Expert: Paul Henneman - 7/14/2007

Question
I am a sophomore in college and just got a job at a bank. I was wondering who would be the best people to talk to about where to and what to start saving or investing money--the bank people or someone else.  I'm not necessarily looking for a retirement fund rather than a place to put extra money that will be fairly liquid, but will still earn a return.  

Thank you for your time
Brian

Answer
Brian,
  Thank you for your question! If you are not looking for a retirement fund, there are some simple solutions for setting up a place to save.
  The two that I favor are either a money market account or a certificate of deposit (CD).  A money market account works essentially like a savings account, but does earn you a small amount of interest. You have full access with an atm card and/or checks. The interest that these types of accounts pay is small, usually around 3 to 4%. That is just about enough to offset inflation. But, your savings will be safe and easily accessed.  www.NetBank.com offers good money market interest rates.  Be sure that the bank is FDIC insured, so that your deposits are insured by the government.
   A CD is a bit different in that the returns it pays are higher, usually around 5%, but you can't access the funds for a period of time. You can purchase CD's for a term, usually lasting from as short as a few months, to as long as a few years. Usually six month or one year CD's are the most efficient and pay the highest interest. However, if you put your savings into CD's, you will not be able to access them without stiff penalities. This can work if you buy perhaps 6 month CD's and are fairly sure that you will not need the funds during that time.
   There are other options, too much information to list here. I do strongly recommend that you pick up a copy of "Investing for Dummies", it is available at most major bookstores and amazon.com  This one book will give you a basic understanding of most forms of investment so that you can make an informed decision on what is best for you.

I hope that this is helpful! Please do not hesitate to follow up with me if I can be of any further service,

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