This post is just to let everyone know I’ve added a new page to this site…

Over the past month and a half I’ve been researching online savings accounts from 10 different banks. With the information I obtained from each of these I have written 10 reviews. You may compare these savings accounts side-by-side to make a more educated decision on which one is best for you. Click here for the review page or click on the link in the top menu of this site.

What are high yield savings accounts?

A high yield savings account is almost the same as any other savings account that banks offer. The difference is, instead of you earning a very small, let’s say, 0.25% APY (annual percentage yield) you are given a much heftier percentage, for example 2.00% APY. That means if your account balance were $1,000.00, after a year you will have earned about $20.00 in compounded interest. Whereas with the lower APY you will have earned only $2.50 in a year.

Why should you have a high yield savings?

A high yield savings account is a good place to keep your money while you’re waiting for something to invest in or if you’re just saving up to buy a big-ticket item. Another good reason to have one of these accounts is to have money set aside for emergencies, such as daughter’s wedding, emergency plane ticket or loss of job. Financial advisors will say to have an emergency fund that will support you for a period of three to six months, should lack of a job become an issue. In times of bad economy, when the unemployment rate is so high, this is a must!

These are the names of the banks whose savings accounts I have reviewed:

Emigrant Direct
ING Direct
HSBC Direct
FNBO Direct
Citibank
E*Trade
Dollar Savings Direct
Capital One
WT Direct
Bank of Internet

Read the Reviews here.

Ah, tax season… For some this time of year is a dreaded part of life, while for others it’s something to look forward to. Getting that tax refund in the mail, knowing that you have some extra money on hand to do whatever you want with– it’s so exciting! But before you get your refund it would be a good idea to have a plan for what you’re going to do with that money. Whether you want to invest it, save it, use it to pay down debt or spend it and buy a new big screen TV, it’s wise to know what you want to do with it before it comes. Otherwise that money may just sit in your bank account to be eaten away with ice creams and coffee.

Here are some ideas to help you decide what to do with your 2009 Federal Income Tax refund:

Start an Emergency Fund

Financial advisers will tell you to create a fund with enough money to sustain you for a period of three to six months. This is especially wise in times like these, when it’s uncertain whether many of us will still have a job in the coming months.

Where you put this fund is up to you, though it would be better to have it in a place where it’s hard to “borrow” from. My wife and I have an online savings account with ING DIRECT. It’s a very practical account that links right to our bank account, but the best part is the interest payouts. There are other online banks that offer high interest as well. Here are a few to compare:

Bank of Internet – With the High Yield Savings account earn 2.06% APY (annual percentage yield). There is a minimum deposit of $100.00 to open this account but after that there are no account minimums or fees. *

HSBC Direct – Open an Online Savings Account with as little as $1.00 and earn 1.55% APY. There are no regular monthly or transaction fees with this account, though other charges may apply, such as non-sufficient funds, stop payment order, and return item fees. *

ING DIRECT – The Orange Savings Account offers 1.50% APY with no fees and no minimums. *

* Annual Percentage Yield (APY) is variable and subject to change without notice. Information from www.bankofinternet.com, www.hsbcdirect.com, and www.ingdirect.com is accurate as of 06/20/09.

Pay Down Debt

Another good way to use your refund is to pay down debt. If you have credit cards, a car payment, or a home loan, pay extra toward the one with the highest interest rate.

College Savings

If you would like to attend college in the future or if you have kids and want them to have the option of going to college, consider opening a 529 college investment plan. CollegeSavings.org is a site where you can find and compare plans that best fit your goals.

Retirement Savings

Use your tax refund to start or add to an Individual Retirement Account (IRA). A Roth IRA is of particular interest, as the earnings accumulate tax-free and remain tax-free even after distribution (when you withdraw funds).

Large Refunds Aren’t As Cool As They Seem

As fun as it is to get a huge lump sum from the government each year, just remember that they’re actually just paying you back for the interest-free loan you gave them throughout the previous year. Every paycheck the government takes out a little bit more then you owe them, then in the spring they pay it back without interest. If you’re receiving a large tax refund you should ask your employer for a new W-4 form so you can adjust the withholding allowance to receive that money in each paycheck. However, be careful not to allow too much money to be taken out of your paycheck– you do want a little bit of a tax refund; otherwise you’ll have to pay some at the end of the year plus fees.

A lot of people prefer to have a larger refund rather than getting that money in their paychecks where it would probably get spent on something or used for bills. If this is an issue, consider having that money direct-deposited from your bank account into the investment fund or high yield savings account of your choice. That way, after every payday, the money is gone from your account before you get your hands on it.

Stocks

Whenever non-investors think of “investing”, their first thought is usually stocks. Which then is followed by thoughts of uncertainty, risk, and in most recent times during this economic crisis, people would fear buying stocks that are near rock bottom. Bad economy, falling stock prices, what is a young investor to do? Well, let’s see, falling stock prices… Hmmm… Cheap stocks? I know! Buy stock when the market is at the floor! Sure the economy is poor right now, but wounds heal, and given time the economy will regain strength. A general rule of investing is to buy low and sell high. So, to invest in stock now would be a good observation of that rule.

But what about the fact that so many companies are on the verge of bankruptcy and also the many that have already gone out of business? Of course you don’t want to buy shares of a company that’s going bankrupt. That would be dumb. But what you could look for is a company whose business is absolutely needed in this culture. Maybe not many people are buying new cars right now, so the auto industry might not be the best choice. But people still have their old cars and they’ve still got to pump them with gasoline. So perhaps the oil industry would be a good idea. Do some research by looking at companies like Chevron-Texaco (CVX) or Exxon (XOM) on NASDAQ.com. Also, I don’t think people are going to stop using their phones anytime soon, so try looking at different telephone companies, like AT&T (ATT) or Sprint (S).

Just remember, if the company offers a product or service that’s vital to this culture, our way of life, then there might be a better chance for that company to remain in business, even during a recession. I hope this makes sense. For myself this is mostly conjecture, as I am not that familiar with trading in the stock market. Though one more tip I can offer is, do lots of research before investing. Know what you’re doing when you do it and know why a stock might be good to buy before you buy it.

Precious Metals

Metals such as silver and gold are another example of a safe investment during bad economic times. Very often when the US dollar loses value, the prices for gold and silver go up. There are also other things that influence the value of precious metals, for example, the government’s economical decisions. Keep in mind that depending on the circumstances the relationship between the value of metals and the value of the dollar may look different.

It’s important to buy gold or silver when the markets are at a low. They don’t have to be at an all time low, just low enough so you can make a profit when the markets go back up.

For more detailed information on how to purchase an trade gold see Investing in Gold. You may also be interested in reading my articles on Paper Trading Gold where I post weekly updates on the status of gold on the market.