Question about handling money?

[bertram182]

If you have clients on contracts, and offer a pre-payment option for the year(ie: getting the yearly service fee in Jan/Feb/Mar) Would it be wise to put that upfront collected money into an interest bearing savings account or another form of savings(cd, money market fund) and then use the interest spun off from that as bonus money or some other form of usage?

Just say your sales for the year are @ 200K and you happen to collect half of it upfront (100K), before even putting a mower into action, stash that 100K of collected money into a 3.5% interest bearing savings account and you should be able to earn $3,500, just for the first month. If that money can remain untouched for the next month, you’re looking at $3,622.50, for a new total (after 2 months) of $107,122.50

Does anyone approach it this way? Am I far off the mark here, or headed in the right direction of "it takes money to make money"

[GeorgiaLandscaper]

Its a good idea......but.......alot of guys here need all that money to operate off of. I my self invest half of everything I claim as profit. I do mostly short term investments like cd's. Now the best thing I have is a roth IRA, I put the max amount of money in it every year, I think it was $3000 last year. By the time I am 55 it will already be worth over 1 million dollars. I started it when I was 18.

Maybe you could invest like 65% of what they pay you up front and keep the other in a account to operate buisness on. Let me know if you decide to do it. I am curious how it works out for you.

[GrassMaster]

Yes you are far off the mark...

stash that 100K of collected money into a 3.5% interest bearing savings account and you should be able to earn $3,500, just for the first month. If that money can remain untouched for the next month, you’re looking at $3,622.50, for a new total (after 2 months) of $107,122.50

Am I far off the mark here,

You should be able to earn roughly $3,500 a year at 3.5% interest.

PS: I went to South Georgia Public School, I could be wrong?

[FSully]

100K @ 3.5% would be $3500 for the year not a month.

100K @ 3.5% would be roughly $9.59 per day not including compounding of interest.

Yes drop it into a business savings account or a mutual fund.

[bertram182]

Sorry for the error, dam, do I feel stupid.

Thanks,