I feel like the best option for this right now is a high-yield 12-month CD. By putting my money into a CD versus a standard savings account, I'm assured that I won't be tempted to withdraw that money early, as I'll be forced to pay an early withdrawal penalty. Since I already have a part-time job with wages being deposited into a standard student checking and savings account, I'm also looking for something more long-term and with a better return than the regular free savings account will offer. And a 12-month term will perfectly carry me past graduation and several months into a steady job.
According to the banking-rates research Web site BankingMyWay.com, national banker Wachovia (WB) currently offers a 12-month CD with a minimum $5,000 deposit and a fixed annual percentage yield (APY) of 4.25%. In comparison, a typical Wachovia savings account with the same amount deposited carries an APY of just 0.15%, so the 12-month CD is a much better low-risk option to help grow my principal.
That still leaves another $5,000 to work with, and this is where things get more complicated for me.
The most concrete thing I know about where I want to go from here is that I want to look at the stock market. Unfortunately, the market and the economy as a whole are far less-than-stellar these days, making it even more difficult to figure out good from bad. However, the one thing still holding true for me is the importance of diversification, although the real rule of thumb seems to be narrow diversification. In fact, investing billionaire Warren Buffet advises that "wide diversification is only required when investors don't know what they're doing."
