Money question
 

If one were owe someone $2000, and has the money for repayment sitting around for a year (well, 13 months), what should be done with it for the time being so it earns more then a savings account?


Longer version:
I owe my mom about $2000 for my neon, and she doesnt want or need payment until next year. I've got the money sitting in my savings account making next to nothing. Is there some way that I can make any money (given the current market, and the relatively small sum) with this? Something secure, and if there's an emergancy, it could be withdrawn rather painlessly?

My econ class really was a dissapointment to me, I didnt learn much of anything. Anyone feeling like they've got a worthwhile suggestion, I'd love to hear it.

~Nate

Money Market accounts are pretty decent and you can open one for about $2000. You can write checks from it for $200 or more depending on who you have it with. I use Vanguard.

There are CD (certificate of deposit) accounts that have minimum deposits of $1K; most other accounts have higher minimums.

I had a 6 month CD 2 years ago. it yielded less than my savings account and couldn't be touched for 6 months. CD's become a better option for growth with more money invested and for a longer initial investment option.

I opened an E*trade savings account... at least it's earning me 3%. I am told a local bank has a 5% savings account, which I need to check out. That's good interest!

It is your debt. Pay off your debt. Repay your mother and have her put it in a money market account.

E-trade savings account is what I have too. It's free, the minimum balance is $1, and the interest is comparable to that of CD's without any of the typical CD restrictions. Currently it does pay about 3% which is still pretty impressive given the economic conditions, but when I first started it was paying 5%. Pretty damn good I'd say for an FDIC-insured savings account.

I agree with this 100%. What are you going to make? $50 or $60, pre-tax?

Pay off Mom, then do something nice for her as a gesture of loaning you the money in the first place.

She said she doesnt need or want it until the end of Febuary 2010 unless there's an emergency, and told me that I should do something with it until then...

Hence my post. 60 dollars at 3% is better then it sitting around doing nothing. E-trade savings accounts looking like the best option thus far. a CD which was suggested to me by a classmate looks like another one, but I'm getting mixed opinions. I know this amount of money isnt much to anybody, but if it yields enough money for a steak dinner or soda money during next years spring break I'd be happy.

~Nate

x2. How much is one's time worth to effect the transaction?

He'd probably lose money by not paying off the debt now, or putting it under the mattress.

His mom doesn't want payment now. Why are you guys insisting that he ignore his mother's request to delay payment until next year? She might have a good reason for her request, or she might have no reason at all, but it is nobody else's business what she wants done with her money.

If she truly doesn't want the money until next year, put it in a CD. If you think you might need to withdraw the money before the year is out, put it in an interest bearing account that allows withdrawal at any time. Sounds to me as if you have already scoped out those options.

ING or HSBC online savings account or money market. I posted a question last year about this also, and I went with a money market.

who said anything about his 'momma's bidness?:confused: but if they did, he shouldn't have made the post and solicited comment.

great, travel to the bank, convert cash into certificate of deposit, lose access to the money for emergences, receive 1099 next year, incorporate interest income into otherwise uncomplicated 1040EZ.......for $50 net profit. i just don't see the wisdom to that.

Gold and silver keep going up and becoming more scarce. Ebay seems to be the new market indicator. Looks like bullion silver has a 50% premium over spot, more for collector coins.

Ever since I discovered this Etrade savings account I don't do CD's anymore. They don't pay any better and you can't withdraw them early without penalties. Setting up the account is easy and it can be done all online. They'll just mail you something to sign after you set it up. Also think beyond these 2 grand that you have right now. Anytime you have spare cash in the future you can transfer it to this savings account and earn a little more.