Can you answer nikko’s question about Bonds?:

Im in school right now to be a dental assistant, and I already own my home. I want the last of my money to grow without risking losing it in stocks or high yield investments. I have considered cd’s but they tie it up for a year and I only get 5%.

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s of the income you earn you should think about the use of a high interest savings account to safely store your extra funds and make your money grow. It’s a fact that many people leave their excess money in their main bank account that does not earn interest. Storing money in a non-interest earning account is a wasted opportunity and you can multiply you money over time through the use of a high interest savings product.

A high interest savings account generally yields an interest rate greater than 2.5%. Most of the high interest products offering the most competitive interest rates and online savings accounts such as HSBC and ING Direct.

Why Interest Matters

Larger capital growth occurs with a high interest savings account because you will receive interest on the principle amount of money that you put away into a savings account. The principle, combined with the interest that you earn on that principle, continues to build on itself - with little-to-no maintenance on your part.

For example, if you put away $10,000 into a high interest savings account, such as an online savings account, with an annual interest rate of 4.0%, you will have accrued $400 by the end of the year without having to lift a finger. By the end of the second year, you will have earned more than $800 - just for keeping your money in the high interest account.

The passive income that you receive from your high interest account can help you achieve financial security and build your nest egg … without the need for you to take up another job or working all the overtime you can get.

Rate of Inflation While earning passive income from your savings seems like a strategic way to, basically, earn money for doing nothing, keep in mind that there is a national rate of inflation, which is usually about 3% per year.

The rate of inflation is based upon the average increase in prices which therefore causes the real value of the dollar to fall. Therefore, if your money is tied into a high interest account that returns 4% interest a year, you have to subtract this rate of inflation in order to understand exactly how much your money is actually growing.

Types of High Interest Accounts

There are two popular types of high interest accounts that you may want to consider: money market accounts and CDs.

A money market account is directly linked to the Stock Market and is not guaranteed. As the market falls, so can your interest rate. However, because it is tied to the Stock Market, you can also lose your principle when you invest it into a money market. PayPal provides one of the most competitive money market accounts currently available online. A certificate of deposit (or CD for short) is a very stable high interest account with a fixed term and return. It is often available through online savings banks such as ING. When you put your money into a CDD you have to decide an initial period of time for the investment such as twelve months. During the agreed period your funds will grow according to the interest rate agreed. However, there may be penalties if you wish to remove your money before the period of time has expired.

There are a number of new online banks entering the market with names that may not be familiar to you so be sure to check out the company before handing over any money. One of the easiest methods is to do a search on the Better Business Bureau website and look for any claims filed against the company. Once you’re comfortable with your selection of accounts, start putting that money away to watch it grow!



Thanks to Richard Greenwood for contributing this article to our Bonds blog:

Us Savings Bond Interest

For many investors buying leaseback property in France the key attractions are the guaranteed yields, stable economy, low deposits and low interest rates. For most leasebacks though even if you managed to get 100% finance for the ex VAT price you still have had to find the VAT as your deposit which you do not get back until 3-6 months after completion. This can often slow down an investor’s momentum as they are waiting to receive back the VAT before using that money as the deposit for their next investment. Because off-plan properties are usually released for sale 18 months to 2 years before completion you could be waiting over 2 years to get your VAT deposit back.

The next thing people often have trouble with is finding 100% interest only mortgages as up till now really only 80% has been possible. Investors often like the idea of interest only mortgages as it reduces their monthly mortgage payments and therefore improves their cash-flow. However interest rates for interest only products have up till now been rather uncompetitive with the classic “interest and capital” mortgage interest rates which have put people off taking them.

The third thing that for some investors has prevented them from taking the plunge and investing in France is that they have felt the yields are not high enough on leasebacks which have usually been around 4-5% NET (equivalent to around 6-7% gross). Even though they are guaranteed and paid NET some investors prefer to take the gamble and purchase something in the emerging markets that they “think” will have a higher rental return.

These issues have now been overcome and you can now get the ultimate leaseback investment. Let’s take an example of one to three bedroom apartments from 106,917 Euros in a stunning high quality residence at Mers Les Bains, Picardy, just 300m from the sea and right in the town centre, walking distance from all amenities. The guaranteed NET yield is 5.27% and you can secure 100% interest only finance (subject to status) at a fixed rate of just 5.1% (correct at time of writing).

What this means is that you can invest in and excellent location in France that pays for itself and all you need to find are your bank and mortgage setup fees plus your legal fees (notaire fees). If you add all these together they add up to roughly 7% of the property price. For better understanding we have provided a simulation below of an investment in a 1 bedroom apartment:

Property Price: 106,917 Euros

VAT@ 19.6%: 20,956 Euros

Mortgage: 106,917 Euros

Deposit: 0 Euros

Notaire fees: 5115 Euros

Bank & mortgage fees:2302 Euros

TOTAL personal contribution: 7,417 Euros

This is just one of the highly attractive investments currently available in France and with the new French tax reforms great things are expected for French property in the coming years.



Thanks to Nick Dowlatshahi for contributing this article to our Bonds blog:

Us Savings Bond Interest

Can you answer Ambernc1’s question about Bonds?:

We are looking to transfer the money in our savings account to a high yield savings account or even possibly a CD. The bank I am currently with only offers a 0.2% return on savings and a 1.2% return on a 3 month CD. Does anyone know of a bank in the US (Arizona) that has a higher interest rate? I was looking for around 3%.

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Can you answer Jean-Claude L’s question about Bonds?:

I plan to put 10K into a high yield savings account for about 5 years and adding 1,200/year. Who has the best and most reliable rates?

Us Savings Bond Interest