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A friend of mine asked the other day how to deal with a little over ten grand sitting in a no-interest checking account. I had a couple of, I thought reasonable suggestions:

I'd suggest putting at least a quarter of what you've got there into a Roth IRA with aggressive funds and forget about it. Rule of 72 says that at an 8% yield, that money will double itself every 9 years, tax phree.

Then make sure you've got your 6 months of tuna and ramen bill money set aside in a 4.5% ING Direct savings account. If you're frugal, so that could be as little as another quarter of the lump sum.

Take the balance and build an CD ladder at ING Direct with 6 and 12 month CDs. That way you always have something coming available in the 6 month term that you can either ladder back with its interest (compounding rules) into another CD, or move back into your savings account to prepare for a big ticket purchase.

Personally, since I've got the savings covered and an existing 401(k) and IRA, my next step is to max out my new 401(k) out of my paycheck and fully fund 2006's Roth IRA limit ($4k) before Suzy and I aren't eligible anymore.

These are the big three funds I'm jumping into with my private ESOP to classic IRA disbersement next week:

KSCVX AGTHX CWGIX

They are top performers in their class, and I feel fairly good about getting into them this month, but they're certainly too volatile for 2 year range.

In my Wachovia Retirement specific funds I have:

ESPIX JMCVX LMVTX MIDAX

They have been performing very poorly lately, but they've been following the market in general. I've been losing about $200/wk on the average in May and June, but I gained $200 when the market rebounded on June 15, 2006, so overall I feel like they're good aggressive funds.

I really like my Wachovia financial advisor, but she came free with the bank account. You may find that your bank also has a financial services branch that can link directly with your other accounts for convenience. Check the blogs and find out who is screwing the little guy over and avoid them.

Yet another Personal Finance post.

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