Ask HN: Just got $200k from an angel, where do I stick it? Savings? CDs?

DO put it in a MMA to get some yield, but understand that you'd be doing amazing to get 2% on it, and that should be lost in the noise if you're doing well in the real work.

You might also be able to extract some concessions from your banker for having more assets at the bank.

In my opinion it's not worth the hassle and small extra income to complicate your capital structure.

I'd toss nearly all of it into an FDIC insured savings account (ING Direct is 1.1%) with the rest in your corp checking account.

These are all companies that are going to be around for a while. And even if the stock goes down, you still get paid a dividend for it.

You can put it into a savings account or CDs at an FDIC/NCUA-insured bank or credit union, and that'd work just fine, but make sure that you stay UNDER the insurance limit (currently $250k), otherwise if the bank goes, so does the portion of the deposit beyond the limit.

If you're feeling curious about other options, a money market account[1] would work too, as would short-term treasuries via TreasuryDirect. But it's likely the case that neither of those will be better than a plain old bank account.

As an aside, there are some states which allow banks to buy private deposit insurance (eg ASI), but I don't trust that system; it's already failed many times in the past[2]. Basically, if they don't have a FDIC or NCUA logo at the bottom of their page, skip it. However, I've only seen one place that actually used that crap (SF Fire CU).

[1] I'm referring to actual money market mutual funds (which are NOT insured like a bank deposit, but are regardless considered 'safe money'). Some banks offer "money market" accounts, but they're identical to the normal insured savings accounts with a different label slapped on the front.

[2] https://www.clevelandfed.org/Research/commentary/1994/0501.p... "Lessons from the Collapse of Three State-Chartered Private Deposit Insurance Funds"

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This is probably more info than you really need, so here's the tl;dr version: Yeah, a savings account is fine. Just keep the balance under $250k.

I already have a strong relationship with a local bank that I use for my personal accounts and my other business. After reading the comments here, I guess I will stick with that plan.

  When do I need the money back?

(Likewise, someone saving for a retirement in 30 years would do well with aggressive capital gains investing, but that's a whole different thread. Just stick to answering the above question for any financial question and you'll be ok.)

* A CD requires you to lock your money up in the CD for a certain amount of time, e.g. 6 months

* You can get the money out early only by paying a early withdrawal penalty, which is typically 30-90 days worth of interest for a CD with a term less than a year (http://banking.about.com/od/cds/a/cdpenalty.htm)

* This is not applicable to you, but FDIC insurance typically covers up to $250k per CD, so you may need multiple CDs (http://en.wikipedia.org/wiki/Certificate_of_deposit#Deposit_...)

Money Market Account rates can be as high as 1.10% (http://www.cdrate.com/money-market/). However, they are not like checking accounts and you'll have to plan out when you withdraw what amount.

* Because of "Regulation Q", MMAs allow only 6 withdrawals a month, which sometimes includes ATM transactions, and only 3 may withdrawals may be checks (http://en.wikipedia.org/wiki/Money_market_account)

* FDIC insurance is up to $100k per account

A $200k deposit in a CD earning 3.8% would make around $7.6k over a year. The same deposit in an MMA earning 1.1% would net around $2.2k over a full year.

My personal view is that a CD or MMA requires extra effort and management time and reduces flexibility, so I don't use CDs or MMAs for my businesses unless there are very large amounts involved and a lot of stability in the business. I also don't chase rates from different banks, because of the convenience of having a single bank provide all my accounts.

Instead of letting everything stay on a static basis of consistent 5k burn rate on a 9k monthly revenue, why not think of strategies to increase burn rate and increase revenue? If you took investor's money, I believe the key thing to do right now is to think how to increase your investor's stock value, which will also benefit you.

Don't even consider putting in a CD and Savings. If you do, it would be considered unethical if you're going to earn your investor the pathetic 3-4% in risk free asset, he's better off investing it from a mutual fund.

Hire. Spend. Grow. Never let cash sit idle, be a magician and transform money into more money.

In Australia we have easy access to high interest savings accounts that can be attached to a regular savings account. So money you put in this account can't be accessed by an atm or used for daily transactions but you can put it into your main savings account instantly when ever you want. But for every day it is in this high savings account you will earn 5% interest.

Ask the angel investor they would also probably have some great ideas.

But focus on investing that money in your business. You have a burn rate of about $5k-$9k would increasing that burn rate by investing more into your business (people, sales, marketing, etc) help you reduce that burn rate quicker?

Anyway I have no idea what business you are in, but use it to invest in your business, that is what is was given to you for.