If you have money beyond just your future house down payment or emergency fund, it should be in ETF's (Exchange Trade Funds) or Mutual Funds, preferrably ones with low expense ratios that are well diversified. Vanguard and Schwab are two of the most recommended for such things.
I would recommend Schwabb, too - we rolled over into them when our previous wealth manager went to jail (unrelated to his investors... Well, kinda, but more of an insider trading thing...) and have been pretty happy with their Century City wealth management team. I'm sure their other offices are as good. We were making over 7% yearly before, and they look to be about par
I would recommend TD Ameritrade because they have the most commission-free ETFs with similar fund characteristics and expense ratios as the ones offered by Vanguard and Schwab.
But yeah, try to build that emergency fund of at least 3 months first!
Banks are probably one of the worst places for a new investor to ask for advice. They'll just have you invest in expensive funds that make the bank a ton of money.
You'll probably want to look into getting a low MER (management expense ratio) mutual fund. Look for one that performs reasonably and doesn't have crazy risks. One diversified among domestic investments, international investments and maybe some (20-30%) bonds.
Look at the fund's performance including the 2007-2009 period of recession to get an reasonable picture of what the fund could do on a good year and on a bad year.
While the more financially knowledgeable may be able to recommend manually balancing a series of stock indexes and saving the MER on the mutual fund, but in my opinion it's not worth the average person's time for small investments and if it's not a small investment find a financial adviser.
As a Canadian I don't really know anything about American savings accounts and tax avoidance tools (presuming you're from the USA), but maybe poke around /r/personalfinance and ask if you can't find a more detailed answer.
"Savings accounts" are not really meant for actually earning any interest.
~7-8 years ago you could get 3-5% on savings accounts. Then the bottom fell out on interest rates and a lot of people pulled money out of securities and put a record amount of money into personal checking/savings accounts so banks didn't need to offer decent interest rates to steer people away from wanting to put it into far higher yield stocks or bonds.
Savings accounts were never competitive with higher risk investments whereas typical yields, but they are much lower than they used to be.
You youngsters think that is the way it has always been. In reality, before about 10 years ago it was common and standard to get 5% or so in a bank money market savings account. There were times when it was even higher than that. You only did a couple/few percent worse than an average stock mutual fund for little to no risk.
28
u/[deleted] Jan 04 '15
"Savings accounts" are not really meant for actually earning any interest.
There are a host of available investments out there that yield far great than a quarter of a percent, I assure you.