What savings should I open?

[EdMan2]

I just found this site. I'm 23, and just started my first real job. I'm trying to save as much as I can and I want to start putting away as much of my paycheck as I can. What is a good high yield savings account to open for someone who doesn't have a lot of money to contribute? I was thinking of opening the account with $500, or maybe $1000, then contributing between $200-$500 every month. So far here are the ones that have seemed promising, any new suggestions, or ideas?

Washington mutual savings + checking for 5.00%
Emigrant Direct
HSBC
ING

The HSBC one seems very promising, but it's almost April, and givent their slow transfer times would it really be worth it at this point?

[safari]

For lower balances like yours the difference of 0.5% is not worth the hassle. For example, if your balance is $1000, the difference between 5.0% APY and 5.5% APY is only $5 a year. You should pick an online savings account that provides the most features and convenience, in addition to a competitive rate. I can recommend GMAC Bank. They have quick transfers and offer free check writing and an ATM card with reimbursement of other banks' ATM fees. I've had an account with them for over a year and never had any issues. Their current rate is 5.1%.

[poundwise]

Check out the link in my signature for a comprehensive list.

Of those, I most often recommend Amboy Direct for persons who are new to utilizing an online savings. They have a simple set-up, direct interface, plus banking by phone, and good customer service. Add to that the fact that they have offered 5.25% APY for the last several months on balances of $1 or more and I don't think you can wrong with them.

Still, there are other good options as well.

Best wishes!

[jIM_Ohio]

I just found this site. I'm 23, and just started my first real job. I'm trying to save as much as I can and I want to start putting away as much of my paycheck as I can. What is a good high yield savings account to open for someone who doesn't have a lot of money to contribute? I was thinking of opening the account with $500, or maybe $1000, then contributing between $200-$500 every month. So far here are the ones that have seemed promising, any new suggestions, or ideas?

Washington mutual savings + checking for 5.00%
Emigrant Direct
HSBC
ING

The HSBC one seems very promising, but it's almost April, and givent their slow transfer times would it really be worth it at this point?

I would not "live to save". Having savings is a good thing... what are you saving for?

[threebeansalad]

Remember to consider the "bonuses" as well as the interest rate-- esp if aren't opening the account with a lot of money.

I'm very happy with ING. The interest rate (4.5%) is lower than others, but they offer you a $25 for opening a new account with $250 minimum, plus you get a $10 bonus for each person you get to open an ING account.

For me, these bonuses have more than made up for the lower interest.

I also have an Emigrant Direct account. I'm pleased with their service and interest rates, but they don't offer any direct bonuses.

[anonymous_saver]

I have accounts with ING, HSBC, and Emigrant.

I only have $1.00 sitting in ING, since they have a much lower interest rate. I am only keeping $1.00 in there in the chances that their rate raises significantly. The only benefit that I see from ING is that they have a nice looking website, easy to navigate.

I have most of my money with HSBC, but am switching it over in a few weeks to Emigrant. I do not like their website. There transfer times also much longer than Emigrant, so you have more days of lost interest. Also, interest is deposited not at the beginning or end of the month, it is deposited based on the day you opened the account. I don't like that.

After April 30th, I will have all of my money with Emigrant (except $1.00 with both ING and HSBC). I have enjoyed their phone customer service the best, and they consistently have had higher rates than most other accounts. I like their website as well.

Just my personal opinions! Congrats on the new job and on your savings goals!

By the way, do you have any debt? If so, what kind?

What are your savings goals? Emergency fund? Down payment? etc.?

[Aleta]

I have ING, Emigrant, and HSBC. Haven't had them that long to compare. I agree with others here to look at the bonus's given to you when you open up the accounts. Any referral money that I receive from ING, I leave it there in that account. The 4.5% isn't that bad and it's an easy account to open up. But, definitely look at the bonuses.

[fairy74]

We use Washington Mutual savings for our mini-EF and ING for our other savings accounts.

[EdMan2]

thanks for all of the advice. I don't have a real goal for the savings yet. I just know that once I pay off my CC debt of $1400 I am going to start having money accumulate in my bofa checking which serves me no good. I don't really spend that much so I just want to put it somewhere so it earns some good interest. It would be nice to have some money to put down on a car (although I don't need a new car), or maybe on a house in 7-10 years.

[omicron]

I got a notice from WAMU saying that the Statement Savings 5% may start to change around April 21st. Additionally all statements must be electronic starting June 1, otherwise they will convert your account to another low rate savings. Minimum balance is $400 for no fees Savings.

I like GMAC 5.1% MMA ($500 minimum balance). Fast transfers, good interface. But they got bought out recently by Utah Bank. Also GMAC's rate changes often.

IngDirect is 4.5%. No minimum.

[EdMan2]

I got a notice from WAMU saying that the Statement Savings 5% may start to change around April 21st. Additionally all statements must be electronic starting June 1, otherwise they will convert your account to another low rate savings. Minimum balance is $400 for no fees Savings.

I like GMAC 5.1% MMA ($500 minimum balance). Fast transfers, good interface. But they got bought out recently by Utah Bank. Also GMAC's rate changes often.

IngDirect is 4.5%. No minimum.

What about Amboy direct that poundwise mentioned? How do others like them? I don't want to deal with rates being lowered all the time, and would like to have fast transfers.

Is it bad to have/open many savings accounts at the same time? As in, will it negatively affect my credit score?

[jIM_Ohio]

thanks for all of the advice. I don't have a real goal for the savings yet. I just know that once I pay off my CC debt of $1400 I am going to start having money accumulate in my bofa checking which serves me no good. I don't really spend that much so I just want to put it somewhere so it earns some good interest. It would be nice to have some money to put down on a car (although I don't need a new car), or maybe on a house in 7-10 years.

Being young, I would mark some of this money for retirement. At age 23, even sending 5% of your income to a 401k, IRA or other qualified retirement plan (invested in equities) puts at a HUGE advantage to retirement saving. Time is the biggest multiplier, you money could compound for more than 40 years.

[EdMan2]

Being young, I would mark some of this money for retirement. At age 23, even sending 5% of your income to a 401k, IRA or other qualified retirement plan (invested in equities) puts at a HUGE advantage to retirement saving. Time is the biggest multiplier, you money could compound for more than 40 years.

yea ive been thinking about starting an IRA but as of yet i have no idea how to do that (time to google), but I have looked at online calculators for these and you're right, starting this early really helps a lot. I just have so many questions about it that I hadn't even considered it a possibility right away. For example, if I go back to school, can I still contribute to the IRA, and what if I'm not able to contribute due to school/or other financial reason....well u get the idea...the IRA seems further away than a normal savings so I was looking at the latter first.

[jIM_Ohio]

yea ive been thinking about starting an IRA but as of yet i have no idea how to do that (time to google), but I have looked at online calculators for these and you're right, starting this early really helps a lot. I just have so many questions about it that I hadn't even considered it a possibility right away. For example, if I go back to school, can I still contribute to the IRA, and what if I'm not able to contribute due to school/or other financial reason....well u get the idea...the IRA seems further away than a normal savings so I was looking at the latter first.

I would suggest looking at websites for any/all of the following:

T Rowe Price
Vanguard
Fidelity

They are three largest mutual fund providers in USA.

My suggestion would be to budget around $300/month to go into IRA and $100/month into emergency fund. You are not in a bad spot, so I would think you could do both without too much consequence. $3600 into IRA is $400 less than the $4000 yearly max for 2007, and the yearly max for 2008 is 5k.

The emergency fund would need to be around 4 months expenses. By the time you retire the IRA would need to be around 300 months expenses (25x expenses X12 months). Because the IRA needs to be two orders of magnitude larger, it deserves attention sooner rather than later.

A 23 yo could set aside 4k into IRA between ages 23 and 33 (11 years, $44k total). With a 10% return would have $1.2 M. Return was 26X the amount invested.

If same person waited until age 34 to start, then put in $4k for 27 years (34 until 61). Setting aside $112k total. With a 10% return that person ends up with $590,000. Return was 5X the amount invested. The end result is less than half as much, yet there was 3X the original amount invested.

Time is the biggest multiplier. Invest early and that investment wins out, all other things being equal, and in some cases, even with other things being greater.

[EdMan2]

I would suggest looking at websites for any/all of the following:

T Rowe Price
Vanguard
Fidelity

They are three largest mutual fund providers in USA.

My suggestion would be to budget around $300/month to go into IRA and $100/month into emergency fund. You are not in a bad spot, so I would think you could do both without too much consequence. $3600 into IRA is $400 less than the $4000 yearly max for 2007, and the yearly max for 2008 is 5k.

The emergency fund would need to be around 4 months expenses. By the time you retire the IRA would need to be around 300 months expenses (25x expenses X12 months). Because the IRA needs to be two orders of magnitude larger, it deserves attention sooner rather than later.

A 23 yo could set aside 4k into IRA between ages 23 and 33 (11 years, $44k total). With a 10% return would have $1.2 M. Return was 26X the amount invested.

If same person waited until age 34 to start, then put in $4k for 27 years (34 until 61). Setting aside $112k total. With a 10% return that person ends up with $590,000. Return was 5X the amount invested. The end result is less than half as much, yet there was 3X the original amount invested.

Time is the biggest multiplier. Invest early and that investment wins out, all other things being equal, and in some cases, even with other things being greater.

Thanks I'll definitely look into that.