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Attention Financially Competent Infidels!

By ObviousTroll (Wed Jul 02, 2008 at 08:37:35 AM EST) (all tags)

I need some advice.

So, due to diligent work on the part of the Troll, no car payments for the past couple of years, and due to the Troll finally catching a break, he's accumulated a significant amount of savings. Not take-a-year-off kind of savings but enough that I want to get it out of a regular savings account.

Here's the thing. Every other time in my life this has happened, attempts to invest the money in anything more complicated than a CD or a money market account has quickly lead to massive erosion of the principal. So much so that it took quite a lot of soothing talk just to get me to enroll in my company's 401k.

And, of course, the stock market is currently horrible.

So what do I do? I put the money in an Ing account last year, when they were offering 4.5%, but that has since fallen to something like 3%.

Liquidity is important because, I assume, Troll Jr. will want to go to college in 2 years.

Is there anything I can do with this cash or should I just leave it parked?

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Attention Financially Competent Infidels! | 44 comments (44 topical, 0 hidden) | Trackback

I'll look after it for you. by Breaker (2.00 / 0) #1 Wed Jul 02, 2008 at 08:41:37 AM EST

No problem!

Thanks. by ObviousTroll (2.00 / 0) #2 Wed Jul 02, 2008 at 08:48:08 AM EST

But in order for me to send you the money, you'll have to send me information about the bank account. Particularly the account # and your SSN.

TIA!

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

: Being UKian by Breaker (2.00 / 0) #4 Wed Jul 02, 2008 at 09:13:26 AM EST

I don't have an SSN. Can you just bung it in an envelope and post it?
Basically any money you put into the stock market should be money you'd happily burn. Even proper, paid advisors will tell you "the value of your investment can go down as well as up" - meaning if your cash gets spanked, tough tittie.
Can you not get a ~10% high interest account over there? You have restrictions on when you can remove the money though.

[ Parent ]

In UKia by Vulch (2.00 / 0) #3 Wed Jul 02, 2008 at 08:56:30 AM EST

I'd be looking for a 2 year fixed term bond, currently round about 7% interest though that's gross before tax. The money is tied up during the term, interest can be paid out or compounded usually.

need more information by StackyMcRacky (2.00 / 0) #5 Wed Jul 02, 2008 at 09:17:55 AM EST

how is your overall financial picture? do you have 6 months expenses in an emergency fund (is this the e-fund?)? how's your retirement coming a long? is this money specifically earmarked for Troll Jr's college? actually, what do you want to do with this money (long-term savings, pay off the mortgage, buy a new car in 10 years, etc)?

also, how much money are we talking about?

ptsd by clock (2.00 / 0) #6 Wed Jul 02, 2008 at 09:39:32 AM EST

i'm flashing back to...to...LAST NIGHT!

p.s. - answer her questions. she knows what she's talking about.

_{Clock is right. [nt] --vorheesleatherface}

[ Parent ]

Six month!?! by ObviousTroll (2.00 / 0) #8 Wed Jul 02, 2008 at 09:54:52 AM EST

I thought the rule was two months? The amount I've got saved is probably about 3 months gross salary.

Anyway, the basic issue is that we aren't in debt except for a reasonable mortgage but every attempt to save money has ended in disaster. We have no money saved for college and very little saved for retirement.

This money hasn't been earmarked for any particular use, other than looking forward to future needs and contingencies.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

I believe by ucblockhead (2.00 / 0) #19 Wed Jul 02, 2008 at 10:50:32 AM EST

It is six months *expenses*, which I'd hope three months gross would cover. It least I hope so, because otherwise my savings is more fux0red than I thought.
----
_{ウセーバラケダ}
[ Parent ]

: Don't feel bad. by ObviousTroll (2.00 / 0) #27 Wed Jul 02, 2008 at 02:55:42 PM EST

Somewhere along the line SWHTL and I must have taken a terrible wrong turn financially. We never got into debt, but until a couple of years ago even a single month without work would have seriously f'ed us up financially.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

rule of thumb by StackyMcRacky (2.00 / 0) #28 Wed Jul 02, 2008 at 03:33:24 PM EST

is 6 months of *expenses*, not salary (as uc stated earlier).

for the e-fund savings the best places to store are either a good MMA (stupid interest rates!), set up a CD ladder (where 1 month's worth of expenses is available every month), or even put it in a Roth IRA (since it's post-tax, you can always withdraw any *principal* you deposited (but not the interest)).

sounds to me like you need to figure out what you need for an e-fund first. once that's built up, then make sure you're saving for retirement. college for the jr. should be your last priority - the kiddo can always take out loans for college (or work his way through), but you can't take out a "retirement loan."

wait....you should build up both your e-fund and start your retirement savings at the same time, not e-fund first.

finally, don't sweat the market. with retirement savings, you still have years to go, and over time you'll come out ahead. if you're scared/paranoid, just go with a cheap-o S&P 500 mutual fund like Vanguard.

[ Parent ]

Okay. Let's start with some terminology. by ObviousTroll (2.00 / 0) #32 Wed Jul 02, 2008 at 06:17:13 PM EST

What's an "e-fund"?

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

emergency fund by StackyMcRacky (2.00 / 0) #33 Thu Jul 03, 2008 at 09:47:54 AM EST

the 6 months expenses.

[ Parent ]

: Ah. Got it. by ObviousTroll (2.00 / 0) #34 Thu Jul 03, 2008 at 12:01:52 PM EST

thx.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Troll Jr to college by sasquatchan (2.00 / 0) #7 Wed Jul 02, 2008 at 09:42:49 AM EST

?? From what you'd said about the boy and his schooling, I'm not sure college is right for him.

If it weren't for the iRACK situation, I'd say put him through boot camp and GI Bill.. Might help grow him up some.

Or have him work his way through, skin in the game makes you work harder, in theory, than a free ride from the folks.

I worked my own way through school. by ObviousTroll (2.00 / 0) #9 Wed Jul 02, 2008 at 09:57:08 AM EST

But college is so expensive now I can't imagine how he could - particularly since financial aid is based on our income, not his.

And I concur about the GI bill.

So, I'm trying to keep my options open. At this point, if he doesn't go to college, his sister might (in 6-7 years).

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Does he know by sasquatchan (2.00 / 0) #11 Wed Jul 02, 2008 at 10:02:59 AM EST

that at 18, when he's done with HS, he's going to be out of the house ? Either working at some job, learning a trade, or college ? Not that you can really motivate a teen, but make it clear the gravy train ends at HS graduation, and responsibility for himself comes up..

I will admit, my grandparents funded my education (they smartly bought ATT in the 30s/40s). So I don't have student loans to pay off. That's huge benefit when done with college about what career/job to take, if you don't have those payments. Granted, too many kids graduate college with loans, then go buy some new car (fully financed), and whinge that they can't go out for _ (movies, coffee, dinner, whatever) because of the loans.. So money management is an under-taught skill it seems.

[ Parent ]

I have made that clear. by ObviousTroll (2.00 / 0) #13 Wed Jul 02, 2008 at 10:14:08 AM EST

At this point though, he has no idea at all what he's going to do except "design video games" which, since he has no talent for, or interest in, coding I consider ridiculously unlikely.

Money management seems to be an even worse issue these days than it was for us - in my day, at least, they didn't give credit cards to college kids without jobs. On the upside, I've always given him an allowance, tied to chores, and expected him to pay for school lunches and such from that money, so he's had some exposure to the idea.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

"Design video games" by ucblockhead (4.00 / 2) #18 Wed Jul 02, 2008 at 10:48:59 AM EST

Lay out to pros and cons:

Pros: You get to play Soul Calibur IV on your break with your coworkers on a 52" HD TV.

Cons: Said break will occur at 11 pm.
----
_{ウセーバラケダ}
[ Parent ]

It's not like it's a huge field, is it? by ObviousTroll (2.00 / 0) #20 Wed Jul 02, 2008 at 11:17:35 AM EST

I mean, how many people in the US actually get paid to design (not code) video games? Maybe, hypothetically, 10k or so? With the vast majority on your coast, not mine?

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Not even that by ucblockhead (2.00 / 0) #21 Wed Jul 02, 2008 at 11:53:44 AM EST

I know for my corporate masters, it's at least 50% Japanese.

In all seriousness, "Design Video Games" is a bit like "Systems Architect". You don't start there. Most never get there. Most of the big names got there either by getting lots of money first then starting a company or in the good ol' days when it was possible for one person to create a game alone.
----
_{ウセーバラケダ}
[ Parent ]

: with the web, by garlic (2.00 / 0) #36 Thu Jul 03, 2008 at 05:29:26 PM EST

it's possible to do on your own now. Probably still require coding skills though.

[ Parent ]

you can have financial aid by StackyMcRacky (2.00 / 0) #29 Wed Jul 02, 2008 at 03:36:00 PM EST

based on his income, not yours. i'm not sure on the particulars, but i know you can do it that way. people on the financial boards i frequent talk about it all the time (i'm not in that situation, so I don't know much about it).

[ Parent ]

really? by LilFlightTest (2.00 / 0) #43 Wed Jul 09, 2008 at 11:03:06 PM EST

i couldn't. i'd have had to have myself declared legally independent, i think, and that was (if i recall) a really big pain in the ass.
---------
if de-virgination results in me being able to birth hammerhead sharks, SIGN ME UP!!! --misslake
[ Parent ]

: like i said by StackyMcRacky (2.00 / 0) #44 Thu Jul 10, 2008 at 09:22:17 AM EST

i'm not sure on the particulars since it doesn't apply to me, but "everybody" says there's a way to do it.

[ Parent ]

Navy is relatively safe by garlic (4.00 / 1) #35 Thu Jul 03, 2008 at 05:26:47 PM EST

as is air force. And I bet the coast guard is a similar setup on the GI bill and terms of service. They do SAR and Drug interdiction though.

[ Parent ]

: Coast Guard by ucblockhead (2.00 / 0) #39 Thu Jul 03, 2008 at 07:28:49 PM EST

During WWII, lots of well-off people got their sons in the Coast Guard on the theory that it'd be safe, not realizing that the Coast Guard would be in charge of running landing craft.
In today's world, though, it's probably pretty safe.
----
_{ウセーバラケダ}
[ Parent ]

Well by Bob Abooey (2.00 / 0) #10 Wed Jul 02, 2008 at 10:01:54 AM EST

For long term money the market might be a good investment now as there are some discounted stocks out there. Short term it's a bloodbath. I'm worth about $15,000 less than I was just a month ago thanks to the whole mess.

I've seen various CD specials for 4% to 5% round these parts but when you factor in taxes and the rate of inflation your real rate of return on those won't be diddly poo. Still, it's more diddly poo than you had before.

I've got all my short term monies in an ING account and it's around 3% which is still better than any bank savings will give you. There are other Internet Banks out there which may be offering more if you're willing to take a bit of a risk.

Warmest regards,
--Your best pal Bob

How's my blogging: Call me at 209.867.5309 to complain.

I wouldn't take advice from Bob by sasquatchan (2.00 / 0) #12 Wed Jul 02, 2008 at 10:04:44 AM EST

I mean, this is a guy selling plasma downtown to make ends meet at the ye olde rehabe center, unless he's moved in with the girl to sponge off her..

How's the job hunt going, bob?

[ Parent ]

If he could lose 15k last month by ObviousTroll (2.00 / 0) #14 Wed Jul 02, 2008 at 10:16:51 AM EST

he's got a lot more on the ball than I do.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

No kids no mortgage etc etc by Bob Abooey (2.00 / 0) #16 Wed Jul 02, 2008 at 10:25:18 AM EST

In fact I've got ZERO total debt.

I'd have to be some kind of idiot not to have a decent stash.

Warmest regards,
--Your best pal Bob

How's my blogging: Call me at 209.867.5309 to complain.
[ Parent ]

: Yeah, we never went deep into debt by ObviousTroll (2.00 / 0) #17 Wed Jul 02, 2008 at 10:33:34 AM EST

but we went through a bad stretch starting out where I kept wrecking cars. Very expensive hobby. Between that and the fact that SWHTL didn't work for 10 years (and only works part time now) we went through years where our life savings could fit in my wallet.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Okay I guess by Bob Abooey (2.00 / 0) #15 Wed Jul 02, 2008 at 10:22:53 AM EST

I'm getting lots of interviews but can't find anyone I really want to work for.

Warmest regards,
--Your best pal Bob

How's my blogging: Call me at 209.867.5309 to complain.
[ Parent ]

Keep it in the bank. by wiredog (2.00 / 0) #22 Wed Jul 02, 2008 at 12:01:40 PM EST

I can't think of any bond funds that are reasonably liquid and have a higher rate of return. Precious metals, perhaps, but you could lose your shirt if gold drops. Two years ago was the time to hedge on that...

I am so glad that I decided to pay down CC debt rather than invest in a 401k. Given market drops and inflation paying off high interest debt is the best possible investment right now.

Earth First!
_{(We can strip mine the rest later.)}

It's the safest bet. by ObviousTroll (2.00 / 0) #26 Wed Jul 02, 2008 at 02:53:29 PM EST

It just galls me that the interest rate I'm getting doesn't even equal inflation.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

US government savings bonds by garlic (2.00 / 0) #37 Thu Jul 03, 2008 at 05:32:25 PM EST

are at 4.5 - 5%. Have to hold them for 5 years to cash them in with no penalty, but if you do cash them in early (1 year to 4.9 years) it's only a 3 month interest penalty.

[ Parent ]

That's an interesting idea. by ObviousTroll (2.00 / 0) #40 Fri Jul 04, 2008 at 09:42:47 AM EST

I tend to think of savings bonds as things you give kids instead of cash, but that's a good point.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

I figure by garlic (2.00 / 0) #41 Fri Jul 04, 2008 at 03:49:55 PM EST

if the US government defaults, I'll have more serious problems then worrying about my savings.

http://www.savingsbonds.gov/ has a lot of info, and you can buy them online, and keep them online -- no paper bond to lose with your birth certificate necessary.

I get I bonds every month deducted from my paycheck. The best rate I have are for about a years worth of bonds over 2006 -2007 at 4.48%. The worst rate I'm getting is from a year prior at 4.08%.

Apparently there's a cap of $5000 purchased per year. There are other federal investment vehicles that you can buy more of, like T-bills.

[ Parent ]

: Again, thanks for the suggestion. by ObviousTroll (2.00 / 0) #42 Sat Jul 05, 2008 at 01:05:16 PM EST

I'll have to discuss it with SWHTL; but it's not a bad idea.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

House by houser2112 (2.00 / 0) #23 Wed Jul 02, 2008 at 12:58:02 PM EST

Is your house paid off? If not, why not pay down the principal on your house? If you need the money back, take out a HELOC. My mortgage and HELOC are both at the same credit union, making it easy to shuffle money around should I need it.

Have to think through the tax implications of that by toxicfur (2.00 / 0) #24 Wed Jul 02, 2008 at 01:03:14 PM EST

Mortgage interest deductions can be extremely beneficial toward tax time....
--
To Rollins lesbians are like cuddly pandas: cute, exotic, forest-dwelling, dangerous when riled and unable to produce offspring without assistance.-CRwM
[ Parent ]

it's all voodoo! by StackyMcRacky (2.00 / 0) #30 Wed Jul 02, 2008 at 03:39:29 PM EST

a big part depends on how long you've been paying on the house, with all the amortization stuff.

i'm not sure i'm paying more in interest than the standard deduction at this point.

but still, i think in OT's situation, he needs to do something other than pay off his house.

[ Parent ]

: depends on his mortgage rate by garlic (2.00 / 0) #38 Thu Jul 03, 2008 at 05:34:33 PM EST

and his expectations for needing the cash, and his comfortability with having the mortgage debt
if the rate's low enough though, the wisest decision is not to pay extra down typically.

[ Parent ]

No liquidity by ObviousTroll (2.00 / 0) #25 Wed Jul 02, 2008 at 02:49:31 PM EST

I need to have cash money on hand over the next 5-7 years as the kids get old enough to maybe, possibly, want to go to college - I just want to put the money someplace where it will get at least a little more than inflation. With CDs earning 2% and even on-line savings only earning 3%...

A year ago I would have put the money in Fanny Maes. Now? Not so much.

--
Has anybody seen my clue? I know I had it when I came in here.
[ Parent ]

Plenty of options by Phage (2.00 / 0) #31 Wed Jul 02, 2008 at 05:28:19 PM EST

Depending on the size of the lump you need to see a CFA. I'm a CPA so PM me for what little I know.

The Czar of Accounting. No Nit Too Small To Pick

Attention Financially Competent Infidels! | 44 comments (44 topical, 0 hidden) | Trackback