Can I make money off my money?

I would ask around and find a financial advisor that your friends or family can recommend and trust.
Figure out how much your bills are per month and keep enough at your fingertips to use to pay bills. Talk to the financial advisor and tell them what your long term goals are with the money you are able to invest.
Also, go with a company that has a great reputation. I have personally gone with New York Life Investment, and have had good results, but you should be prepared to be in it for the long haul.
Also, there are hundreds of good investment companies out there, I wasn’t suggesting you go with the company I went with.
Good luck!

A lot of people recommend index funds If you are thinking of a long term investment, it should work out.

Retirement!

For the time being, you could find a bank or credit union that has better interest rates.

I am not a financial advisor and I tend to not like risk.

If you don’t have a company 401K you can contribute to, I would recommend you put $6,000 in an IRA if you have not done it already for 2020. You don’t have to do it all at once. That will mean $6,000 of your income will not be taxed if you put the federal limit of $6,000 in. So, if you made $40,000 this year, you will take off the $12,000 everyone gets, and also another $6,000 and you will be taxed only on $22,000 income. That is the very simplified explanation. You should read up on IRA’s before you make any assumptions or take any action. If you put your money in an IRA you cannot withdraw the money until you are 591/2 or you will pay a penalty. You can play the stock market or put your money in mutual funds in you IRA account and the earnings will not be taxed until you withdraw the money when you are older.

If you are saving for a house, then the IRA option isn’t good for you probably, although you can put any amount. You could put just $1,000. $1,000 a year for 20 years would be $20,000, and if it is earning interest it would be $24,000 just from low compounding interest. $6,000 contribution yearly at just 1% a year would be you put in $120,000, but you would have $140,000. At 3% you would have $176,000. At higher interest it multiplies fast. Each year you can put whatever amount up to the limit set by the federal government. Right now that is $6,000 for people under age 50.

If all you are getting is .03% interest in some sort of traditional savings account, get out of that. Even if you just earn 1% that would be $250 a year on your $25,000, or $20 a month. Every bit counts. $20 is a tank of gas or more savings. Unfortunately, right now accounts are getting very low interest. Some are offering bonuses. Capital One (an online bank) sometimes offers $400 bonus if you keep $25,000 for 3 months, stuff like that. Keep you eyes open for deals. Chase usually has deals for new accounts. You can maybe open a checking account there and get $250. I think that is their latest deal?

Index funds can be a good idea as mentioned above. Know that October is traditionally a down month in the stock market, never any guarantees though. If you decide to go the IRA route you can move the money and keep it in a money market type of fund (as your core account) that is only earning similar to a bank, and then start investing it when you feel ready. These accounts are usually not insured by the FDIC just so you know. Go with one of the well known companies like Fidelity, Vanguard, Charles Schwab, etc.

I guarantee nothing I said above, it is just what I do with my money. There is a lot of literature available on everything I mentioned. I think start small and as you come to understand more you can do more.

I’d withdraw $16.48 of it (plus shipping costs) and buy a copy of A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. By the time you finish it, there’s a reasonable chance the market will have collapsed and you’ll be looking at the buying opportunity of a lifetime in the stock market.

Understanding how investments work is a basic life skill (just like brushing your teeth). It should be taught to everyone. That doesn’t mean you can’t have an advisor, but everyone should learn enough about how it all works to hold that person accountable.

Correction: I linked to an older edition of the book. This is the current edition: https://www.amazon.com/Random-Walk-Down-Wall-Street-dp-0393358380/dp/0393358380/ref=mt_other?_encoding=UTF8&me=&qid= It’s also cheaper, so there’s that.

Have you paid off all your debt?

@Caravanfan I have no debt, never have.

@gorillapaws Thanks, I agree it is an important skill. I don’t really think anyone is taught it, unless you take a finance class in college? Is that even a thing? Pretty outrageous, because it’s so important!

Yes, it’s a thing. You can get a degree in finance. Most business degrees (marketing, accounting, economics) require at least one semester of finance, often it’s two.

@JLeslie LOL, true, totally forgot that was something you could focus your studies and career on! Doyyyyy….see like I said, it’s funny because I’ve always been really good with money, saving it, not having debt, paying off my credit card every single month, not spending like a lunatic, but when it comes to handling it in the long haul, clueless!

@deni I have a business degree, actually I majored in marketing, and I have not invested anywhere close to what I should have, so don’t feel bad. I am way too conservative in my investments. Being a great saver you are ahead of a lot of people. I think you are much younger than me if I remember correctly, you have time to invest and accumulate money.

I also seem to remember you are a waitress, is that right? If some of your tips aren’t claimed, you save on taxes now, but you reduce your SS when you are older, so saving is really important for you if that is the case. Saving in a retirement fund like an IRA is a really good tax shelter.

It’s doubtful a financial advisor would take you on with only 25K to invest.

Questions to ask yourself:
1) What is your risk tolerance
2) When do you need the money
3) Have you fully funded any retirement plans