This is not financial advice and, as it may soon be apparent, I know nothing about investing. This is just what I do with my money, and it’s worked out pretty well so far.
I keep the bulk of my savings in no-risk, insured, low-yield accounts. I add a little more to these savings every month. To prevent me from doing anything stupid, I set a threshold (just in my mind; not with any financial device) that the account can never go below. And as the account grows, so does the threshold. As an example, let’s say that the account has $11 at one point, and I set the threshold every $5. At that time, I can never let the account go below $10, but if I really want to, I can take out up to a dollar. If the account goes up to $17 at a later time, I cannot let the account go below $15. I like this system. The most savings I can lose is $5.
The only times I will be able to go below the threshold are when buying a house or a spouse. I wouldn’t even go below it to buy a car at this point. My retirement savings are not included in this discussion, but yes, I’m planning for that too.
For a while, I kept my savings in an online savings account, but recently the interest rate made sense for me to put a chunk of it in a CD. I don’t have to worry about being penalized for taking money out of it, because the amount put in the CD was all protected by my artificial threshold anyway, so it’s nothing I’ll want to touch. I’ve kept some out in my regular savings account in case a better rate comes along before this one-year CD is up.
Now of course not all of my money is savings. So what do I do with the rest of it? Well, first I spend it on monthly payments like rent. I also have miscellaneous non-monthly expenses, like gifts, travel, and car maintenance. But, even after all that, there’s still some left. It’s not always a lot, but I can have fun with it. I can decide to blow it on something that won’t turn into cash, like entertainment or gadgets. Or, I put it into high-risk, yet potentially high-yield investments.
Recently, I decided to go for a couple of high-risk investments.
First, when I was in Vegas to see Blue Man Group, I of course had to “invest” in some slots. They turned out to be high-yield at first, but also high-risk as when I reinvested what I earned, I didn’t get it back. No big deal; I walked out with about the same amount I walked in with. It’s a good thing I used a player’s card; a coin in/out statement is in the mail to help me prove losses for taxes.
With all the crazy financial stuff that’s going on right now, I got inspired by a thought from Mike and decided to throw some extra cash into a more socially acceptable form of gambling. Tonight, I opened up an account on E*TRADE. I was able to fund it instantly from my bank account, but unfortunately these funds won’t be available for investing purposes for four business days. Let’s hope the stock market freaks out just a little longer.
So we’ll see what happens in four days. After about five minutes of research, I know what I would buy tomorrow, but that may change over the next few days. After that, I’ll just let it sit and see if this crisis fixes itself. If it doesn’t, well, I can only lose what I put in, which is extra change anyway.
