Anyone have a CD account or something similar to grow money?

**Mes T** · 09-19-2010 09:51 AM

So I have about $1,000 that will just sit there and shrink in value unless I do something about it. Thinking of opening a CD account with that money, possibly for several years, and having it grow.

A friend of mine opened a retirement account at about age 22 so that years down the line she'd have money, but I don't know, is a CD account maybe more beneficial?

**Amber** · 09-19-2010 09:55 AM

Do you want to take risk or do you just want to get a 3 or 4 percent off of it? I opened up a Roth, which is an after tax account. But that is the market. I should invest in some CDs but not sure I want to tie down my money right now.

But what you would probably would do is tie it into a CD for 3 or 6 months at a time and then keep taking the money out and putting it into another one. That probably sums up all I know about this stuff. LOL

**Mes T** · 09-19-2010 10:17 AM

I thought it was possible to tie it down for like years with a CD? I'd opt for that option if I could.

**WildChild** · 09-19-2010 10:24 AM

When I worked in financial services, we called CDs certificates of disapointment or certificates of depreciation. When you look at what inflation has averaged a year over the last 20 years, they barely break even. Better than sitting in your mattress or a savings account. I'm no longer licensed and can't advise you but I would look at a Roth IRA, they have a lot of advantages.

**LanaBear** · 09-19-2010 01:15 PM

I agree with WC... I'd look more into a Roth rather than a CD. We've got 401k's and I've been tempted to pull them and put them towards a Roth, but the penalty sucks, plus as of right now, I've got employer match on my 401k contribution, but I've taken big hits on it too. My kids are each set up with 529's.

Although, these days, I think just stuffing the money in your mattress is more beneficial.

**rcoreyus** · 09-19-2010 10:59 PM

Hm, I'm going to have a very different suggestion. $1000 isn't going to make a lot of difference in the future - even if you invest it well. I think you should either:

1) Use it for something really fun and memorable that you wouldn't do otherwise. Don't fritter it away on lots of little things - go skydiving, or something you will remember for the rest of your life.

or

2). Keep it as an emergency fund to help you progress in your education and career. Lots of times you will find you suddenly need money - car broken down and need to get to work, etc. Use this money in an emergency when it really counts.

**p3375** · 09-20-2010 02:31 AM

Yeah, I agree with rcoreyous - and would lean toward door #1

go learn / experience / do something you would not have done otherwise. That's just as much an investment as socking the $ away somewhere. And it may have much greater dividends..
Pat

**sourpuss** · 09-20-2010 07:22 AM

Mes is already traveling the world and doing all kinds of memorable things, so we need to hand it to her on that one.

I have an IRA. I think it's just a standard one, not sure. I used to do the money market accounts, but it was such a hassle filling out all the paperwork, etc that the $32 or whatever it got was so not worth it.

**WildChild** · 09-20-2010 07:36 AM

Money markets are only appropriate if you need the funds very safe and ready access - the safer they are the less earning potential. Certainly they have their place but if you are looking for long term gains, they aren't where you want your money.

There are so many resourses, check out Suzie Orman, she has her head on straight.
And do look at Roths, they offer many advantages that regular IRAs don't. The general rule of thumb is to pay down your debt, build an emergency fund (this will keep you from going into debt when something unexpected happens) then start saving for retirement. The younger you are when you start, the less you'll need to put away each month to have a good fund. Plan ahead, if you think you'll want a new car in two years, open a mutual fund or some sort of account for that and start contributing. That will help you avoid impulse buying.

**Mes T** · 09-20-2010 08:40 AM

Hmm. Would just... putting money away religiously into a savings account every month pretty much have the same effect? And maybe be a little more convenient if I end up needing it for some emergency, it'll be easy to withdraw.

I'm currently between jobs so I guess first the smart thing to do would be to figure out how much money I'll have left, or "sitting there," after I've used my monthly income for whatever it is I need.

I'll look into the Roth, thanks!