| Posted By |
Message |
|
|
Savings acct question
What’s the difference between an IRA, money market and CD? For the twins they have about 7k in a savings acct linked to our account. This is money they got from their christening, birthday and then some money we put in. What is the best option? I don’t necessarily want to put into two separate 529s in case they don’t go to college but ideally this will be used for college if they go, if not when they are 18, they can have the money. They are 16 months old and the account has been open 15 months and maybe earned like $7 in the past 15 months...
Message edited 5/28/2018 11:48:09 AM.
|
Posted 5/28/18 11:42 AM  |
| |
|
Long Island Weddings
Long Island's Largest Bridal Resource |
NervousNell
Just another chapter in life..
Member since 11/09 54921 total posts
Name:
..being a mommy and being a wife!
|
Re: Savings acct question
An IRA us a retirement acct. They wouldn't be able to touch that until they are in their 60s.
A CD is a savings acct where you get a slightly better interest rate for locking the money in for a set term. You can then take it out or renew for more time.
I am not sure what a money market acct is. I have heard of it but never had one.
|
| Posted 5/28/18 11:48 AM |
| |
|
MommaG
Yay Spring!
Member since 5/05 5133 total posts
Name:
Gloria
|
Savings acct question
A money market account is like a checking account but with restrictions and a higher interest rate. I believe with my mm account, I can only write maybe five checks per month and they have to be at least $250 per check. I believe it is meant to help you manage your money and save for big expenses, instead of writing checks for everything.
|
| Posted 5/28/18 2:03 PM |
| |
|
|
|
Re: Savings acct question
Posted by MommaG
A money market account is like a checking account but with restrictions and a higher interest rate. I believe with my mm account, I can only write maybe five checks per month and they have to be at least $250 per check. I believe it is meant to help you manage your money and save for big expenses, instead of writing checks for everything.
Thanks! The money is actually not going to be touched it’s my kids money. I just want to be sure that it can be used for college. I don’t want the 529 just in case they don’t go, I don’t want the penalties.... so only time it will be used is to pay tuition for college
|
| Posted 5/28/18 2:43 PM |
| |
|
hmm
Sweet
Member since 1/14 8012 total posts
Name:
|
Savings acct question
CD's are good, once mature you can roll over and decide what you want to do with the $$. Credit unions have some of the better %
|
| Posted 5/28/18 4:03 PM |
| |
|
|
|
Re: Savings acct question
Posted by hmm
CD's are good, once mature you can roll over and decide what you want to do with the $$. Credit unions have some of the better %
Good to know! We bank with BFCU
|
| Posted 5/28/18 5:17 PM |
| |
|
hmm
Sweet
Member since 1/14 8012 total posts
Name:
|
Re: Savings acct question
Posted by TwinMommyToBoys
Posted by hmm
CD's are good, once mature you can roll over and decide what you want to do with the $$. Credit unions have some of the better %
Good to know! We bank with BFCU
check out a few. I found NEFCU was better then Island Crd, :)
|
| Posted 5/28/18 6:28 PM |
| |
|
CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
|
Re: Savings acct question
Posted by TwinMommyToBoys
What’s the difference between an IRA, money market and CD? For the twins they have about 7k in a savings acct linked to our account. This is money they got from their christening, birthday and then some money we put in. What is the best option? I don’t necessarily want to put into two separate 529s in case they don’t go to college but ideally this will be used for college if they go, if not when they are 18, they can have the money. They are 16 months old and the account has been open 15 months and maybe earned like $7 in the past 15 months...
IRA is an Individual Retirement Account and can only be funded with earned income from that individual so unless your twins are working, they won't be able to use an IRA
Money Market is like a savings account but is a mutual fund which strives to price each share at a dollar at the end of each day. Tends to be very conservative and does not earn much interest and the interest rate is variable. Most have no surrender fees are minimum length of deposit
A CD is a Certificate of Deposit were the deposit held for a term whether it be 6 months, a year, etc. The interest rate is known at the time the CD is purchased. If you break the CD, you will be charged surrender charges and receive interest prorated.
Message edited 5/30/2018 8:21:10 AM.
|
| Posted 5/30/18 8:20 AM |
| |
|
|
|
Re: Savings acct question
Posted by CookiePuss
Posted by TwinMommyToBoys
What’s the difference between an IRA, money market and CD? For the twins they have about 7k in a savings acct linked to our account. This is money they got from their christening, birthday and then some money we put in. What is the best option? I don’t necessarily want to put into two separate 529s in case they don’t go to college but ideally this will be used for college if they go, if not when they are 18, they can have the money. They are 16 months old and the account has been open 15 months and maybe earned like $7 in the past 15 months...
IRA is an Individual Retirement Account and can only be funded with earned income from that individual so unless your twins are working, they won't be able to use an IRA
Money Market is like a savings account but is a mutual fund which strives to price each share at a dollar at the end of each day. Tends to be very conservative and does not earn much interest and the interest rate is variable. Most have no surrender fees are minimum length of deposit
A CD is a Certificate of Deposit were the deposit held for a term whether it be 6 months, a year, etc. The interest rate is known at the time the CD is purchased. If you break the CD, you will be charged surrender charges and receive interest prorated.
Thank you! My husband has a federal pension, and he has 2 401k accounts and I have a 403 B through work that we contribute to, both around 6%. I want my twins money to at least earn something so if they do go to college we aren’t working 5 jobs to pay for it. We have a regular savings attached to our account and transfer money monthly to it. My husband made an appointment with a financial planner to see what our options are! I tend to be more conservative with money investments in that I don’t want to see what I have be lost in the market
|
| Posted 5/30/18 8:49 AM |
| |
|
Eunyboo
<3
Member since 7/12 4376 total posts
Name:
E
|
Re: Savings acct question
If you're adding money in, I would create a 3-5 year-CD for more than half of it and then a building CD for the rest so you can continue adding in. For a building CD, you can add funds but not take them out and it's usually about a year or so. Check the rates though. (For example, I just looked at Island's rates and the rate is the same right now for a 30-month or 60-month CD. I worked at a CU for 5 years so I'm pretty well-versed in CDs if you have any other questions!
|
| Posted 5/30/18 10:22 AM |
| |
|
CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
|
Re: Savings acct question
Posted by TwinMommyToBoys
Posted by CookiePuss
Posted by TwinMommyToBoys
What’s the difference between an IRA, money market and CD? For the twins they have about 7k in a savings acct linked to our account. This is money they got from their christening, birthday and then some money we put in. What is the best option? I don’t necessarily want to put into two separate 529s in case they don’t go to college but ideally this will be used for college if they go, if not when they are 18, they can have the money. They are 16 months old and the account has been open 15 months and maybe earned like $7 in the past 15 months...
IRA is an Individual Retirement Account and can only be funded with earned income from that individual so unless your twins are working, they won't be able to use an IRA
Money Market is like a savings account but is a mutual fund which strives to price each share at a dollar at the end of each day. Tends to be very conservative and does not earn much interest and the interest rate is variable. Most have no surrender fees are minimum length of deposit
A CD is a Certificate of Deposit were the deposit held for a term whether it be 6 months, a year, etc. The interest rate is known at the time the CD is purchased. If you break the CD, you will be charged surrender charges and receive interest prorated.
Thank you! My husband has a federal pension, and he has 2 401k accounts and I have a 403 B through work that we contribute to, both around 6%. I want my twins money to at least earn something so if they do go to college we aren’t working 5 jobs to pay for it. We have a regular savings attached to our account and transfer money monthly to it. My husband made an appointment with a financial planner to see what our options are! I tend to be more conservative with money investments in that I don’t want to see what I have be lost in the market
I would keep a small percentage of their money in something liquid like a savings account. However, long term, you want something that will grow. With current interest rates, you will be losing money by locking in too much in a CD or money market as the interest rate will not outpace inflation and inflation will eat away at the purchasing power. In addition, all bets are on 3 rate increases this year by the fed.
NYS 529 has an age based investment option through Vanguard so it's very inexpensive. You don't have to make either twin the owner (via UTMA or UGMA) so you can use the benefit for either child or another beneficiary at some point. And the qualified expenses have become more liberal. In addition, if you are not taking a tax credit for the contribution, you can withdrawal the contribution at any point without consequence. The earnings are would could possibly be subject to the 10% penalty and income tax.
Message edited 5/30/2018 12:02:31 PM.
|
| Posted 5/30/18 12:01 PM |
| |
|
