Where to Store Your Savings: I Netted a 313% Return

My family has always opted for low interest, but mostly safe investments such as CDs and savings accounts that are insured by the FDIC. So it was only natural that in my younger years I would be drawn in by the lure of doubling your savings in the stock market, and pretty much every other investment that promises unreal returns on your savings. I have tried every option for investing my extra income, from the stock market to money market. The one common denominator is that none of them have netted me the interest that my first real investment did, a Certificate of Deposit I got in 1998 at the age of 14.

You see, back in those days even a mediocre savings account with a minimum 100$ balance offered a 3.333% rate of interest. When your savings is relatively small (like mine & the average American's seem to be), 3% is barely going to cover your wrapping paper at Christmas. Once more, 3% is a gold mine compared to the .333% most savings accounts offer today. At .333%, 1000$ isn't even going to buy 1 roll of wrapping paper at Christmas.

The whole idea is to at least outpace inflation with your savings with a reasonably secure investment. According to the Labor Department's Consumer Price Index, annual inflation rose at 2.3% for 2010. So the savings accounts that offered 3% would at least keep your money worth the same amount. However today's savings account rates are getting pummeled by inflation.

When looking to the future, I always like to take my cues from past experiences. Now the Certificate of deposit I spoke of earlier was at a hefty %6 interest rate. Sometimes while day trading, I would double or triple my money over the course of a few weeks. However I would just as likely absorb several losses that accumulated along with trading fees, and the top tier capital gains tax for trading so often. After it was all said & done I won 2 out of every 3 days I played the market, and still lost 5% of my initial investment. I did make my broker very rich, as most of my profits on my 1500$ initial investment were given away in trading fees. I can't make the banks raise their interest rates, and trading stocks is a waste of time if you have to give all your profits to a broker. Well leave it up to me to beat the financial sector at it's own game.

The first thing I did when I recently rejoined the ranks of the employed was research rates for online savings accounts. I have found that I am much better at saving when the money is slightly out of arms reach. I found some decent ones with 1%-1.15% interest rates. I already have a sharbuilder account, so I was immediately drawn to ING direct's electric orange. I found an offer where ING direct will match an initial deposit of 250$ with 25$ if you have a coupon code. On top of that, they give you 10$ for every friend you can refer who uses one of your codes (up to 50). So here I have the potential for making a 250$ initial investment into 775$ before interest. Add in the 1% interest, and 775$ will net another about 8 in a year. I have a few myspace accounts with 5000+ friends, and quickly put out some of my refer a friend e-mails. Altogether, my savings account this year which started at 250$ will net 783$ which is an incredible 313% interest.

The catch (everything has one) is that you have to have a 250$ initial deposit, and the 25$ reward is held for 6 months before you can withdraw it. Since a savings account is a semi-long term investment, most people are expecting to leave their initial deposit in there for at least 6 months.