Savings of less than a year

[StinkyCoach]

I currently put the property taxes due at the end of the year in a CIT savings account that yields 1.83%. This is the best return I've found for short term savings. Is there something better I'm missing? Since I'm just starting on the FIRE/Mustache way of life I don't have enough to put the entire tax allotment in a CD in January, so I set aside an equal amount each month for the end of the year.

Is there a better investment opportunity for savings of less than 12 months?

[inline five]

I have found bank bonuses far exceed the measly few % you'd make in a money market account.

[wbarnett]

I have found bank bonuses far exceed the measly few % you'd make in a money market account.

Great suggestion. This works particularly well if you have a payroll processing system that allows you to split your paycheck among multiple accounts. A lot of these accounts require very little money down, and only have to be open for 6 months total. You can make well over $1000 per year doing this.

[inline five]

I have found bank bonuses far exceed the measly few % you'd make in a money market account.

Great suggestion. This works particularly well if you have a payroll processing system that allows you to split your paycheck among multiple accounts. A lot of these accounts require very little money down, and only have to be open for 6 months total. You can make well over $1000 per year doing this.

Yep and I can even change my direct deposit online too. I made over $2,000 in just a single month this year alone. Very little out of pocket, maybe $13,000. And a big chuck of that was a $500 payout for a $10k deposit.

I have even considered opening up a business account (and getting a bonus) to send myself direct deposits to accumulate the rewards faster.

[StinkyCoach]

Sounds great. What if I can't get the minimum deposit? I saw the chase bonuses are for minimum deposits of 10,000/15,000/25,000 minimum deposits. That's well above what I need for year end taxes.

[inline five]

Some of mine were very low. Most wanted $1,500 to avoid fees. But min was lower like $500. I would put in $1,500 and do the min required. 5/3 was give them $500 they give you $250. But $1,500 to avoid fees. Suntrust was I think min of $100 to open but $1,500 to avoid fees and direct deposit $2000 and they give you $500. Also had to make 10 debit transactions, so I bought $0.48 tent stakes at Walmart 10x each for both accounts using the DIY checkout machines. All of the direct deposit money can be transferred out or withdrawn right away. Just follow the rules. It beats making 1.8% for an entire year and it beats working to make that money.

I tried to explain it to my in laws but they just can't wrap their heads around it. It's free money.

[StinkyCoach]

Some of mine were very low. Most wanted $1,500 to avoid fees. But min was lower like $500. I would put in $1,500 and do the min required. 5/3 was give them $500 they give you $250. But $1,500 to avoid fees. Suntrust was I think min of $100 to open but $1,500 to avoid fees and direct deposit $2000 and they give you $500. Also had to make 10 debit transactions, so I bought $0.48 tent stakes at Walmart 10x each for both accounts using the DIY checkout machines. All of the direct deposit money can be transferred out or withdrawn right away. Just follow the rules. It beats making 1.8% for an entire year and it beats working to make that money.

I tried to explain it to my in laws but they just can't wrap their heads around it. It's feee money.

Wow, that's awesome. When you say direct deposit, you mean your employer makes the direct deposit for you? I'm not sure I can have more than one DD (or even how often I can change my DD bank).

Thanks for the great info.

[inline five]

Some of mine were very low. Most wanted $1,500 to avoid fees. But min was lower like $500. I would put in $1,500 and do the min required. 5/3 was give them $500 they give you $250. But $1,500 to avoid fees. Suntrust was I think min of $100 to open but $1,500 to avoid fees and direct deposit $2000 and they give you $500. Also had to make 10 debit transactions, so I bought $0.48 tent stakes at Walmart 10x each for both accounts using the DIY checkout machines. All of the direct deposit money can be transferred out or withdrawn right away. Just follow the rules. It beats making 1.8% for an entire year and it beats working to make that money.

I tried to explain it to my in laws but they just can't wrap their heads around it. It's feee money.

Wow, that's awesome. When you say direct deposit, you mean your employer makes the direct deposit for you? I'm not sure I can have more than one DD (or even how often I can change my DD bank).

Thanks for the great info.

Some banks count certain actions as direct deposit, example credit card or debit card funding. There is a big long list online at the same places that list all these bank bonuses. But since I can change direct deposit online and even designate amounts to certain accounts I don't worry about it. Like I said I have started to investigate getting a business account and sending the direct deposit/ACH myself. Not sure on the fees. Still working on it. But I'll also get a nice bonus from opening the account, $750 last time I looked a few days ago.

[wbarnett]

Sounds great. What if I can't get the minimum deposit? I saw the chase bonuses are for minimum deposits of 10,000/15,000/25,000 minimum deposits. That's well above what I need for year end taxes.

That might be for savings accounts. The Chase checking bonus doesn't have a minimum as long as qualifying direct deposits are dumped in there regularly. I don't know the rules about posting external links here, but there's a great website that tracks credit card and bank account signup bonuses - doctor of credit. I've used three of their recommendations in the past year.

[Retire-Canada]

I currently put the property taxes due at the end of the year in a CIT savings account that yields 1.83%. This is the best return I've found for short term savings. Is there something better I'm missing? Since I'm just starting on the FIRE/Mustache way of life I don't have enough to put the entire tax allotment in a CD in January, so I set aside an equal amount each month for the end of the year.

Is there a better investment opportunity for savings of less than 12 months?

Presumably you are saving/investing for FIRE as well? If so how about you invest the money you are now setting aside for property taxes instead of saving it separately to get it into the market and then at the end of the year you divert sufficient funds from saving/investing the last few months to cover property taxes? That way the money doesn't need to earn anything and you don't have cash sitting on the sidelines for the whole year.

[StinkyCoach]

Presumably you are saving/investing for FIRE as well? If so how about you invest the money you are now setting aside for property taxes instead of saving it separately to get it into the market and then at the end of the year you divert sufficient funds from saving/investing the last few months to cover property taxes? That way the money doesn't need to earn anything and you don't have cash sitting on the sidelines for the whole year.

So as long as I don't withdraw more than I invested and the investment doesn't lose money, I'd be fine? No taxes or penalties?

[Retire-Canada]

So as long as I don't withdraw more than I invested and the investment doesn't lose money, I'd be fine? No taxes or penalties?

You won't be withdrawing anything from your investments - gain or lose in the market. You'll just divert money you would have invested into your property taxes at the end of the year. Rather than doing it at the start of the year. That way you'll have that money in the market earlier.

[moof]

So as long as I don't withdraw more than I invested and the investment doesn't lose money, I'd be fine? No taxes or penalties?

You won't be withdrawing anything from your investments - gain or lose in the market. You'll just divert money you would have invested into your property taxes at the end of the year. Rather than doing it at the start of the year. That way you'll have that money in the market earlier.

+1.  If you are saving at a prodigious rate it should only be a couple months of taxable contributions that have to be diverted at tax time.  I don't bother to do this myself, but it would only be 3 months of taxable contributions that would be diverted.  Heck, now that I am thinking about this I think I should change after this year's escrow cycle.

[StinkyCoach]

I see what your saying. Unfortunately I don't have the full amount of cash needed for the taxes unless I save a portion each month. Just starting the FIRE lifestyle.

[Much Fishing to Do]

Vanguard Prime Money Market has been gradually ramping up with interest rates and current sits at about 2.1%, its where I keep my lazy money I'll need for taxes later given I already have a Vanguard account and am satisfied given its probably almost keeping up with inflation, but agree there seems to be decent returns in bonuses out there if you're willing to look around and do the legwork

[AMandM]

Wbarnett, thanks for the non-link ;-)

[HBFIRE]

Currently using Heritage Bank high yield checking.  3.3% up to 25 K.  Was using Consumers Credit union at 4.6%, but they changed everything recently.

[StinkyCoach]

Thanks for the info guys. I look into these options.

[Linea_Norway]

You Americans are so lucky getting these bonuses for opening a credit card or bank account. Here in Norway we don't have that, although I recently did earn a 10$ bonus for using a new credit card for the first time. That bonus was not announced for in the advertisement.