I've got a friend with ten grand sitting in a regular savings account doing nothing

[Mr. Scorpio]

He called it his rainy day fund, and he's pretty much adding a $1,000 month to it with no intention of spending any of it.

And like a busy body, I suggested that he should use some of it to make some investments, but I have no clue how to invest in anything and neither does he.

So, if he's interested in doing something with some of his savings, how much should I suggest he invest and how should he get started?

Any advice?

[we can do it]

1. There are still some CDs with good rates available if they are risk averse.

[Ferrets are Cool]

12. That is exactly what we just did. nt

[marybourg]

2. Is that the only money he has? If so, it

should probably stay there. It’s difficult to advise on investing without knowing a lot more about the person and their finances.

[Happy Hoosier]

11. Nah.... get it in a HYSA.

My HYSA is fully insured and currently earns 4%. He's throwing away $400/yr letting it rot in a low-interest savings account.

[multigraincracker]

3. 10K is good starting point to starting for

other safe investments. That’s how I started and now in retirement the interest and dividends cover all of my bills. Had to get that first 10K to find a gook broker that thought like I did.
Slow and steady wins the race. Good for him.

[Lebam in LA]

4. At 75 I'll keep my $ in savings

One account has $13k earning 4.65% so I am happy keeping it where it is.

[bucolic_frolic]

5. Cash is a demand on future consumption

Some foods are rising in price dramatically due to climate change. Socking away increasingly scarce foods can be an inflation hedge. Olive oil supposedly went from $300 per wholesale unit to $1,000. I do know the bottles I paid $4.65 for are now $7.15. Will they be $10 next year. I don't know. Is it a good investment to put 6 bottles on the shelf? You can always eat it.

There are index funds for every type of investment, for big companies, for small ones, for USA for Europe, for Asia for everything all lumped together. There are mutual fund companies with specialties, and ones that will take $500 to invest, or start with ten times that. There are ETFs, there are large brokers, and small. This is just to say it's a broad landscape. You can DIY, with often free online advice, or pay someone 3-6% or $2,000 to do it for you. I don't think SEC rules allow one to give advice unless trained in finance.

[MaryMagdaline]

6. I'm very skittish and don't like risk - at all

I put money into fixed annuities. They only pay 5 or 6 percent (going be less as inflation eases) but the money is guaranteed, insured by your state, and forces me not to spend any of it. The interest you earn is tax free, unlike CDs.
There are down sides - you are penalized for early withdrawals; if inflation goes weigh up you might be able to keep up with inflation. However, you will earn something and your funds are safe.
When I hit 70 I might buy an annuity that pays for the rest of my life so I don’t run out of money. For now, I’ve just parked most of my savings in fixed annuities.

[surfered]

7. Current CD rates range from 4% to 4.6% for 3 months to one year

Tell your friend he’s forgoing at least $400 per year in lost interest.

He should consider “laddering” his ten grand into several CDs like 3 month, 6 month, and one year maturities. This way every 3 months, he would have access to some money if needed. If not needed, then reinvest it another CD.

A banker should be able to explain this to him. Good luck and good on you for helping your friend.

[A HERETIC I AM]

8. Yup. The OP should ask his friend if he likes free money!

How would an extra $450 a year strike you?

Beats a poke in the eye with a sharp stick, any day!

[CoopersDad]

9. Capital One has some high interest savings accounts nearly as good as CDs. nt

[Happy Hoosier]

10. Having an emergency fund in cash is a good idea...

The point of an emergency fund is to a guaranteed source of cash for that “rainy day.” If it’s in a volatile Investment, the owner needs to be able to wait out a down market… or accept the losses.

However, there are High Yield Savings Accounts which earn interest above inflation with basically no risk. That is where I keep my emergency fund. I keep about $25K there, which would cover household expenses for about 6 months in the event both my wife and I lost our jobs simultaneously. And it is FDIC insured. I use Ally, but there are plenty of options.