Should I save or invest?

[jekajekalynn]

We're getting back a nice tax refund this year, and after we pay off some bills we're still going to have a nice chunk to fiddle with. (about 1k-2k after paying off some old debt)

We were planning on going to WDW next year, and I was wondering what is the best method of earning some sort of interest on our money?

I was thinking about starting a new cd since its been a while since I had one back when they were 3-4 percent, but jeeeeze...after 12 months at a minuscule interest rate they have now I would only have a WHOLE 12-15 dollars accrued on top of it.. Well that would be enough for a couple of meals at Cosmic Rays ...

I was thinking about doing some online investing, but that investing jargon stuff on Etrade might as well be written in Esperanto ..

So, what would be the best way to get some interest back on our money?

TIA!

 

[descovy]

Eh, I'm sure many other people will have smarter ideas...

But I would put it in savings. Yes, the interest rate stinks. My ING account is 1.25%... crummy.

But CD's aren't giving much either...

Most important to me though, is the money is "liquid" And it is safe from losing (won't go down)

Do you have a healthy emergency fund? Like 6-8mos of expenses? If you do, go agead and "invest." But for me (not there yet... more like 3 mos saved ) I am growing a little at a time in my savings before I do anything else. These times are just so uncertain, and you never know when you will need it!

 

[Golf4food]

For a year? Not much. Don't invest it (ie stocks), though. Stocks and mutual funds are LONG TERM, not a quick buck here or there - the risk is much too great, especially in the current economy. If you can't afford to lose it, don't invest it short term.

Either stick it in an online savings account or in a 6-12 month CD at whatever the best rate is that you can find, which won't be very good right now.

And beyond that, if you always get back a huge tax refund, for God's sake fix your W-4 witholdings and KEEP THAT MONEY IN YOUR PAYCHECK instead of giving an interest free loan to Uncle Sam. You want interest now but you COULD have been earning interest on it all year long. A $1,000 tax refund is $83 per month you could have kept, a $2000 refund = $166 per month, etc. If you do nothing with that money but put it into savings to earn a little interest you are doing far better than now. (And think how much easier it will be to payoff those Disney trips!)

 

[LuvOrlando]

I like CD's for regular folks. The main reason is regular folks NEED their money to be there for an emergency so as long as you are getting your CD from a FDIC insured establishment your money will be safe. I know interest income right now is pretty flat, but if you keep in mind that every incremental increase in potential earnings corresponds to an steeper increase in likelihood of losing it all, the smaller gains tend to look more appealing.

The only money that belongs in the markets is DISPOSABLE INCOME, as in money that you could easily throw away and not miss. If you could not afford to throw it away then safety should be your primary concern.