Easy savings in 2007
Note: Information reflects 2006 online banking rates.
If you're trying to build a nest egg in '07, some of these links may help.
The Simple Dollar has a great post detailing what happens to your money if you saved $20 each day and deposited in an online savings account. They're calling it the Andrew Jackson plan (because he's on the $20 bill). They calculated that by the end of 2007, you would have saved and earned a total of $7,435.99. The post tracks the progress over the months and shows compound interest in action (without the confusing math).
Amy offers some tips for choosing an online-only savings account. At this very moment, Emigrant Direct and HSBC Direct are both offering 5.05%. ING Direct only offers 4.50%, but they do have a $25 sign-up bonus if you're referred by a buddy. (If you don't have a buddy, e-mail firstname.lastname@example.org and we'll hook you up.)
Bankrate has an article on great places to park your cash. They discuss your choices, comparing online-only savings accounts, CDs, and money-market funds. It's a good primer if you're looking to start saving for a rainy day (don't touch money, but must be fairly liquid).
I just opened up an ING Direct account. It took five minutes. I signed up for ING because of the $25 refer-a-friend bonus. But I may go with HSBC for the higher yield after I've made the ING bonus (like the Simple Dollar recommends).
Setting up automatic transfers from my checking account on payday has helped me maintain a healthy rainy day fund. I started doing it when I noticed that I could spare $50 every two weeks and not feel too much pain. Paying my savings first actually helps me to get what I actually want — bigger ticket items that I can afford because I didn't spend that money on stupid crap. $5 here and there goes by pretty fast.
Even if you don't go with one of the high yield online-only savings accounts, I'll bet you can setup automatic transfers to a savings or money-market account with your current bank.
Disclaimer: The links and mentions on this site may be affiliate links. But they do not affect the actual opinions and recommendations of the authors.