Expert: Paul Henneman - 5/1/2008

Question
Hello, I am a student at a junior college right now. I am planning on transferring to a university and I realize it is going to cost me a fortune. I put my savings($3,000) to a one year CD of 3% interest rate at a local bank. I was told I'm going to earn around 96 dollars in one year. I was wondering if there is any better i can invest my money for better rate. I thought about stock market, but I'm afraid that I would lose money on it.

Answer
Eva,
   Thank you for your question!
I think that you are doing the right thing. There are many different types of investments that could earn you more, but they are more risky. As you noted, there is a signficant chance that you could lose money.  If you were investing for a long period of time, this is of less concern because any loss in your investment would eventually turn around and become a gain. However, it sounds like you will likely be needing these funds in the next few years. A CD or money market account is really the safest thing to do for this.
   There are CD's out there with slightly higher rates of returns, for example www.INGDirect.com offers 3.3% return on their CD's currently. However, this is a very small difference, perhaps not worth your time to move everything over, and there is an advantage to working with a local bank as you have access to a branch.
   I am sorry I could not be of more help, but I do think that you are doing the right thing for now. After you get your university degree, your income will certainly rise substantially, and you should be able to  begin to save and invest for your future. At that time you should begin thinking about learning more, and talking to an expert to organize your finances.

I hope this helps! Please do not hesitate to follow up with me if I could be of any additional help,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com