I only received a couple of participants in my group writing project, but I’m not disappointed: they both had great advice, and in the end, it’s the quality that counts! Without further ado, here are some thoughts other personal finance bloggers shared, and a link to my response as well. The original question appears below.
Many thanks to the two who participated, and I’ll be sure to try this again when I have more to offer :)
- Mid-term Savings Methods by Shane Ede at A Penny Saved suggests high-yield savings accounts, some CDs, and perhaps some stock exposure. A comment from a reader recommended lumping long-term savings together and just separating them out “virtually” using an Excel spreadsheet
- Larry Stay from Grow Your Funds chose to leave his insights about choosing bonds in a comment on my response to the reader. He’s a professional bond portfolio manager with some nice credentials, and willing to take questions from readers about investing at his site, making it interactive. What a great resource! I’ve already learned about investment vehicles I didn’t even know existed.
- You can read my original response to the reader’s question as well.
The great thing about a group writing project (even one as small as this) is the dialogue it creates. Like a true brainstorming session. If it were more generic a question and had more participants, you’d have had the added benefit of finding responses from people and sites you didn’t even know existed. Even just considering my response forced me to check what options, vehicles, and rates are currently out there and available that might fit both my reader’s and my own investment needs. What can I say? I wish this sort of participatory writing project happened more often!
For completion, here’s the reader’s original question:
I like to setup my finances on a “purpose” basis. I create a separate account for each specific saving target. I have 401ks or IRAs devoted to long-term savings. A checking account (and a small savings account at the same bank) to handle day-to-day expenses. Some CDs as a safety net in case I lose my job. A separate savings account for spur-of-the-moment spending.
This keeps things tidy and reduces the tempation for my spur-of-the-moment spending to hamper something important (like next weeks [sic] groceries).
This works great for short-term or long-term savings. But not so well for mid-term savings. Things that are maybe 3-7 years out. (Like buying a new car or saving for home remodelling.) I can’t figure out what the best vehicle is for carrying this out. I can take more risk (and want better return) than savings accounts and CDs, but it’s not so long that I want too much stock exposure.
It just doesn’t seem like there’s a good way to create a single account to handle this sort of time-horizon.
Maybe the answer is on your site somwhere and I haven’t been able to find it. Any suggestions?
If you’d still like to respond and participate, don’t hesitate to let me know!