APY, dividend?? best place for me to put a chunk of money??

dividend rate APY
3 months 1.14% 1.15%

dividend rate APY
3 months 1.39% 1.40%

Any ways, I got my tax check back and I was looking for a place to put my money for a few months to make a little profit off of it..

This is just what my bank offers for short (less than 6 months at a time), investments..

What is APY, and dividend rate?

Lets assume I put a $1,000 in.. would this be plan be a good idea?

What would I expect back at 3, 6 months at these rates?

thanks

fire-stick

aka Scott

fire-stick said:

dividend rate APY
3 months 1.14% 1.15%

dividend rate APY
3 months 1.39% 1.40%

Any ways, I got my tax check back and I was looking for a place to put my money for a few months to make a little profit off of it..

This is just what my bank offers for short (less than 6 months at a time), investments..

What is APY, and dividend rate?

Lets assume I put a $1,000 in.. would this be plan be a good idea?

What would I expect back at 3, 6 months at these rates?

thanks

fire-stick

aka Scott

Click to expand...

Hmm, not sure but I think if you put $1000 in for 3 months at 1.4% APR...not sure about APY...well $14 dollars divided by 4....$3.50 gain I think.

Basically, APR is Annual Percentage Rate... It is the "simple" interest.

APY is the Annual Percentage Yield rate including compounding (if any)...

For simplicity: Say you have 12% APR and the account is compounded every month:

$1,000 * 0.12/12 month period + $1,000 = $1,010.00 after 1 month
$1,010 * 0.12/12 month period + $1,010 = $1,020.10 after 2nd month
...
$1,126.83 after 12 months (12% compounded monthly)...

Now take the same account, but it is simple interest:

$1,000 * 0.12 + $1,000 = $1,120.00 after 12 months (simple interest 1 yr no compounding)

So, the difference between simple interest and an account that pays with monthly compounding is $6.83 after 1 year. Or, the APY of an APR of 12% return would be an APY of 12.683% (because of the 12 months of compounding--monthly in this case).

You can also have daily compounding, continuous compounding too, coupons where the interest is sent you every month but the principle remains the same, etc...

There are lots of financial calculators out there--you can just Google for the type of calculator you need and go from there.

Here is a simple savings calculator that lets you do the calculations over 1 year (or longer) time frames.

At least, this is the way I understand the answer to your question (I am not in the finance industry at all--just my lame understanding of the basics).

-Bill

Gold or Silver.

Similar question of course is - Can I make an investment that makes money faster than the combination of inflation x dollar devaluation x etc. at a very modest risk ?

If you think of one, let us know. :shrug:

The other similar question to ponder of course - Even if you don't care about return on investment, is there anywhere to put money that is risk free ? Sometimes the balance of risk and reward starts to look like a bank lock box.

gold went below 900 an ounce today, and so CNI is sold out of all eagle bullion coins at this moment. now is a good time to buy, but you have to call and inquire and hope they have some on hand to sell when you do...
ps -- don't sell if it goes down..

Honestly, for short term I would say keep your $1,000 in savings with your bank or pay off any debts you may have.

Its better to have a small chunk of cash like that on hand - esp. with the current job market, who knows what could happen - do you have three months mortgage/utilities & expenses in savings?

I say start thinking about investing when you have this base covered (three months of savings) at which point I'd tell you to find a decent broker who can point you in the right direction - depending on your age, savings and debt, in the next 6 months it could be a great time to invest for you or a wonderful time to invest for your children if your retirement is in good shape.

But again, get enough cash in savings to cover your *** for three months first.

bullfrog said:

Honestly, for short term I would say keep your $1,000 in savings with your bank or pay off any debts you may have.

Its better to have a small chunk of cash like that on hand - esp. with the current job market, who knows what could happen - do you have three months mortgage/utilities & expenses in savings?

I say start thinking about investing when you have this base covered (three months of savings) at which point I'd tell you to find a decent broker who can point you in the right direction - depending on your age, savings and debt, in the next 6 months it could be a great time to invest for you or a wonderful time to invest for your children if your retirement is in good shape.

But again, get enough cash in savings to cover your *** for three months first.

Click to expand...

I completely agree. If you are looking at short term gains from interest over just a few months at ~zero risk, then the "profit" you will end up with will be so small as to not even make thinking about it worth it. You might not even make enough to cover any kind of transaction fee if there is one.

If you have any kind of credit card debt at all, that is where it should go. If you have no debt, then just keep it in savings. I would expand on Bullfrog and say in these times, it's better to plan on 6 months expenses in savings. In other words, can you live only off your immediately available savings account cash balance for 6 months? 3 months is for normal times, recession and increasing unemployment will push the guideline out.

With today's interest rates the amount you'll make on $1000 in 6 months or a year is a joke. Not even worth putting the money in the bank IMO. Not even really worth it if you $10,000. Just keep it around as an emergency fund, or use it to pay off any debts you may have. Or better yet wait until the stock market bottoms out, and then put the money there. When bear markets start to recover you'll typically make 40% or 50% in the first year.

Intel seems like a good bet. I recall they seem to go down to five or ten dollars in bad times. They're at ~$14 now. When things turn around (hit bottom) I'd be tempted to jump on them.

BB said:

Basically, APY is Annual Percentage Rate... It is the "simple" interest.

APR is the Annualized Percentage rate including compounding (if any)...

Click to expand...

Actually, you got that backwards. APR is the annual percentage rate. It doesn't take monthy compounding interest into account. APY is the annual percentage yield. APY is the percentage rate you actually get if you leave the money in for a full year. If you leave your money in for less than a year, your percentage rate will fall somewhere between APR and APY since the money will still have some compounding interest. If you leave the money in for one month, your interest rate will match APR because there will be no compound interest. Annual Percentage Yield (APY) is the higher number, not Annual Percentage Rate (APY). If you have an APY of 5% interest, the APR would probably be above 4% but under 5%.

HoF,

You are correct--I had them backwards... Fixed APY and APR in bold...

Thank you,

-Bill

Open a savings account here at Emigrant Direct. They are currently paying 1.80% APY. Highly recommended.

jtr1962 said:

With today's interest rates the amount you'll make on $1000 in 6 months or a year is a joke. Not even worth putting the money in the bank IMO. Not even really worth it if you $10,000. Just keep it around as an emergency fund, or use it to pay off any debts you may have. Or better yet wait until the stock market bottoms out, and then put the money there. When bear markets start to recover you'll typically make 40% or 50% in the first year.

Click to expand...

+1

MARNAV1 said:

Gold or Silver.

Click to expand...

This is CPF darn-it. Push the flashlight backed securities! And when in doubt always invest in Ti.:nana:

Yeah your right, I didn't think about that!

Screw all the CD crap!! I've found FAR better returns with high-yield saving and checking accounts! EVEN before the economy started tanking.

Check out my post at:
https://www.candlepowerforums.com/posts/2865735&postcount=31

FNBO savings just sent a message saying the interest rate is now down to 2.15% APY - but their checking (WITH a no-restriction debit card, no less) has remained at 1.83% APY! (EDIT: They call their checking account, a BillPay account.) Both have interest that is compounded daily, to boot.

Check it out at:
http://fnbodirect.com

To make matters even better - their site works perfectly fine for people running Linux with Firefox! (A HUGE plus for me. )
(And even better with the Sxipper plug-in for Firefox.)

Heck, if your going to have money sit around in a checking account anyway and use your debit card regularly - why not have it earn 1.83% rather than a measly .1% or nothing at all???
That's the way I figure it.

Hoggy said:

FNBO savings just sent a message saying the interest rate is now down to 2.15% APY - but their checking (WITH a no-restriction debit card, no less) has remained at 1.83% APY! (EDIT: They call their checking account, a BillPay account.) Both have interest that is compounded daily, to boot.

Click to expand...

Hoggy, check out Presidential Bank. They currently have have 2.25% APY on their premier savings account. They only downside is you need $5000 to open which is why I did not mention it earlier. After you open it, there are no minimums.

Their internet checking account is a full checking account with bill pay and paper checks and yields 2.00% APY. However you $1500 to open and afterwards you need to keep a minmum balance of $1000 or they charge you a service fee. They also require a monthly direct deposit of $200.

If you meet the minimum requirements they are a great bank. They were actually paying around ~4% APY before this huge financial meltdown occurred.

RocketTomato said:

Hoggy, check out Presidential Bank. They currently have have 2.25% APY on their premier savings account. They only downside is you need $5000 to open which is why I did not mention it earlier. After you open it, there are no minimums.

Their internet checking account is a full checking account with bill pay and paper checks and yields 2.00% APY. However you $1500 to open and afterwards you need to keep a minmum balance of $1000 or they charge you a service fee. They also require a monthly direct deposit of $200.

If you meet the minimum requirements they are a great bank. They were actually paying around ~4% APY before this huge financial meltdown occurred.

Click to expand...

The only problem is - those damned minimums! Not to mention that their 2.25 will likely fall soon along with the economy.
Those minimums are hard to make for someone that's , like me.

With FNBO - there are NO minimums whatsoever!! (EDIT: ok, well maybe $1.00(One Dollar))
To me, that's the coolest thing!

And the fact that their savings interest rates fall as fast as they are, tells me in a strange way, that they're protecting what they can provide. I bet IGObanking is still at 2.5 and will remain that for a bit to come, and then finally fall to suit with FNBO. (What I consider over-extension at this point.)
EDIT: However - to be fair.. I noticed that BOTH FNBO Direct as well as IGObanking(A division of Flushings Savings Bank in NY) were rated as 4-star banks according to bankrate.com last I checked.

Kinda makes me feel better about staying with FNBO.
No minimums at all is a HUGE thing for me right now, and possibly many, MANY more people.


(But I'll keep Presidential in mind for when things get better - and they WILL. Thanks for the tip.)

I ran across an Email from Oct 2008 with this advice:

Subject: Investment advice..

If you had purchased $1000.00 of Nortel stock one year ago, it would now be worth $49.00.

With Enron, you would have $16.50 left of the original $1000..

With WorldCom, you would have less than $5.00 left.

If you had purchased $1000.00 of Delta Air Lines stock you would have $49.00 left.

If you had purchased United Airlines, you would have nothing left.

But, if you had purchased $1000.00 worth of beer one year ago, drank all the beer, then turned in the cans for the aluminum recycling
refund you would have $214.00.

Based on the above, the best current investment advice is to drink heavily and recycle.

This plan is called the 401-Keg Plan. :laughing: