I think it was 1 penny dividend last time I checked. I may to not know something everyone else knows

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Do you qualify for a Roth IRA? I would want to max that out before putting my investments in taxable accounts.

This is for my roth Ira at Vanguard

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When you guys say high yield savings, are we seriously just talking about like 0.8% right now?

Edit: Because, if so, I don't see the point. Why don't I just do a money market fund?

Yes. My "high yield savings" is .84%. Money market funds are generally at about .01%. Have you found one more than that?

I don't know what you mean by "generally at about 0.01%". Money market funds don't give a fixed rate; they invest in extremely low-risk things like short-term bonds and short-term corporate debt, and they try to avoid ever losing money at all costs--at the expense of taking the gains that typically come with higher-risk strategies, obviously.

Since they do involve some tiny amount of risk, they're generally expected to perform better than savings accounts. During the financial crisis, this risk averseness led most of them to basically earn 0%--as opposed to continuing to pay some fixed interest rate like a savings account or losing money, like most higher-risk funds did.

ok did you fund it with 6200 though? because roth ira limit for this year is 5500.

my vanguard money market account has returned .02% over the past year. my ally savings account returns .84

Noah, trying not to lose money = .01%. My Fidelity money market account is currently at. 01%. Is there one out there that you are aware of that earns better than .84%? If so, please post it. I'm not trying to be difficult or anything. I'd really like to know what it is. My guess is that you simply don't understand how this works.

noah,

yeah i think you're confused bro.

my "high-yield" savings is at 1.0% atm.

I'm not confused. Money market funds are extremely risk-averse mutual funds. They don't return a fixed amount; they return whatever amount they happen to earn minus expenses, just like any mutual funds. What makes them different from other mutual funds is that they are incredibly risk averse, and therefore typically pretty low yield.

They will not always earn more than a high-yield savings account because they have risk--the amount that they earn in a given years varies. However, they are generally expected to return more than a high-yield savings account on average.

This is actually one of the first sentences in the Wikipedia article about them... it's basically just their definition....

i'll stand corrected on the definition, but it's a red herring. there's no reason to invest at 0.01% with a tiny amount of risk when you can get 0.8%+ with an even tinier amount of risk.

to answer your original question -- what's the point? fdic-insured liquid savings is the best option for low-risk, short timeline needs.

It's not "investing at 0.01%"... you invest in a mutual fund that will earn an unknown amount of money. Recently, it has earned 0.01%. That does not mean that that is what you will earn.

a money market fund's yield isn't likely to spike up in the short-term to reward your patience. looking at yields for vanguard's mm fund, you have to go back ~5 years to see a yield higher than 0.8%. if the interest rate environment changes, you'll have plenty of time (and basically no penalty) to switch back to a money market fund.

Five years ago is when the financial crisis hit. That's a totally unfair metric.

i was just using it to illustrate that money market funds, unlike volatile instruments such as equities, don't move all that fast. you won't miss out on a big interest payment because your money was on the "sidelines" in a savings account.

can you lay out what you see as the advantage of holding a money market fund instead of high-yield savings?

ok i guess you said it:

that's fine, but it's not the case right now, so i see no reason to prefer the mm now.

They invest in extremely low risk things, but they can break the buck, like with the Reserve Primary Fund in 2008. After it broke the buck, some of that money was tied up for years, depending on how much you had invested.

The fed had to backstop money market funds to the tune of $50 billion in the crisis due to fear contagion.

Noah,

You still seem confused. It is true the money market funds are mutual funds that can have altering performance (just as a savings account's interest changes). And it used to be the case that they offered higher yields than bank accounts. However, the financial crisis of 2008 changed things. Interest rates went so low on T-bills and short-term CDs (what money funds primarily invest in) that the yield on money funds was actually less than the expense ratio. It costs more to manage these funds than they can make in yield since short term interest rates are near 0%. So now money market funds pretty much universally yield near 0 while bank accounts can pay more. My brick and mortar savings account has .25% and my online savings has .84%.

I can't think of one compelling reason to choose to invest in a money market fund over a high yield savings. Except for the rare case of 2008 when they broke the buck, their price stays constant (like a savings account). If their yield goes above the interest rate on savings accounts, then move the money to a money market account. But that will probably be a few years before that happens (if not longer).

Edit: one reason to prefer money market funds would be if you had more than the $250,000 for the FDIC limit. Money funds are safer for multi millionaires in that sense. Are you talking about depositing more than 250k? If so, yeah, a money market fund is probably the way to go after the first quarter mil.

CDs tho

I put 3k in January or February for 2012. I put 3k into 2013 this week.

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Im about to set up a bank account in Hongkong and am looking at over 1000 different mutual funds available. Im basically illiterate in those things and there are many different categories and companies so Im pretty lost there.
What I find surprising is that some fund companies have an initial charge of 5%, some others have a sales charge of 6%, not including at minimum 1.3% charge and oftentimes more as a management fee. Are those rates standard? It sounds like I would be getting raked to death.
Also most of the times these funds actually make less long term than the index theyre trying to replicate (And I assume all those graphs dont even include all the charges, am I right about this?).

Ideally I would like to put somewhere between 50-100k (and lock it for at least 5+years) into some type of fund that closely follows a big index fund, most probably the SP500, and paying the less charges possible overall.

Any advice is appreciated there. Thanks.

i wouldn't say fees like that are standard, but they are not uncommon. you are wise to run far away from them.

you should be able to find ETFs that passively track broad market indexes for low fees. note that to be broadly diversified you want exposure to global equities (us and "international") as well as fixed income -- s&p500 alone won't cut it.

however, this is for investments with a very long horizon (10-15 years *at least*). for a 5 year commitment, i'd look at high-yield savings and CDs.

It looks like that from those 1000 different funds the lowest fees I could hope for would be about 1.3% annual charge with no initial charge and no sales charge, does this sound reasonnable? If not, what kind of fees should I be aiming for?

Also I think its hard to find asian bank branches that offer ETFs, looks like most of them just offer mutual funds, and the one that offers ETF only offers asian markets through them.

Im not sure what you mean by fixed income? I feel like im already diversified with most of my net worth in europe (small rental properties, some financial product linked with bonds, emergency fund)+ I'm currently buying my home in asia that will be ready in 2015. Still I basically have 0$ in stocks atm so I thought thats what I need to do moving forward.

Also why should funds be for 10-15 yrs minimum? I dont get it, except for funds that have big entry/exit charges obviously. Iam thiking 5+ years, could be a lot more than that, but I dont want to rule out a big opportunity presenting itself at some point in the future.
To my poor understanding the only difference between a 5yrs or 20yrs stocks investment is that in the 1st case you run a high risk of actually losing money while the 2nd case its basically impossible. But lets say I dont mind this risk too much, what other reason could I have not to invest in some type of mutual fund/ETF if I dont want to 100% commit for 15+ years?