One of the reasons for saving money, for some people, is that they plan to launch a business or some other project that will hopefully produce an even greater return in the future. If you have done this, or attempted to, you know how hard it is to get money from a bank when you actually need it. What's your alternative? One possibility is approaching family and friends.
How many friends do you have that you can approach for capital? Entreprenuer Magazine says it might be more than you think, and finding investors for a new venture may be made easier by making a list. Here are two articles from their website which might help you: Friends With Money, published Aug 2006, and Accepting Money From Friends & Family, published May 2002.
The more money you start with, of course, the more likely it is for friends, family, and even strangers to invest. By having some capital to begin with, you convey the sense that you are serious about your intended venture, that it's important enough to you to spend your own money. They are likely to feel that you will be prudent with their capital, and that you have enough financial discipline that you may actually bring them a return with interest, eventually. Be realistic; asking for all the money that you have determined you will need, beyond your own savings. Don't hold back and then try to ask for more later because you ran out. [That's my philosophy, unless your total required amount is very large. You may feel differently.]
So if you are considering saving money, for whatever purpose, don't put it into a regular checking or savings account with puny interest rates. Consider getting an online savings account or even two, and earn a better rate. Having your money saved online typically reduces banking fees, earns you more interest, and is easier to get at when you need it.Your money is protected by the US FDIC for up to US$100,000 per person per bank (institution, not branch), just like any regular bank account.
Thus, if you are saving over $100K, whether of your own money or capital you have borrowed from friends and family, I suggest opening two accounts at different institutions. This reduces the risk on your capital.An online savings account is ideal because, if you choose a good bank - such as Emigrant Direct or Ing Direct - with a minimum of account conditions, you have a very liquid investment that collects interest until you need it for your project. Remember, it's not the online savings account with the highest interest rate that is best, but the one which gives you the optimum conditions for your financial needs.
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