I'm new to savings and stuff so for a person who has no discipline, i’m looking to open an account where I can do reoccurring deposits minimum $10 either every week or manually be able to keep adding money to the account but I can’t touch the money until the time I set which I'm thinking a year. I live in Houston Texas if where I stay plays a part in my search.
Certificate of Deposit
byu/Head-Society-1709 inpersonalfinance
Posted by Head-Society-1709
11 Comments
Are you employed?
You could update your direct deposit with your employer to have a percentage or fixed dollar amount of your paycheck go into a high-yield savings account. That would let it earn interest and it would be out of sight while it is building.
Alternatively you could automate transfers from your checking account to a HYSA.
Opening up a CD every week just is going to look crazy when you log in and see all those accounts.
Why not just improve on your self-discipline?
You could buy a CD with a maturity of one year every other week, but at the end of a year, you’d have 26 of them. Doesn’t seem efficient
You don’t want to start a new CD each week. Just look at how you bank, and find the highest rate you can qualify for with the things that you do https://wallethub.com/best-high-yield-savings-accounts
Etrade savings is fine (~3.25%, no strings) and they have a free checking as well.
Fidelity CMA has hysa yields (~3.45%) with checking-like features (buy SPRXX or set core fund to SPAXX), no ATM fees worldwide, free wires, no NSF fees. For me Fidelity CMA is the easiest way to high yield, no fees, lots of features
Finding a product to cover bad habits is not the way too go.
Learn and practice good habits.
Good habits with less money will go further than bad habits and more money.
Learn to save, add money to a HYSA, and keep adding.
Build savings for 3-6months worth of your expenses. Thats the starting place.
Then you can learn about investing in your future.
“but I can’t touch the money until the time I set which I’m thinking a year. ”
There aren’t going to be too many options where “some system or people” will protect your money from you.
If you put the money in a CD, the National Guard won’t step in to stop you if you decide that you want to pull some or all of the money out before a year from now.
If the penalties for cashing in a CD early are enough to deter you, then that I guess works, but they generally have fixed periods (3,6,9,12, etc months) and there are probably minimums well above $10 to get them, so that doesn’t sound like it’ll work for you.
Most CDs require a minimum balance of $500 (some require a minimum of $2500), so while setting aside $10/paycheck is a great 1st step to savings, I don’t think CD is what you’re looking for. But maybe online savings account would be a better option.
Look for a no-penalty CD if you want flexibility. Otherwise, a regular CD works. Ally and Marcus offer low minimums.
Treasury direct (us savings bond) -have to hold for a year.
$25 minimum. Ibonds or ee bonds.
You can set up automatic purchases.
Once you sell you’ll have to check for a 1099 form.
The sort of thing you’re describing is sometimes known as a “holiday savings” or “goal savings” account.
CDs have a minimum issue amount (typically $1000) so you can rule that out.
Instead of time limited, think about stashing away money that takes extra steps to get to. When I was still working, I had $200 per pay period sent to my Schwab brokerage account, which invested the funds in a money market mutual fund. It all happened automatically without any input from me.
On the other hand, to get at these funds I would have to log in to Schwab, put in a “sell” order for some of the money market fund, wait a business day for the trade to settle, then log back in and initiate a funds transfer to my bank – which takes a day or two. Somehow, that much “friction” in getting to my money meant that I would not bother to do so unless it was for something really important.