What is a Certificate of Deposit?

More commonly known as a C.D., a Certificate of Deposit is a non-accessible account that you can open with a bank. The depositor purchases a “CD” for a predetermined amount of money (often in hundred or thousand dollar increments). The bank then has the right to loan out the depositors money without fear of depositor withdrawal, and in exchange, the bank pays a higher interest rate.

Larger principal (amount) CD’s will yield higher interest rates. Longer term before repayment will yield higher interest rates. Penalties will be incurred if the depositor decides to cash in their C.D. before term completion.

The C.D. is also insured by the FDIC (What is the FDIC?) which makes it virtually risk free. These are great tools for investors who want more interest that would be yielded from a Savings Account, but want to remain risk free.

A savings account is a great place to store your money and earn a little interest, although they are a bit less accessible than a Checking Account (What is a Checking Account?)

As opposed to a checking account, when you store your money at a bank using a Savings Account, your money is not directly accessible (though it can be with a simple visit to the bank). By storing your money with the bank, you can be sure that your money is safe and secure.

The money is even further secured against bank failure by the FDIC (What is the FDIC?) as well.

Will I Earn Interest with a Savings Account?

You absolutely should. If you’re opening a Savings Account that pays zero interest, you should look into another bank. However, if you’re looking for any sizable interest a savings account is likely not the answer for you. The interest that you will receive will be very, very small. Often under 1% annually. But, minuscule interest is better than none at all.

Savings Account as Overdraft Protection

Many banks offer a great service called overdraft protection. Learn what Overdraft Protection is.

A checking account is an account held at a bank where they store and protect your money for you. This money is immediately available to you at all times, and the bank will usually provide extra services to you like a debit card, checks, and online banking.

By storing your money with the bank, you can be sure that your money is safe and secure.

The money is even further secured against bank failure by the FDIC (What is the FDIC?) as well.

Will I earn Interest?

Probably not, although it isn’t completely unheard of. Most checking accounts pay you via convenience and safety services as opposed to yielding actual interest. If you want to earn interest, you should consider looking into a Savings Account (What is a Savings Account?) or Investing.

Debit Card’s Convenience Factors

Most checking accounts are accompanied by a debit card.  This debit card makes it much easier to spend and access the funds in your account than to carry cash:

1. Mobility
   By carrying a debit card, you could have access to millions of dollars (if you were so lucky to have that amount in your checking account).  In order to have control over that same amount of money in cash, though, it would take carrying backpacks full of money.  This could be very heavy and inconvenient- not to mention it draws unwanted attention, which brings us to%hellip;
2. Safety
   If you carry cash, it is very easy for someone to steal from you.  There is little or no recourse and unless the police manage to catch the thief, you will likely never see your money again.
   With a debit card, however, as soon as it is stolen you can call your bank and cancel the card.  No thief will have access to it and your funds are much safer.

Ladies and Gentlemen: Welcome Neville Medhora-

Tell us a little about yourself and what it is that you do.

Currently I own and manage the largest online rave company. I started HouseOfRave.com in high school, have always done it part time and have just recently gone full time with it.

What is it about money that most intrigues you?

I find it fascinating that money is completely fake. It’s not real. Every major currency is a fiat currency which means it’s essential fake. Until I fully understood that I never made much of it.

There is a simple test you can apply to anyone to see how much money they have:
What is their contribution to their fellow man? How much value have they provided?

Some easy examples of this:
-Guy flipping hamburgers at restaurant provides only a marginally useful service that anyone can do.
-Steve Jobs is a one in a billion guy who took his formerly failing company and turned it into one of the greatest success stories in just a few short years. He revolutionized personal computers and now the phone. He enriched and made millions of lives easier.

Guess which one of those provides the most value, and therefore has the biggest wallet?

What would you say the number one cause of your success is?

‘Success’ is kind of ambiguous, but without further complicating the question I’d say that focusing my efforts on ONE THING really helped. Back in college I was doing 5-10 businesses at once. Nothing ever took off until I took the plunge into just ONE.

What’s the best part about being self employed?

Being able to do my work at noon or save it till 4am. I also absolutely detest rush hour traffic and would rue the day I have to drive in it. I love my work, but I don’t always want to work from 9 to 5. Maybe I want to work a few hours now, go run errands, then work 10 straight hours way into the night. That freedom is what I like best. But with freedom comes having to discipline yourself…that took me a long time.

What are your best methods for finding/attracting clients?

Have something that significantly enriches their life or business in some way.

Name your 5 favorite websites:

www.NevBlog.com – It’s fun to look back at where I was each year. I can’t write about most of the cool stuff on the blog, but it gives me a general snapshot of what I was doing at this time several years ago.
www.ted.com – Single best source of fascinating videos online. I usually watch a ted video when I eat lunch.
www.Luxist.com – I like the luxury real estate section.
www.digg.com – Digg is pretty fun.
www.stumbleupon.com – Maybe once a week I’ll sit and use StumbleUpon for several hours into the wee hours of the morning. I can’t tell you how many fascinating things I’ve stumbled upon and good ideas I’ve got from using this seemingly time-wasting website.

How did you get your start? Did you study something in particular or were you self taught?

I was completely self taught. My immediate family doesn’t have any business experience, so I had to branch out on my own to gain that experience and motivation.

I used to be a big computer nerd back in middle school and high school, and would learn all sorts of different computer programs, how to make webpages etc. Eventually I got interested in seeing if I could make money doing those things.

I also started asking family friends who owned businesses, “Ummm…sir….what do you do?” They were glad to invite me out to their companies and show me around. I was hooked.

Here’s a little elaboration on how I started.

What are the tools that you couldn’t live without?

Photoshop, my tablet PC, fast internet access and books. Especially books.

What do you feel are the most important skills to have in order to manage money?

Common sense. Spend less than you earn. During the good times, make sure you save for the bad times. It’s seriously that simple. People who say otherwise are undisciplined and/or lazy.

How are you coping and dealing with the current downturn in the economy?

I’m trying to boost HouseOfRave.com sales to a $1,000,000/year, and a downturn doesn’t exactly help. I feel I’ll have to work twice as hard to just maintain the level I’m at….and get 10 times as creative to hit my goal. Using more creativity I believe is the way to prosper during bad times.

Wherever there is a big problem, there is an even bigger opportunity.

Which one person would you say has had the biggest influence on you?

Earl Nightingale.

What is your number one tip for a college student freshly started in money management?

Start saving. Be cheap (or frugal, whatever you want to call it). Bargain for everything. Every penny counts. If you don’t graduate with at least 6 months of living expenses saved and ready to use, you’re at a significant disadvantage.

I wrote about this Here.

Is there anything else that you would like to share with the readers at UseTheDollar.com?

Yes. There’s this thing called the library where they have vast collections of the life works of thousands of fascinating, successful and brilliant people. They keep all these secrets in one place, and let anyone use them for absolutely free.

They’re called books, and they often answer every question you could ever have, and impart on you vast amounts of knowledge 99% of the population will never bother to attain. Reading one (non-fiction) book every two weeks can put you so unbelievably far ahead of the curve it blows my mind that more people don’t do it.

Make sure to check out Neville’s personal financial blog (the very first result when conducting a google search for “Finance Blog’) at www.NevBlog.com!

Thanks again Neville!