Friday, January 06, 2006

Grandma's Stagnant Money Pile

My grandma's first dream was to become a doctor but it was stopped short when world war II occurred and she became pregnant with her first child. She had to find a way to feed her newborn baby (my dad) and so, her next dream was to own her own business. She was always stronger and more independent than my grandpa in terms of ambition and mind...she has always been the bread winner between the two of them. She managed to create and build an export/import business from the ground up, which was very successful after the war ended. In a way, she also got her first dream since all her children became doctors.

She was rich. I say "was" because she has spent most of her fortune through out her life and on her children. For example, she financed all her children's mortgages (she has five children). That is pretty nice of her considering that all her children live in prime real estate areas; Southern California, Bay area, and Hawaii. However, her savings have not exactly been growing since she has sold her business. Imagine, 40 years of her money twiddling thumbs and standing still.

However, she has divided up her some of her savings into large, small, and smaller piles prior to putting them into safe and slow savings accounts. Ten years ago, she has a very small amount of money put in a six month CD under my name after much persuasion from my mom that CDs are not going to kill her money. The interest rate currently is 1.87%. An all time high for this CD! Hey, at least she's not using shoeboxes anymore.

I'm the least favorite and most distant grandchild in my grandma's world. I don't expect her to give me this money and I doubt that she has the intentions to. To be honest, I think she has forgotten these smaller little piles she has spread around. I don't consider this money (approximately $12,000) my money but, since I can legally do what I want with this money, I'm going to put it in HSBC direct savings account, which has a much higher yield of 4.25%. I will have until the end of the month to withdraw the money from the CD account before it renews itself automatically. If she ever needs this pile, at least it'll have grown just a bit better than her other piles. This move has no benefit to me but really, I am just sick of getting the CD account statement every six months and staring at that horrible one percent interest rate. I wonder if she realizes that I have to pay taxes on the interest accrued for this money.

The HSBC savings account I had opened on my mom's behalf is now up and running with a $25 bonus since the online application was submitted two weeks ago. So far, it's been a smooth experience for me.

The next step is to open up a HSBC savings account for MYSELF :)!!


  1. I think what you are doing with your grandmother's money is commendable. Older people have are hard time investing their money due to living through some tough times (world wars/depression) and to them it's hard to hand over hard earned money to someone. My grandmother never hid her money under the bed (that I know of) but she too had her money in cd's, however at the time she was getting between 8-9% (back in the 80's) but if she had her way now she would be happy with it in a normal savings account and 1.00% just doesn't cut it.

  2. Congratulations on your nice windfall from your grandmother. Even if you don't consider it your money, invest it correctly and one day you could possibly use it for a down payment on a house. Although, houses here in SoCal are absurdly priced. Best of luck with your budget!

  3. Thanks! Bolo, I'm sure your grandma is not as bad as mine. I know that my grandma thinks that we're still in a war, somehow, and has this need to have her stash secured :). I remember her telling me when I was kid during dinner to eat up my meal fast because "you never know when they're going to bomb this place". Her words, exactly. I'm not sure if she'll react well when I tell her that I'm moving her money into an online savings account.....i don't think she knows about computers and internet....yet.

    Tershania, I wish I could view it as my money but then, I'd feel as if i'm stealing. I've come to terms with the fact that I might never get to own a house here in SoCal :(. They are absurdly priced, I agree completely. Even a manufactured home is sold for $200,000!