time many years in the future. It is probably not a big concern for your daughter in these amounts, but the interest on these bonds is exempt from state taxes in all cases, and is exempt from Federal taxes if you use them for education expenses. The main weakness of these bonds is probably that they're too safe. You can get better returns by taking some risk, and some risk is probably acceptable in your situation. Savings accounts, including so-called ""money market accounts"" from banks are a possibility. They are very convenient, but you might have to shop around for one that: I don't have any particular insight into whether these are likely to outperform or be outperformed by treasury bonds. Remember, however, that the interest rates are not guaranteed over the long run, and that money lost to inflation is significant over 15 years. Certificates of deposit are what a bank wants you to do in your situation: you hand your money to the bank, and they guarantee a rate for some number of months or years. You pay a penalty if you want the money sooner. The longest terms I've typically seen are 5 years, but there may be longer terms available if you shop around. You can probably get better rates on CDs than you can through a savings account. The rates are not guaranteed in the long run, since the terms won't last 15 years and you'll have to get new CDs as your old ones mature. Again, I don't have any particular insight on whether these are likely to keep up with inflation or how performance will compare to treasury bonds. Watch out for the same things that affect savings accounts, in particular fees and reduced rates for balances of your size." If you plan on holding the money for 15 years, until your daughter turns 21, then advanced algebra tells me she is 6 years old. I think the real question is, what do you intend for your daughter to get out of this?  If you want her to get a real return on her money, Mike Haskel has laid out the information to get you started deciding on that. But at 6, is part of the goal also teaching her about financial stewardship, principles of saving, etc.? If so, consider the following: When the money was physically held in the piggy bank, your daughter had theoretical control over it. She was exercising restraint, for delayed gratification (even if she did not really understand that yet, and even if she really didn't understand money / didn't know what she would do with it). By taking this money and putting it away for her, you are taking her out of the decision making - unless you plan on giving her access to the account, letting her decide when to take it out.  Still, you could talk her through what you're doing, and ask her how she feels about it. But perhaps she is too young to understand what committing the money away until 21 really means. And if, for example, she wants to buy a bike when she is 10, do you want her to see the fruits of her saved money? Finally, consider that if you (or you & your daughter, depending on whether you want her to help in the decision) decide to put the money in a financial institution in some manner, the risk you are taking on may need to be part of the lesson for her. If you want to teach the general principles of saving, then putting it in bonds/CD's/Savings etc., may be sufficient, even if inflation lowers the value of the money. If you want to teach principles of investing, then perhaps consider waiting until she can understand why you are doing that. To a kid, I think the principles of saving & delayed gratification can be taught, but the principles of assuming risk for greater reward, is a bit more complex. "Well, I understand this forum is about money but I think you would be far better off if you invest the money in your daughters education or something similar that can bring much more significant future gains. I am a big fan of compound interest and investing in stocks but $700 sitting until she's 21 wont grow into a significant amount. When she's 21, what would you ""hope"" she'd spend the money on? something valuable like education right? so why don't you take the first step now so she will get a much bigger return than the monitory value. If I were you I'd invest in a home library or something similar."
"Congratulations. The first savings goal should be an emergency fund.  Think of this not as an investment, but as insurance against life's woes.  They happen and having this kind of money earmarked allows one to invest without needing to withdraw at an inopportune time.   This should go into a ""high interest"" savings account or money market account.  Figure three to six months of expenses. The next goal should be retirement savings.  In the US this is typically done through 401K or if your company does not offer one, either a ROTH IRA or Traditional IRA.  The goal should be about 15% of your income.  You should favor a 401k match over just about anything else, and then a ROTH over that.   The key to transforming from a broke college student into a person with a real job, and disposable income, is a budget.  Otherwise you might just end up as a broke person with a real job (not fun).  Part of your budget should include savings, spending, and giving.  All three areas are the key to building wealth.   Once you have all of those taking care of the real fun begins.  That is you have an emergency fund, you are putting 15% to retirement, you are spending some on yourself, and giving to a charity of your choice.  Then you can dream some with any money left over (after expenses of course).   Do you want to retire early?  Invest more for retirement.  Looking to buy a home or own a bunch of rental property?  Start educating yourself and invest for that.   Are you passionate about a certain charity?  Give more and save some money to take time off in order to volunteer for that charity. All that and more can be yours.  Budgeting is a key concept, and the younger you start the easier it gets.   While the financiers will disagree with me, you cannot really invest if you are borrowing money.  Keep debt to zero or just on a primary residence.  I can tell you from personal experience that I did not started building wealth until I made a firm commitment to being out of debt. Buy cars for cash and never pay credit card interest.  Pay off student loans as soon as possible. For some reason the idea of giving to charity invokes rancor.  A cursory study of millionaires will indicate some surprising facts:  most of them are self made, most of them behave differently than pop culture, and among other things most of them are generous givers.  Building wealth is about behavior.  Giving to charity is part of that behavior.  Its my own theory that giving does almost no good for the recipient, but a great amount of good for the giver.   This may seem difficult to believe, but I ask that you try it." "I think the basic question you're asking is whether you'd be better off putting the $20K into an IRA or similar investment, or if your best bet is to pay down your mortgage.  The answer is...that depends. What you didn't share is what your mortgage balance is so that we can understand how using that money to pay down the mortgage would affect you.  The lower your remaining balance on the mortgage, the more impact paying it down will affect your long-term finances.  For example, if your remaining principal balance is more than $200k, paying down $20k in principal will not have as significant an effect as if you only have $100k principal balance and were paying down $20k of that. To me, one option is to put the $20k toward mortgage principal, then perhaps do a refinance on your remaining mortgage with the goal of getting a better interest rate.  This would double the benefit to you.  First, your mortgage payment would be lower by virtue of a lower principal balance (assuming you keep the same term period in your refinanced mortgage as you have now.  In other words, if you have a 15-year now, your new mortgage should be 15 years also to see the best effect on your payment).  Further, if you can obtain a lower interest rate on the new loan, now you have the dual benefit of a lower principal balance to pay down plus the reduced interest cost on that principal balance.  This would put money into your pocket immediately, which I think is part of your goal, although the question does hinge on what you'd pay in points and fees for a refinance. You can invest, but with that comes risk, and right now may not be the ideal time to enter the markets given all of the uncertainties with the ""Brexit"" issue.  By paying down your mortgage principal, even if you do nothing else, you can save yourself considerable interest in the long term which might be more beneficial than the return you'd get from the markets or an IRA at this point. I hope this helps. Good luck!" Basically you have 4 options: Use your cash to pay off the student loans. Put your cash in an interest-bearing savings account. Invest your cash, for example in the stock market. Spend your cash on fun stuff you want right now. The more you can avoid #4 the better it will be for you in the long term. But you're apparently wise enough that that wasn't included as an option in your question. To decide between 1, 2, and 3, the key questions are:  What interest are you paying on the loan versus what return could you get on savings or investment?  How much risk are you willing to take? How much cash do you need to keep on hand for unexpected expenses? What are the tax implications? Basically, if you are paying 2% interest on a loan, and you can get 3% interest on a savings account, then it makes sense to put the cash in a savings account rather than pay off the loan. You'll make more on the interest from the savings account than you'll pay on interest on the loan. If the best return you can get on a savings account is less than 2%, then you are better off to pay off the loan. However, you probably want to keep some cash reserve in case your car breaks down or you have a sudden large medical bill, etc. How much cash you keep depends on your lifestyle and how much risk you are comfortable with. I don't know what country you live in. At least here in the U.S., a savings account is extremely safe: even the bank goes bankrupt your money should be insured. You can probably get a much better return on your money by investing in the stock market, but then your returns are not guaranteed. You may even lose money. Personally I don't have a savings account. I put all my savings into fairly safe stocks, because savings accounts around here tend to pay about 1%, which is hardly worth even bothering. You also should consider tax implications. If you're a new grad maybe your income is low enough that your tax rates are low and this is a minor factor. But if you are in, say, a 25% marginal tax bracket, then the effective interest rate on the student loan would be more like 1.5%. That is, if you pay $20 in interest, the government will then take 25% of that off your taxes, so it's the equivalent of paying $15 in interest. Similarly a place to put your money that gives non-taxable interest -- like municipal bonds -- gives a better real rate of return than something with the same nominal rate but where the interest is taxable. The limits on an HSA are low enough that there's no real danger of overfunding it.  The limits max out at (as of 2011, for an individual) at just over $3000 per year.   Sometime in the next few years, you will have more than $3000 in health care expenses.  It might be something like a car accident, acid reflux, a weird mole that the doctor wants to check out, a broken toe, a few nasty cavities that need to be filled, an expensive antibiotic, or something else entirely.  Or, it might be something less dramatic, getting eaten away by copays and contact lenses. When that happens, you want the peace of mind that you can pay for your deductible plus any other expenses.  Keep in mind that even a $5000 deductible can cost you more than $5000 out-of-pocket; either because of non-insured expenses, or simply an illness that straddles multiple calendar years. Besides, it's not like your HSA money is going anywhere; even if you never touch it, it's just a savings account that you can't touch until you turn 65.  And if you do truly have an emergency, you can get at it if you have to. Even if your HSA is filled with several years' worth of deductibles, it's still a way to shield thousands of dollars a year from taxes, with luck moving them into lower-tax years 40 years from now.  And it's a way that doesn't involve income limits or mandatory withdrawals. First, what's the reason? Why do you have that much in cash at all - are you concerned about market volatility, are you planning to buy a house, do you have tens of millions of dollars and this is your slush fund?  Are you a house flipper and this is part of business for you? If you need the money for short term use - ie, you're buying a house in cash next month - then as long as you're in a sound bank (one of the big national ones, for example) it seems reasonable.  You can never predict a crash like 2008, but it seems unlikely that Chase or Citibank will go under in the next few weeks. If you like to have a cash position, then split the money among multiple banks.  Buy a CD at one major bank with some of the amount.  My in-laws have a trust which is partially invested in CDs, and they use multiple banks for this purpose to keep their accounts fully insured.  Each separate bank you're covered up to 250k, so if you have $150k at Chase and $150k at a local bank, you're covered.  (You're also covered in a much larger amount - up to 1MM potentially - if you are married, as you can have a separate account each for $250k and a joint account up to $500k.) Otherwise, why do you have that much in cash?  You should invest it in something that will return more than inflation, at a minimum... Edit post-clarifications: $350k is around my level of 'Maybe, maybe not'.  You're risking $100k on a pretty low risk (assuming this isn't a small local bank, and even those are pretty low still).  In order to remove that risk you have to do something active - ie, take 100k somewhere else, open a new bank account, etc. - which isn't exactly the hardest thing in the world, but it does take effort.  Is it worth the 0.001% chance (entirely made up) you lose the 100k?  That's $10, if you agree with that risk chance.  Up to you. It wouldn't be particularly hard, though, to open an account with an online bank, deposit $100k in there in a 6 month CD, then pay the IRS from your other account and when the 6 month CD expires take the cash back into your active account.  Assuming you're not planning on buying a house in the next six months this should be fine, I'd think (and even then you'd still have $150k for the downpayment up front, which is enough to buy a $750k house w/o PMI). Additionally, as several commenters note: if you can reasonably do so, and your money won't be making significant interest, you might choose to pay your taxes now rather than later.  This removes the risk entirely; the likely small interest you earn over 3 months may be similar to the amount you'd spend (mostly of your time, plus possibly actual expenses) moving it to another bank.  If you're making 2% or 3% this may not be true, but if you're in a 0.25% account like my accounts are, $100k * 0.25% * 0.25 is $62.50, after all. Houses burn down a lot more frequently than banks fail. Also, I'll bet the odds that FDIC will insure the loss of money in a bank is much higher than the odds of a homeowner's policy believing a huge pile of cash burned up in your house AND even then your policy probably wouldn't have coverage limits high enough to reimburse you for substantial cash losses. Oh yeah, then there is theft, floods,etc. The biggest danger is that routine inflation will eat up that money faster than the rats in the basement. Now, having some cash for a small emergency on hand isn't a terrible idea, but using your closet as a personal bank doesn't seem very smart. Here are some options: Park your money in a bank that works best for you. Debt creates risk.  The more debt you take on, the higher your risk.  What happens if you lose your job, miss a payment, or forget to write the final payment check for the exact amount needed, and are left with a balance of $1 (meaning the back-dated interest would be applied)?  There is too much risk for little reward?  If you paid monthly at 0% and put your money in your savings account like you mentioned, how much interest would you really accrue?  Probably not much, since savings account rates suck right now. If you can pay cash for it now, do it.  So pay cash now and own it outright.  Why prolong it?  Is there something looming in the future that you think will require your money?  If so, I would put off the purchase. No one can predict the future.  Why not pay cash for it now, and pay yourself what would have been the monthly payment?  In three years, you have your money back.  And there is no risk at all. Also, when making large purchases with cash, you can sometimes get better discounts if you ask.