I want more money.

August 6, 2006 8:08 AM

Looking for suggestions to put my savings at work and generate more money.

I have 59,000$ in a low interest fund at the bank at this moment, and I have 13,000$ coming in the next two months. Some of this money will have to go to taxes next April, roughly 30,000$ by my estimates. I am between jobs, but I am not particularly thrilled about getting a new one (i.e. working for someone else), and I would like to hear suggestions on ways to put this money to work and generate more money. Investing, entrepreneurship, hustling, anything goes. Though I don't really like the idea of investment. I want to get something done. For exemple, a friend bought two trucks and offers moving services. It seems to be working well for him. Would like to hear more ideas.

posted by anonymous to work & money (15 comments total)

How to ladder a CD portfolio
Laddering Certificates of Deposit (CDs) to Maximize Your Earnings

Unless you want to get really, really into the stock market, invest in a low-cost index fund that tracks a major stock market index. Money magazine's list of the best index funds for 2006.

Also, put some of your money in a Roth IRA; the earnings are tax-free.
posted by kirkaracha at 8:26 AM on August 6, 2006

Can we assume that all of your debt is paid off?
posted by k8t at 9:11 AM on August 6, 2006

If you don't already own a house, buy one.
posted by scarabic at 9:13 AM on August 6, 2006

At today's interest rates, $42,000 in a CD will generate enough money to pay for most of your smaller bills, such as phone and Internet service, as well as groceries, if you're willing to look for sales and avoid the deli and seafood counters.

As k8t noted, however, high interest rates will also work against you, and it is usually more advisabile to pay off higher-interest debt prior to investing the remainder.

I would advise against scarabic's suggestion that you purchase a house. If you're looking to invest in a new business venture, it's best not to saddle yourself with more debt than absolutely necessary.
posted by The Confessor at 9:33 AM on August 6, 2006

If you don't already own a house, buy one.

Be very, very careful of currently deflating housing prices. If you don't know anything about the housing market, DO NOT simply buy a house.
posted by SeizeTheDay at 9:55 AM on August 6, 2006

The CD ladder is an interesting technique, but CDs are yielding so little these days. A quick look around shows 2-4%. You can get 5% right now in a HSBC on-line savings, so there's a thought for at least some of your cash.
posted by xmutex at 10:08 AM on August 6, 2006

If you don't already own a house, buy one.

It's fashionable to claim that the housing bubble will come soon, and investing in a house is a long-term proposition. Plus, a $30k house couldn't be all that great.

Also, unless he's going to rent it out it's not going to give him any income.

And finally, if he ever wanted to move to a new city it would be a huge paint to sell, and he would probably get killed.
posted by delmoi at 10:28 AM on August 6, 2006

So you've got $72K in cash ($59K in hand, with $13K coming soon), and $30K due for taxes in eight months; in that case, you've really got $42K in cash. If these funds you're expecting are paid.

And you're out of work.

Without knowing more (i.e, your age, profession, where you live and family situation so we can zero in on living expenses, etc) don't even think of investing; stay liquid. The US economy is starting to slow down, interest rates are rising and that damn housing bubble (fashionable statements or not!) has to deflate / burst sometime.

I'm very, very nervous about these markets in general and the global economic outlook specifically. As K8T hinted at, if you're not totally debt free then pay off your debts first. Almost always, this will be the best investment you'll ever make.

If you don't have a passion for a business - and you don't because you're asking us - then starting one is not for you.

Build up cash and prepare to weather the storm. Sorry to sound pessimistic, but these are very, very unstable times economically.
posted by Mutant at 11:28 AM on August 6, 2006

CDs are not only yielding 2-4%. Bankrate's CD page shows 1-year CDs at 5.09%. 5-year is 5.02%.

And the most recent T-bill rates were all over 5%.

(That said, the liquidity of a high-interest savings account has a certain advantage over even laddered investments in T-bills or CDs.)
posted by jimw at 11:36 AM on August 6, 2006

Stay liquid but do not worry about the housing bubble unless you plan on buying a mansion in Malibu. Without going into a huge diatribe, you can live in a house for as long as you like. You won't be forced to sell to cut your losses, you can just live in the house. Stay away from things obviously overpriced, but if you want to purchase a house I would not advise against it. Houses, unlike most investments, will not disappear out of nowhere should their value plummet. I would warn against buying property as an investment but not in a case where you want some place to live and are not buying beachfront property in Miami.

That said it is best to keep your funds liquid until you have a source of income that will not be derived from capital. <$100k is nothing, people drive cars that cost $42k, if it was enough to live off of they'd invest it in those areas.
posted by geoff. at 12:41 PM on August 6, 2006

Since you're going to have a 30k tax bill, you need to have at least that amount in no-risk vehicle. I suggest putting the money in a money market fund. ETRADE is running a promotion right now, all new accounts earn 5.15% (5.28 APY) for the first 3 months. After that they earn according to their normal schedule which will depend on the current interest rates and your balance. So that $30,000 you owe Uncle Sam could earn you $1000 before you have to fork it over.
posted by justkevin at 1:59 PM on August 6, 2006

NetBank is giving out some sizable cash bonuses just for opening accounts. Using this link to open checking, money market, and a CD will earn you $175 on $2500 of deposits, and that's BEFORE they pay you interest. However, I'd move the money elsewhere after they pay out the bonus, which takes a month (except, of course, for the 1-year CD), like to EmigrantDirect, which is at 5.15% on a fully liquid savings account. So, that's what to do with the $30K you need for taxes.
posted by kindall at 4:20 PM on August 6, 2006

I'm considering buying a drive thru coffee stand. It's a little more than you have to spend but if you have a good location they make quite a bit of money.
posted by fshgrl at 4:31 PM on August 6, 2006

CDs are not only yielding 2-4%. Bankrate's CD page shows 1-year CDs at 5.09%. 5-year is 5.02%.

And the most recent T-bill rates were all over 5%.

(That said, the liquidity of a high-interest savings account has a certain advantage over even laddered investments in T-bills or CDs.)

I'm not sure I'd avise jumping into a 2-year CD that's paying an interest rate only marginally higher than the best MMAs.

Are you really willing to sacrifice 1 or 2 years of liquidity--especially when we are talking about <$100,000 and what sounds like a large portion of OP's worth--for a few tenths of a percentage point of APY?
posted by jckll at 8:18 PM on August 6, 2006

Follow up from the original poster:

Thanks everyone for the suggestions. OP here.

I purposely did not include much significant personal information originally because I wanted to keep it broad and somewhat generic and have all sorts of different answers. I am actually more interested in reading what other people would do with this kind of money in their own situation than what they would do if they were in my situation. I am looking for inspiration and diverse ideas about possible uses of this money in this thread, not financial nuts-and-bolts step-by-step how-to's tailored to my situation, though that too is appreciated and informative.

But for what's it worth, I am debt-free, do not own a house and this money is indeed most of my total worth. I am 25 years old.

Thanks again!

[e-mail]
posted by jessamyn at 4:59 AM on August 7, 2006