The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: 51cent on February 28, 2018, 02:57:47 PM
-
I've built up approx. $50,000 in my business checking account and would like to make a little interest on it as well as get it out of the account that I write checks from in case of fraud.
Most of the great savings accounts I find that pay 1.5% give or take are for personal accounts only. For ease of accounting I don't want to borrow it personally and pay it back to get that rate.
Vanguard prime money market couldn't help me either.
I found a local bank that is 1.05%, but every 6 months I have to sign back up to keep that rate
A 7 month cd at that same bank is 1.55% so I could possibly do that I guess, but money market or savings would be preferred.
Am I missing and great ideas? Better rates out there?
Thanks!
-
I would avoid little privately owned banks. You don't want your CD to turn out to be some guy's Ponzi scheme like Stanford Financial Group, which actually had 50 offices.
https://en.wikipedia.org/wiki/Stanford_Financial_Group
If you want higher returns then you're just going to have to take more risk. The lowest risk bond/stock allocation from 1970 to 2010 was 28% stocks / 72% bonds. Here's the historical annual returns...
(http://investingadvicewatchdog.com/images/28-72-year.jpg)
-
Banks like Wells Fargo and Chase offer $200-$300 for opening up a business account with them. I believe the minimum is about $15k and you would need to keep the balance for 6 months. You can do much better than a high interest savings or CD if you open multiple accounts depositing just the minimum into each.
-
Great info Mighty.... I'll look into that as a possibility.
Thanks to you both
-
Is your business a C-Corp or an S-Corp?
What is the realistic need for the money in the next 6-12 months?
If it's an S-Corp/LLC, personally I would just withdraw the money, put it in a Fidelity Brokerage Account, then request check writing access and a margin line. What you invest in is up to you, anywhere from their version of a savings account, to brokered CDs, or stock/bond funds.
You can get to half of the account balance immediately through writing a check and depositing it in your business account as a contribution to your company. Sell the stocks/bonds/mutual funds and you can get to all the funds within a week.
There's no real impacts to taking the distribution unless you have to show net worth in the company to borrow money, but that's a different discussion I can help with.
Just some advice from the soon to be retired commercial banker..
-
I have $40K parked in two checking accounts drawing 3% interest.
$15K at Lake Michigan Credit Union: https://lmcu.org
Here are the criteria to qualify for the 3% rate in an LMCU Max Checking account:
- Sign up for e-statements.
- Minimum of 4 logins to online banking per month.
- Minimum of 10 debit card purchases per month.
- Direct deposit in your account at least once per month.
I have my LMCU account linked to Mint.com, which handles the minimal required logins.
On the first Monday of each month, I reload my Amazon gift balance
with ten purchases of $0.50 each for a total of $5.00 to satisfy my debit
card requirement.
I also transfer $5 each month from my primary checking account into LMCU via
an automated ACH transfer which counts as a direct deposit.
The entire process takes less than 10 minutes each month after you've
got your account set up. LMCU has a nice link on your account page to
confirm you've met all the requirements to qualify for the 3% rate.
I also have an account at Old Missouri Bank, which has similar terms to
LMCU, but pays 3% interest up to $25K with 12 debit charges per month.