Stupid interest question!

[SteveD2]

I've never been very good with math, or money. I rarely save any.

Right now I've got $1200 just sitting in my bank account that I don't want to spend, it's extra insurance money from when I wrecked my jeep, and it's going towards a newer jeep this summer. Since it's just sitting there, I might as well put it in a savings account right?

Dumb question:
Lets say the savings account is giving 2% interest on $1000. Does that mean it would earn $20 every month? That doesn't sound right to me....

 

[wwillson]

quote:

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Originally posted by ZmOz:
I've never been very good with math, or money. I rarely save any.

Right now I've got $1200 just sitting in my bank account that I don't want to spend, it's extra insurance money from when I wrecked my jeep, and it's going towards a newer jeep this summer. Since it's just sitting there, I might as well put it in a savings account right?

Dumb question:
Lets say the savings account is giving 2% interest on $1000. Does that mean it would earn $20 every month? That doesn't sound right to me....

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It would be closer to $20 every year. There are better vehicles to invest in than savings accounts. Your money won't be as liquid, but it will certainly grow faster.

 

[Not the Autorx Frank]

Ahhhhhhh. That would be $20 per year per 1K

 

[SteveD2]

quote:

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Originally posted by wwillson:
It would be closer to $20 every year. There are better vehicles to invest in than savings accounts. Your money won't be as liquid, but it will certainly grow faster.

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That's what I thought.

Is there anything that would be worth putting $1200 into for about 4 or 5 months?

 

[greencrew]

Not in 2004, that's the down side of low interest rates.

I was shopping at the grocery store with my wife today, where there is a bank in the store. There was a sign advertising a special saving with 1.5% interest rate. That's close enought to zero that you might just as well call it zero. Keep the cash liquid and don't worry about it. There's more money involved in the purchase of a jeep, and timing can be a factor in the decision.

 

[msparks]

quote:

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Originally posted by ZmOz:
That's what I thought.

Is there anything that would be worth putting $1200 into for about 4 or 5 months? [/QB]

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No, only thing would be either a money market account, a 6 month CD, or just a savings account.

If you have 3-5 years I would recommend then Balanced fund or Bond fund that pays a good dividend.

 

[ALS]

I put extra money in my money market fund.
JTP. It has been paying me a little over 8% interest. Although it has jumped 5 to 6% in value it never goes over 7% and bounces up and down a lot even negative to what I paid per share. I leave money there because it pays 8 plus percent in interest and that is a lot more than the bank pays. If your interested don't buy in until it drops to around $15 or less.

 

[tom slick]

the rates they give you are annual percentage rates. so as mentioned above it would be about $20 per year. most savings accounts are paying less than 1% right now. CD's are making about 2.5-3% if you have a 3 year CD. money markets are not paying crap right now either.
Here is an interest calculator