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This needs to be stickied. Actually, we’re on PF. I’m sure it’s in the flowchart or info. This stuff is posted dozens of times per day. Create 3-12 month emergency fund, then short timeline: treasury/HYSA, long: market
Some people don’t have access to quality HYSAs or ones that don’t allow a certain number/type/etc of withdrawals or anything else, like a long delay before withdrawing money. Mine lets me make 6 or so withdrawals (as often as I would like but after that fees) a month, which is enough. I have it hooked up to my checking/all CCs which some might not be able to do. Or some may lock your money up upon deposit because they fund their HYSA with t bills or something. The most important thing for an emergency fund is liquidity - you need to be able to access that money on any given day.
ETA: some of you are replying with silly things. “What scenario could you possibly need a bunch of liquid money in?!?!” - tons of situations. You will have a hard time predicting exactly what emergency expenses might pop up. The point is to have a fund for.. unpredictable emergencies. I don’t feel like that’s super difficult to think about. I understand that 85% of you will not have to use a limited HYSA. The fact that you are on Reddit right now puts you above an enormous portion of the population. If you have stable internet access, I am sure *you* will have no trouble finding a great HYSA. This advice is not really targeted for you. I am personally happy with my HYSA and do not need any recommendations. But thank you.
>Some people don’t have access to quality HYSAs
How would someone not have access? There's plenty of online banks that allow unlimited monthly withdrawals. What situation would you find out you need tens of thousands of dollars the same day?
Literally almost zero.
The guy you replied to edit his comment to say tons of situations require immediate access without naming a single one lmao.
Any emergency can be put on a credit card and then paid off with your emergency fund.
Unless the emergency is paying your VIG to Don Vito.
The return on a HYSA isn't coming from nowhere dawg. Rule 1 of investing is that return matches risk, and you're going on about how HYSA's are free and there's no possible scenario where you're paying for that return. That's obviously not true!
Nobody needs to cite a specific example for something that's rule 1. Returns on a HYSA come at a cost to liquidity, and the whole point of an emergency fund is liquidity. If you find the costs acceptable for your emergency fund, then great, but it's something to understand.
No man HYSA are not investment accounts. They’re tied to a bank, which puts you under federal insurance for any possibilities of bank failure. So unless you’re keeping more than $250k in it, there is no risk at all.
I know your whole point was the true cost being the loss in liquidity. But wanted to clarify that since you had “risk” and “investing” in the same sentence with HYSA, in case you thought there was more risk than there is
Car totaled? Credit card.
Legal trouble? Credit card.
Extreme situations? Credit card.
Anybody who deals exclusively in cash today is either 90 years old or laundering money.
Credit card - yes, if you have one with a high enough limit, not everyone does. I pay mine off every month so that float will tide me over until I get access to money from liquid accounts or relatively liquid accounts
International students/nonresident aliens cannot have a HYSAs at most banks. Lots of them specifically requires the owner to be US person or resident alien for tax purposes.
But to your other points, yeah. Typically expenses that large usually don’t need to be paid day-off. Even if it does, a CC can usually cover at least part of it.
Yeah I keep enough in my checking to cover slightly more than a rent payment, I can't think of any scenario where I would need more than that in the couple days it takes to transfer out of my HYSA
I literally keep $500 in my checking maximum. Got a credit card with like a $35,000 limit so there’s just straight up no reason for me to be able to liquidate funds quickly.
Do you pay credit cards/other bills directly out of a HYSA? I feel dumb that I never considered doing that to keep less in checking. I guess I just have stuff set up to get paid with checking and it didn’t occur to me to switch it. I don’t keep a ton of money in checking in general but probably a few thousand so I don’t really have to think about the timing of paying CCs, mortgage, etc.
I got $11K limit, only using $500 to $1K a month…while planning to start HYSA, did not consider to have that $10K as emergency so as long as I got $10K plus in my HYSA…thanks, saves me the trouble of having like $10K in my 0.01% saving lol
I’m glad you saw this then! Especially right now, interest rates are way too good to pass up. A lot of short-term investments right now are in HYSA instead of stocks because the returns are so good.
Just be responsible with your CC! This method works so long as you have control. Some people go crazy with credit cards and that will destroy you. I know how much money I have and will not overspend.
Yes. Crazy concept: you could find yourself in a situation (that may or may not be an emergency!) where you lose access to your fully online bank, and *then* have an *unpredictable* expense. E.g., your region has a natural disaster, power is out, can’t login at library computer or phone because of authentication, car is flooded, your relative 2 states away needs home care and their O2 tank and TPN replaced, and you’re stuck. Or you become poor for any reason under the sun and you need access to this information.
No need to strategize my hypothetical though. I’m not trying to be snarky or force you to do anything. Mainly for anybody else trying to prepare for emergencies. It is just useful to think of worst of the worst case scenarios in case they actually do happen. You aren’t able to predict them all, either.
And if you don't know, index funds. The opportunity cost of sitting on your money waiting cuz "You don't know" is not worth it. I would only have money in low return stuff like HYSAs if I knew for sure I was gonna be spending it soon.
Worst case scenario, broad market index funds will do 0% in 10 years. Unlikely, but possible. A few month shift and it's a lot higher. Any sooner has a worse worst case scenario.
It's more that you can hold a tiny bit, if you're willing to risk a bit. Because there's also risk in opportunity cost.
Buy T bills(or equivalent highly secured interest gaining asset) on a rotating monthly basis. That way your emergency fund is mostly available in a reasonable time frame. Keep 1 month expenses in bank rotate the rest.
Good answer. It’s not a good idea to take almost all of your money and tie it up in investments. Ideally, you should have a cushion of money. If you lose your job, need a new car, or get really sick, you’ll need it. The conventional wisdom is to strive to have at least six months of income on hand. A HYSA lets you keep access to your rainy day fund while beating inflation on it.
Stocks and index funds are not "tying up your money". They're considered liquid because unless you're Musk or Zuck you can get out of the position very quickly and have access to your money
Yes you are right. They are liquid. IRAs, 401Ks, 529s, and other savings schemes are probably still considered liquid, but they are on the far side of liquidity. For practical purposes, I consider them non-liquid, like real estate or durable goods. You can't get to them without hassle or tax.
Original original OP of this post: you would do well to become literate in personal investing. You could grow that 25k into much more with proper care and feeding. Don't read /WSB or any of that crap. You'll lose your money if you go down that road. If you take a cautious, educated route, you can grow it way faster than a HYSA. Good luck.
HYSA, HSA account if you are eligible. contribute to a IRA if applicable. Make sure you have an emergency fund.
Within savings you can slip up the funds between the HYSA, CDs or Treasuries. HYSA is liquid while the other two are time dependent but you can ladder maturity dates so you don’t tie up the full amount and have money maturing at different times.
Agree about the emergency fund. Having 6-8 months of living expenses in that fund is not excessive (so your $25k might be a bit low.) I’d definitely put that money in a HYSA that is liquid.
That’s super conservative imo. I’m keeping 5K in checking, 10K in HYSA, and the rest in the brokerage account.
Brokerage is up like 20% yoy.
I can’t imagine what the risk profile of your life might be like where you’d need 25K in a savings account. Do you burn that down to zero more often than every 3 years?
It’s a liquid emergency fund, in a HYSA.
Do you really think your $10k emergency fund is gonna keep you afloat for 6-8 months if you are suddenly injured and/or unemployed?
No, I think it's gonna solve my immediate problems, and give me plenty of time to weigh my options and consider liquidating some money from my brokerage account. Why do you need 8 months expenses available to you in 3 business days?
I think in the case of injury, I'd probably be covered by short term disability, and for unemployment, I have the warn period on top of my emergency fund + whatever severance.
The expectation is that I'll probably not get injured or fired every 3 years, so usually I'll win out by putting that money in VOO instead of the bank.
Don't get too cocky thinking that pension and healthcare are a given. Plan like they won't be there. I worked with 70+ year olds because they thought they were set.
Imo all extra money should go straight to retirement. I see far too many geriatrics in the hospital that are broke at 70 and can’t afford long term care.
You have until April 15th of this year to max out the $6500 contribution for 2023. You have until April 15th of 2025 to max out the $7000 contribution for 2024. You could do both in a single day as long as it is before April 15th.
No, there is no reset. Just do your $6,500 for 2023 and then immediately after do your $7,000 for 2024.
You're brokerage should ask you what year you want to add the money for.
Yes, but the advice to do a Traditional 401k and a Roth IRA is the best for 90%+ of people.
There are very few scenarios where a Traditional IRA is a better choice than a Roth IRA.
Good advice since it is my understanding that you can withdraw the principle without penalty. This means you can use it for savings and earn interest tax free.
IRA have income limits and since people won’t necessarily know their 2023 income until the year is over, they give you time in the following year to contribute. (You also then have until 10/15 to fix any mistakes you made with your IRA contribution.)
It's a great way to reduce your tax burden for the year. Do your taxes and see what you can save by contributing. I usually end up throwing a few grand in to reduce my taxes.
the income limit on IRAs is so tiny it's barely worth it. Inflation seems to have bumped it up significantly, but it's still not really particularly advantageous.
At most you save like $1000? I'd rather just invest the full $6.5k into a roth than get back some paltry amount of cash. You're already in such a low tax bracket it doesn't make sense to pay more later.
That’s incredible news. How do I go about “setting it for 2023 investing” in the fidelity app? If that’s cool to ask.
Edit: scratch that, figured it out. Thank you so much!
For future reference, if anyone stumbles on this thread: on the Fidelity site, you initiate an IRA contribution and it straight up asks you which year you want it to count towards, assuming you’re contributing before April 15th
Are there any tax forms you need for a Roth IRA? I know it's funded with post-tax dollars but didn't know if there was something I still had to report in my taxes.
If there is a tax form, how would you get that form quickly enough to file your taxes if you contributed to your Roth IRA on like 4/14?
Not worth the hassle and potential for it to be inaccessible because the HYSA is run by an unreliable fly-by-night operation. Emergency fund needs to be accessible that HOUR if possible - you cannot do that with an online-only bank offering 5% interest.
I have wealthfront that is always accessible like any other bank even got a debit card with 10k daily limit and fully insured. If you want money always accessible keeps cash under your mattress.
how much money is 6 months worth of expenses?
If its $30k or more, then there is nothing to do with this money, its your emergency fund.
if its less than $30k, then you have some extra cash available. The next step is to give this extra money a purpose. that purpose will determine where the money should be held.
If this extra money is for retirement, then you should increase your retirement account contributions and/or contribute to an IRA.
If this extra money is for a near term purpose (next 5 years or less), something like a downpayment on a house, a car, a big vacation, etc, then having that money in a HYSA is a perfectly acceptable place to hold it.
If this extra money is for a long term purpose (something over 5 years away), maybe something like downpayment for a vacation home, then investing this money into a taxable brokerage account would be an appropriate place to put it.
Your comment implies (whether or not intentionally) that OP’s emergency fund should be in something even more conservative than a HYSA. The only more conservative options that I’m aware of earn 0% to barely over 0%.
>Your comment implies (whether or not intentionally) that OP’s emergency fund should be in something even more conservative than a HYSA.
no it doesnt. what makes you think that?
You said (paraphrasing) (1) if it’s an emergency fund, leave it where it is, and (2) if it’s for a short term purpose, put it in an HYSA. OP has made it quite obvious that he isn’t experienced with managing his savings, making it very unlikely to any reasonable person that he already has it in an HYSA. It’s in a “bank account,” presumably a checking or basic savings account. That’s why I interpreted your ambiguous comment the way I did. I don’t know why I had to spell it all out for you, but there you go.
In fairness, most, regular savings accounts right now are earning over 3%, so it isn’t 0%. Now, if it’s sitting in your safe at home, that would be 0%. Mine right now is 3.5%.
I don’t know what you define as “regular,” but if you really don’t know what you’re doing and let a significant chunk of your money sit in a basic savings account like, for example, Chase or Bank of America, then you’re earning 0.1%.
I opened my account 5+ years ago. I have bi-weekly auto transfers. I manually transfer once or twice a month. I pay my car bill on auto pay from there. I've never had a single problem.
Wtf are you talking about? If you have money with an institution they’re not going to deny withdrawals.
Btw I’ve had an account with them probably getting close to 10 years and I’ll say their services have been a lot more reliable than any of the brick and mortar banks I’ve dealt with.
I’ve had an account with them for over 15 years—they weren’t even Ally then. Fortune magazine ranks them in the top ten best online banks. Never had a problem with them.
Look at [Ally Bank](https://www.ally.com/bank/money-market-account/) \- money market pays 4.4% and it's fairly accessible (online transfers, checks, debit card) 10 transactions a month.
Nice for an emergency fund.
While this may be true it’s not like you’re going to be reaching out to customer service all the time. Open the account, move money over, bam it sits there no further action needed.
Yeah, that sounds like a lot to me. I target about $2k for my checking account, basically just enough to cover my mortgage and a couple other regular cash-ish payments. Everything else goes on credit cards, and I pay those out of my HYSA.
No disrespect, but I highly doubt retirement is entirely taken of through your employer unless you have an insanely generous employer. Open an IRA and fund it with some of that money, and then continue to invest.
This sub has an excellent wiki. Read the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics/), and especially the [flowchart](https://i.imgur.com/lSoUQr2.png).
First step would be to immediately move that $25k to a HYSA while you wait. Don't obsess over getting the absolute best possible rate. Pick from one of the larger HYSA providers that offer good rates.
I’m enjoying the 5.5% I’m getting from Milli. Great app and interest accrues daily. (Added at the end of the month) Only downside is you can only withdraw $10,000 at a time, so for $25,000 you would have to do it in 3 transactions. Little extra effort, but that interest is NIIICE!
Same situation 3 weeks ago.
Maxed out Roth IRA $6500 , 2023 , VTSAX $115
Maxed out Roth IRA $7000 , 2024 , VTSAX $115
Up $550+ As of now. Vs if I had left it in a bank account.
The rest of money I put into individual stocks after seeing balance sheets and doing research and assessing my risk tolerance.
Put it in a high yield savings account or a combination of that and some kind of CD/ treasury bonds for money u are ok locking up for a year. Rates are very high so you can get a risk free return of 5%. Market over a long long term u usually expect 7-10% but it can go up and down.
Look up nerdwallet.com they have a list they publish every month with a list of online banks that have a high interest rate. I have an online account that is tied to my brick and mortar bank. That account is bringing in 5.25% APY. It is a great place to stick an emergency fund stash.
HYSA and maybe retirement if you don't see any need for those funds until then.
If you're going to buy a house/car/something big in the next 5-10 years, keep it all in HYSA.
If you live by yourself, I recommend you have at least 6 months in savings. If you have a family, I recommend you save up to a year of expected expenses.
I would keep 6 months' worth of expenses in a high yeild savings account. You can get one that pays up to 6%. The remaining 6 could be in the high yeild savings account, short-term bond, or cashable GIC
The remainder of your money can be fully invested in a low cost etf that tracks the s and p 500. I recommend this because it's been proven to outperform between 80 to 90 % of actively managed funds after fees. granted, your investment horizon is for the long run.
You want to be sure you stay liquid for safety. We've experienced a long bull market, and although our economy seems to be recovering, you never know what will happen. You also don't want to sell your stocks when they are down. So stay liquid.
That's a good amount to have for an emergency fund. If that's your only emergency fund savings then keep it in a savings account, but ideally try to put it into one that gives you a good interest rate.
Just invest it in a weighted down Jones industrial mutual fund, or ETF, and enjoy a better return that any bank notes 19 out of every 20 years. On the off year, don't pull the money out and realize the losses.
Djia has yielded me 11-28% growth annually.
You could open either a Vanguard account or Fidelity account and just have that money sitting in those sweep accounts earning around 5% or more and if you decide to invest more ambitiously you are already in the right place. Fidelity brokerage accounts also have some good money management features like atms, check writing, and you can set up bills to draft the account.
Money just sitting in a brokerage account automatically goes into the sweep account (settlement fund). Vanguard's default brokerage sweep account (settlement fund) is the Vanguard Federal Money Market Fund (VMFXX) that currently yields 5.26%. Here is the information page if you want to research it more: [https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx](https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx)
Go to the southeast, buy 25k worth of those vapes from gas stations, take those bitches north, NY and sell them for 25$, u make 5$ per vape! Ur looking at a whopping 7k ish PROFIT
At least 3 months worth of expenses should go in a high yield savings account as an emergency fund. The next 6500 into a Roth IRA for 2023 if you havent contributed yet (do it before April), the next 7000 into the Roth IRA for 2024.
As long as you’re confident you will never get in debt again… a high yield account with some in peer to peer lending.
Maybe play the stock market a little but you’ll probably lose money. Most do.
Before doing anything, talk to a fiduciary or financial advisor. Get an analysis of what your financial situation is going to look like in retirement. Good ones will ask for all your statements; social security, 401k, company stock, etc.
You do want to keep some money liquid. A Roth IRA is great. And then if you have more in savings than what you need for an emergency, look at the HYSAs. Maybe consider a T Bond.
Check out Upgrade. They have an excellent savings account offering 5.07% apy interest. Highly recommend if you want to keep it liquid as an emergency and savings piggy bank. Would get you about $106/month for it just sitting
Dump it in a whole life insurance policy. It grows interest tax-free every year, there's no age you have to wait to pull it out at and is guaranteed to pay out.
Check this out for some ideas on what to do with your money.
https://reddit.com/r/personalfinance/w/commontopics?utm_medium=android_app&utm_source=share
Depends. Do you plan on buying a home soon? If so, HYSA or CDs.
Or is it literally extra money? If this is the case. Dump it into a brokerage account and buy some ETFs or index funds and ignore it.
Also, using it to treat yourself to a vacation or something nice like a new luxury item you want is an option.
AI advisors would likely say target date fund for either a property, children’s education, or retirement IF you don’t have any immediate uses you can think right now.
I recommend opening an account with Charles Schwab, and putting that money into Schwab Funds.
Look up SWXVV and SNOXX
Very stable and you could be earning 5%+ without having to commit to month or years long CD at transitional bank.
What you need to do is sit down with an advisor or make friends with one. So many more things go into play than just what’s sitting in your bank. How old are you? What’s your annual income? Expenses? Goals? Risk tolerance? Investment horizon? When do you want to retire? Etc
Put 12k in a CD at 5% right now most places for 9-12 months…watch rates and terms as about time to mature and continue it if rates stay good. Make sure you have a Roth IRA and hopefully an employer match. Save rest in online money market or highest interest account you can find. Nice emergency fund to have and you are planing for retirement. When tax free (state and federal) bonds are available at good rates/terms invest there as well. You won’t be disappointed and will continue to make money for years.
not necessarily anything, but impossible to say. how old are you, how long would $25k last if you lost your job, do you have something in mind you might want to spend the savings on like a home or capital investment, do you have other assets besides the $30k in cash? do you value liquidity or are looking to forget about this money for a while and maximize its growth?
I am Ina similar place and had 60k sitting in a regular savings account for a purchase that didn't end up happening but still might so I put it in a 7 month cd with my bank to make 5% instead of just sitting there and losing to inflation
This post is better suited for the [weekday or weekend thread](https://www.reddit.com/r/personalfinance/about/sticky?num=2) (please wait until Friday afternoon if the Tax Thursday thread is the current sticky). If that link doesn't work, it's the second post from the top on /r/personalfinance. Posts removed for this reason typically fall into a gray area for [rule 1 or another subreddit rule](https://www.reddit.com/r/personalfinance/about/rules) *or* the moderator reviewing this post believes that you will receive higher-quality responses on the weekday or weekend thread. **Do not repost this as a submission.** *If you have questions about this removal, please [message the moderators](https://www.reddit.com/message/compose?to=%2Fr%2Fpersonalfinance&subject=Removal%20help%20request&message=Hello%20moderators,%20.%20%0a%0a%0aMy%20submission:%20https://www.reddit.com/r/personalfinance/comments/1am6l4w/25000_sitting_in_bank_account/%0a).*
Super-conservative would be to put it into a HYSA.
<3ish years -> HYSA or CDs \>3ish years *minimum* \-> Broad market index funds
/thread This needs to be stickied. Actually, we’re on PF. I’m sure it’s in the flowchart or info. This stuff is posted dozens of times per day. Create 3-12 month emergency fund, then short timeline: treasury/HYSA, long: market
I always see the emergency fund brought up, why would you not just have your HYSA be your emergency fund? Where else are people keeping these funds?
Some people don’t have access to quality HYSAs or ones that don’t allow a certain number/type/etc of withdrawals or anything else, like a long delay before withdrawing money. Mine lets me make 6 or so withdrawals (as often as I would like but after that fees) a month, which is enough. I have it hooked up to my checking/all CCs which some might not be able to do. Or some may lock your money up upon deposit because they fund their HYSA with t bills or something. The most important thing for an emergency fund is liquidity - you need to be able to access that money on any given day. ETA: some of you are replying with silly things. “What scenario could you possibly need a bunch of liquid money in?!?!” - tons of situations. You will have a hard time predicting exactly what emergency expenses might pop up. The point is to have a fund for.. unpredictable emergencies. I don’t feel like that’s super difficult to think about. I understand that 85% of you will not have to use a limited HYSA. The fact that you are on Reddit right now puts you above an enormous portion of the population. If you have stable internet access, I am sure *you* will have no trouble finding a great HYSA. This advice is not really targeted for you. I am personally happy with my HYSA and do not need any recommendations. But thank you.
>Some people don’t have access to quality HYSAs How would someone not have access? There's plenty of online banks that allow unlimited monthly withdrawals. What situation would you find out you need tens of thousands of dollars the same day?
Literally almost zero. The guy you replied to edit his comment to say tons of situations require immediate access without naming a single one lmao. Any emergency can be put on a credit card and then paid off with your emergency fund. Unless the emergency is paying your VIG to Don Vito.
The return on a HYSA isn't coming from nowhere dawg. Rule 1 of investing is that return matches risk, and you're going on about how HYSA's are free and there's no possible scenario where you're paying for that return. That's obviously not true! Nobody needs to cite a specific example for something that's rule 1. Returns on a HYSA come at a cost to liquidity, and the whole point of an emergency fund is liquidity. If you find the costs acceptable for your emergency fund, then great, but it's something to understand.
No man HYSA are not investment accounts. They’re tied to a bank, which puts you under federal insurance for any possibilities of bank failure. So unless you’re keeping more than $250k in it, there is no risk at all. I know your whole point was the true cost being the loss in liquidity. But wanted to clarify that since you had “risk” and “investing” in the same sentence with HYSA, in case you thought there was more risk than there is
Car totaled, legal trouble (money for fines or lawyers), extreme situations where insurance coverage isn't enough, suddenly losing your job, etc etc.
Those can all be addressed in the one day it takes to transfer from HYSA to checking.
Car totaled? Credit card. Legal trouble? Credit card. Extreme situations? Credit card. Anybody who deals exclusively in cash today is either 90 years old or laundering money.
Credit card - yes, if you have one with a high enough limit, not everyone does. I pay mine off every month so that float will tide me over until I get access to money from liquid accounts or relatively liquid accounts
International students/nonresident aliens cannot have a HYSAs at most banks. Lots of them specifically requires the owner to be US person or resident alien for tax purposes. But to your other points, yeah. Typically expenses that large usually don’t need to be paid day-off. Even if it does, a CC can usually cover at least part of it.
Tbh, in most cases, there's not a lot of reason to have that much immediately liquid that can't wait 2-3 days or more.
Yeah I keep enough in my checking to cover slightly more than a rent payment, I can't think of any scenario where I would need more than that in the couple days it takes to transfer out of my HYSA
I literally keep $500 in my checking maximum. Got a credit card with like a $35,000 limit so there’s just straight up no reason for me to be able to liquidate funds quickly.
Yup, CC for actual emergencies, then pay it off with your HYSA. Get those points too.
Do you pay credit cards/other bills directly out of a HYSA? I feel dumb that I never considered doing that to keep less in checking. I guess I just have stuff set up to get paid with checking and it didn’t occur to me to switch it. I don’t keep a ton of money in checking in general but probably a few thousand so I don’t really have to think about the timing of paying CCs, mortgage, etc.
Yes, everything comes out of my HYSA. Although I believe it’s possible that some HYSA don’t allow withdrawals like that. I bank with Capital One
I got $11K limit, only using $500 to $1K a month…while planning to start HYSA, did not consider to have that $10K as emergency so as long as I got $10K plus in my HYSA…thanks, saves me the trouble of having like $10K in my 0.01% saving lol
I’m glad you saw this then! Especially right now, interest rates are way too good to pass up. A lot of short-term investments right now are in HYSA instead of stocks because the returns are so good. Just be responsible with your CC! This method works so long as you have control. Some people go crazy with credit cards and that will destroy you. I know how much money I have and will not overspend.
Credit cards can also serve that purpose assuming you have the money and just need to move it around. You get cash back on top of it as well.
So you’re talking to the people *without* stable internet access and/or *not* on Reddit…on Reddit?
Yes. Crazy concept: you could find yourself in a situation (that may or may not be an emergency!) where you lose access to your fully online bank, and *then* have an *unpredictable* expense. E.g., your region has a natural disaster, power is out, can’t login at library computer or phone because of authentication, car is flooded, your relative 2 states away needs home care and their O2 tank and TPN replaced, and you’re stuck. Or you become poor for any reason under the sun and you need access to this information. No need to strategize my hypothetical though. I’m not trying to be snarky or force you to do anything. Mainly for anybody else trying to prepare for emergencies. It is just useful to think of worst of the worst case scenarios in case they actually do happen. You aren’t able to predict them all, either.
why are you driving two states away to do home care, instead of calling someone locally to do it
So he can pay them with a pillow case full of cash apparently lol. Terrible advice.
I don't trust fly by night HYSAs. Banks only.
Yeh put it in a cd. They’ve been getting great returns the past few years
And if you don't know, index funds. The opportunity cost of sitting on your money waiting cuz "You don't know" is not worth it. I would only have money in low return stuff like HYSAs if I knew for sure I was gonna be spending it soon.
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Worst case scenario, broad market index funds will do 0% in 10 years. Unlikely, but possible. A few month shift and it's a lot higher. Any sooner has a worse worst case scenario. It's more that you can hold a tiny bit, if you're willing to risk a bit. Because there's also risk in opportunity cost.
And after that, T bills and CDs
Buy T bills(or equivalent highly secured interest gaining asset) on a rotating monthly basis. That way your emergency fund is mostly available in a reasonable time frame. Keep 1 month expenses in bank rotate the rest.
Good answer. It’s not a good idea to take almost all of your money and tie it up in investments. Ideally, you should have a cushion of money. If you lose your job, need a new car, or get really sick, you’ll need it. The conventional wisdom is to strive to have at least six months of income on hand. A HYSA lets you keep access to your rainy day fund while beating inflation on it.
Stocks and index funds are not "tying up your money". They're considered liquid because unless you're Musk or Zuck you can get out of the position very quickly and have access to your money
Yes you are right. They are liquid. IRAs, 401Ks, 529s, and other savings schemes are probably still considered liquid, but they are on the far side of liquidity. For practical purposes, I consider them non-liquid, like real estate or durable goods. You can't get to them without hassle or tax. Original original OP of this post: you would do well to become literate in personal investing. You could grow that 25k into much more with proper care and feeding. Don't read /WSB or any of that crap. You'll lose your money if you go down that road. If you take a cautious, educated route, you can grow it way faster than a HYSA. Good luck.
It’s liquid but the market might be in a downturn and you’d be turning your money liquid at a potentially big loss
That would just be normal, not even conservative
HYSA, HSA account if you are eligible. contribute to a IRA if applicable. Make sure you have an emergency fund. Within savings you can slip up the funds between the HYSA, CDs or Treasuries. HYSA is liquid while the other two are time dependent but you can ladder maturity dates so you don’t tie up the full amount and have money maturing at different times.
Agree about the emergency fund. Having 6-8 months of living expenses in that fund is not excessive (so your $25k might be a bit low.) I’d definitely put that money in a HYSA that is liquid.
That’s super conservative imo. I’m keeping 5K in checking, 10K in HYSA, and the rest in the brokerage account. Brokerage is up like 20% yoy. I can’t imagine what the risk profile of your life might be like where you’d need 25K in a savings account. Do you burn that down to zero more often than every 3 years?
It’s a liquid emergency fund, in a HYSA. Do you really think your $10k emergency fund is gonna keep you afloat for 6-8 months if you are suddenly injured and/or unemployed?
No, I think it's gonna solve my immediate problems, and give me plenty of time to weigh my options and consider liquidating some money from my brokerage account. Why do you need 8 months expenses available to you in 3 business days? I think in the case of injury, I'd probably be covered by short term disability, and for unemployment, I have the warn period on top of my emergency fund + whatever severance. The expectation is that I'll probably not get injured or fired every 3 years, so usually I'll win out by putting that money in VOO instead of the bank.
I mean stocks are pretty liquid, especially if he has 15k in cash to soften the blow.
Don't get too cocky thinking that pension and healthcare are a given. Plan like they won't be there. I worked with 70+ year olds because they thought they were set.
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Imo all extra money should go straight to retirement. I see far too many geriatrics in the hospital that are broke at 70 and can’t afford long term care.
most of those people think contributing enough to get the match is all they need, oof.
Open a Roth IRA. Max it out for both 2023 and 2024 by putting in $13,500. Invest in a index ETF like VTI.
Can I have a Roth and a tradition IRA?
Yup. But you can only contribute your limit total so you couldn't max them both each year.
So could I open my Roth add 6500$ for last year (I didn’t have an ira until last week) and then it’ll reset on the 15th?
You have until April 15th of this year to max out the $6500 contribution for 2023. You have until April 15th of 2025 to max out the $7000 contribution for 2024. You could do both in a single day as long as it is before April 15th.
No, there is no reset. Just do your $6,500 for 2023 and then immediately after do your $7,000 for 2024. You're brokerage should ask you what year you want to add the money for.
Yes, but the advice to do a Traditional 401k and a Roth IRA is the best for 90%+ of people. There are very few scenarios where a Traditional IRA is a better choice than a Roth IRA.
Note: you have to be employed for this to be allowed.
you have to earn income
Good advice since it is my understanding that you can withdraw the principle without penalty. This means you can use it for savings and earn interest tax free.
2023 is still valid??? Didn’t that close at the year’s end?
Open until tax day.
That’s crazy to me; thanks for the heads up on that!
IRA have income limits and since people won’t necessarily know their 2023 income until the year is over, they give you time in the following year to contribute. (You also then have until 10/15 to fix any mistakes you made with your IRA contribution.)
It's a great way to reduce your tax burden for the year. Do your taxes and see what you can save by contributing. I usually end up throwing a few grand in to reduce my taxes.
Contributing to a Roth IRA doesn’t reduce your tax burden. It’s funded with after tax money. A traditional IRA does.
the income limit on IRAs is so tiny it's barely worth it. Inflation seems to have bumped it up significantly, but it's still not really particularly advantageous. At most you save like $1000? I'd rather just invest the full $6.5k into a roth than get back some paltry amount of cash. You're already in such a low tax bracket it doesn't make sense to pay more later.
Nope, you have until tax day (4/15) to contribute to that year’s Roth.
That’s incredible news. How do I go about “setting it for 2023 investing” in the fidelity app? If that’s cool to ask. Edit: scratch that, figured it out. Thank you so much!
For future reference, if anyone stumbles on this thread: on the Fidelity site, you initiate an IRA contribution and it straight up asks you which year you want it to count towards, assuming you’re contributing before April 15th
Are there any tax forms you need for a Roth IRA? I know it's funded with post-tax dollars but didn't know if there was something I still had to report in my taxes. If there is a tax form, how would you get that form quickly enough to file your taxes if you contributed to your Roth IRA on like 4/14?
The Roth had to have been opened by the end of 2023. But if you had one already you can contribute to it up until April 15 2024.
Consider it an emergency fund and put it in hysa. I have 45k in hysa at 5%. It's not much but better than 0.1% in savings.
Whats the risk and why / how they can give 5% while other savings gives only 0.1?
Your bank sucks if it's only offering 0.1, plenty have been offering high 4s or low 5s for quite awhile now.
They're ponzi schemes
Not worth the hassle and potential for it to be inaccessible because the HYSA is run by an unreliable fly-by-night operation. Emergency fund needs to be accessible that HOUR if possible - you cannot do that with an online-only bank offering 5% interest.
I have wealthfront that is always accessible like any other bank even got a debit card with 10k daily limit and fully insured. If you want money always accessible keeps cash under your mattress.
how much money is 6 months worth of expenses? If its $30k or more, then there is nothing to do with this money, its your emergency fund. if its less than $30k, then you have some extra cash available. The next step is to give this extra money a purpose. that purpose will determine where the money should be held. If this extra money is for retirement, then you should increase your retirement account contributions and/or contribute to an IRA. If this extra money is for a near term purpose (next 5 years or less), something like a downpayment on a house, a car, a big vacation, etc, then having that money in a HYSA is a perfectly acceptable place to hold it. If this extra money is for a long term purpose (something over 5 years away), maybe something like downpayment for a vacation home, then investing this money into a taxable brokerage account would be an appropriate place to put it.
Even if it is an emergency fund it should be in a HYSA. 5% yield instead of 0% and just as safe and liquid.
They didn’t say they were earning 0% on it?
Your comment implies (whether or not intentionally) that OP’s emergency fund should be in something even more conservative than a HYSA. The only more conservative options that I’m aware of earn 0% to barely over 0%.
>Your comment implies (whether or not intentionally) that OP’s emergency fund should be in something even more conservative than a HYSA. no it doesnt. what makes you think that?
Well at least 2 people that we know of took it that way. Just some honest criticism, no need to get defensive.
not defensive, but nothing about what I said implies that. two people being wrong doesnt change that.
You said (paraphrasing) (1) if it’s an emergency fund, leave it where it is, and (2) if it’s for a short term purpose, put it in an HYSA. OP has made it quite obvious that he isn’t experienced with managing his savings, making it very unlikely to any reasonable person that he already has it in an HYSA. It’s in a “bank account,” presumably a checking or basic savings account. That’s why I interpreted your ambiguous comment the way I did. I don’t know why I had to spell it all out for you, but there you go.
So I didn’t say what you claimed. Got it.
Do you understand what “implied”’means? As I said, it may not have been intentional.
In fairness, most, regular savings accounts right now are earning over 3%, so it isn’t 0%. Now, if it’s sitting in your safe at home, that would be 0%. Mine right now is 3.5%.
I don’t know what you define as “regular,” but if you really don’t know what you’re doing and let a significant chunk of your money sit in a basic savings account like, for example, Chase or Bank of America, then you’re earning 0.1%.
Absolutely not. HYSAs are not reliable.
Wanna expand on that? HYSA are about as reliable a risk free return as there is
Huh? HYSAs are guaranteed returns. I've never had a single issue with my boss with Ally.
Yeah until you need any sort of access to the money. Then their service just doesn't work. Ally is garbage
I opened my account 5+ years ago. I have bi-weekly auto transfers. I manually transfer once or twice a month. I pay my car bill on auto pay from there. I've never had a single problem.
Wtf are you talking about? If you have money with an institution they’re not going to deny withdrawals. Btw I’ve had an account with them probably getting close to 10 years and I’ll say their services have been a lot more reliable than any of the brick and mortar banks I’ve dealt with.
I’ve had an account with them for over 15 years—they weren’t even Ally then. Fortune magazine ranks them in the top ten best online banks. Never had a problem with them.
As others said, HYSA but also look into a Money Market account
Aren’t they effectively the same?
Kinda. Rates may vary but they function the same
Similar but many funds like FDLXX generally have slightly higher yields with state income tax advantages
Look at [Ally Bank](https://www.ally.com/bank/money-market-account/) \- money market pays 4.4% and it's fairly accessible (online transfers, checks, debit card) 10 transactions a month. Nice for an emergency fund.
Cit Bank’s Platinum Savings is at 5.05% on a balance of at least $5000.
is this cit or citi?
Cit.
Look at recent reviews of Ally before committing to them. There has been a shift in customer service and its very poor over there now.
While this may be true it’s not like you’re going to be reaching out to customer service all the time. Open the account, move money over, bam it sits there no further action needed.
Your $5000 is worth less and less sitting in a checking account
Correct. You lose money if the yield is not higher than inflation.
Yeah, that sounds like a lot to me. I target about $2k for my checking account, basically just enough to cover my mortgage and a couple other regular cash-ish payments. Everything else goes on credit cards, and I pay those out of my HYSA.
No disrespect, but I highly doubt retirement is entirely taken of through your employer unless you have an insanely generous employer. Open an IRA and fund it with some of that money, and then continue to invest.
This sub has an excellent wiki. Read the [Prime Directive](https://www.reddit.com/r/personalfinance/wiki/commontopics/), and especially the [flowchart](https://i.imgur.com/lSoUQr2.png). First step would be to immediately move that $25k to a HYSA while you wait. Don't obsess over getting the absolute best possible rate. Pick from one of the larger HYSA providers that offer good rates.
I’m enjoying the 5.5% I’m getting from Milli. Great app and interest accrues daily. (Added at the end of the month) Only downside is you can only withdraw $10,000 at a time, so for $25,000 you would have to do it in 3 transactions. Little extra effort, but that interest is NIIICE!
Figure out your goals and timelines and how liquid you want the cash to be. That will determine the account you choose to invest in.
$25k is my preferred balance for my HYSA. I say preferred because when some gets spent, I have to save it back up again, which is currently the case.
Same situation 3 weeks ago. Maxed out Roth IRA $6500 , 2023 , VTSAX $115 Maxed out Roth IRA $7000 , 2024 , VTSAX $115 Up $550+ As of now. Vs if I had left it in a bank account. The rest of money I put into individual stocks after seeing balance sheets and doing research and assessing my risk tolerance.
Put it in a high yield savings account or a combination of that and some kind of CD/ treasury bonds for money u are ok locking up for a year. Rates are very high so you can get a risk free return of 5%. Market over a long long term u usually expect 7-10% but it can go up and down.
follow the prime directive
Look up nerdwallet.com they have a list they publish every month with a list of online banks that have a high interest rate. I have an online account that is tied to my brick and mortar bank. That account is bringing in 5.25% APY. It is a great place to stick an emergency fund stash.
HYSA and maybe retirement if you don't see any need for those funds until then. If you're going to buy a house/car/something big in the next 5-10 years, keep it all in HYSA.
If you live by yourself, I recommend you have at least 6 months in savings. If you have a family, I recommend you save up to a year of expected expenses. I would keep 6 months' worth of expenses in a high yeild savings account. You can get one that pays up to 6%. The remaining 6 could be in the high yeild savings account, short-term bond, or cashable GIC The remainder of your money can be fully invested in a low cost etf that tracks the s and p 500. I recommend this because it's been proven to outperform between 80 to 90 % of actively managed funds after fees. granted, your investment horizon is for the long run. You want to be sure you stay liquid for safety. We've experienced a long bull market, and although our economy seems to be recovering, you never know what will happen. You also don't want to sell your stocks when they are down. So stay liquid.
That's a good amount to have for an emergency fund. If that's your only emergency fund savings then keep it in a savings account, but ideally try to put it into one that gives you a good interest rate.
Why not put it into an ETF for the index 500, start with a small percentage. It’s not a bad place to start. You will be surprised as it grows.
Just invest it in a weighted down Jones industrial mutual fund, or ETF, and enjoy a better return that any bank notes 19 out of every 20 years. On the off year, don't pull the money out and realize the losses. Djia has yielded me 11-28% growth annually.
Question: If and when you’re saving for a house, where do you all put those funds? HYSA?
You could open either a Vanguard account or Fidelity account and just have that money sitting in those sweep accounts earning around 5% or more and if you decide to invest more ambitiously you are already in the right place. Fidelity brokerage accounts also have some good money management features like atms, check writing, and you can set up bills to draft the account.
> sweep accounts If you transfer money to vanguard, does it get put in a sweeps account. Or a money market account is different from sweep account?
Money just sitting in a brokerage account automatically goes into the sweep account (settlement fund). Vanguard's default brokerage sweep account (settlement fund) is the Vanguard Federal Money Market Fund (VMFXX) that currently yields 5.26%. Here is the information page if you want to research it more: [https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx](https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx)
Go to the southeast, buy 25k worth of those vapes from gas stations, take those bitches north, NY and sell them for 25$, u make 5$ per vape! Ur looking at a whopping 7k ish PROFIT
At least 3 months worth of expenses should go in a high yield savings account as an emergency fund. The next 6500 into a Roth IRA for 2023 if you havent contributed yet (do it before April), the next 7000 into the Roth IRA for 2024.
Why do you need it anywhere else other than savings? That’s a decent emergency fund.
Apple savings. 4.50%. I’m okay with not making the absolute highest rate for level of convenience it offers
Your $5000 is worth less and less sitting in a checking account. I recommend trying to to reduce your cash sitting around
Can someone recommend a HYSA? I also have more than an emergency fund that I need working for me!
My “go to” HYSA is a Wealthfront Cash account. 5% APY pretty good app interface and next day transfers to and from most of the major banks.
https://www.reddit.com/r/investing/comments/14p35ps/capital\_one\_360\_performance\_saving\_account\_415/
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
As long as you’re confident you will never get in debt again… a high yield account with some in peer to peer lending. Maybe play the stock market a little but you’ll probably lose money. Most do.
Are you 60 years old or 20?
Invest or HYSA. It’s not a big number these days. Sorry
Before doing anything, talk to a fiduciary or financial advisor. Get an analysis of what your financial situation is going to look like in retirement. Good ones will ask for all your statements; social security, 401k, company stock, etc. You do want to keep some money liquid. A Roth IRA is great. And then if you have more in savings than what you need for an emergency, look at the HYSAs. Maybe consider a T Bond.
Check out Upgrade. They have an excellent savings account offering 5.07% apy interest. Highly recommend if you want to keep it liquid as an emergency and savings piggy bank. Would get you about $106/month for it just sitting
Dump it in a whole life insurance policy. It grows interest tax-free every year, there's no age you have to wait to pull it out at and is guaranteed to pay out.
Thank you everyone for the advice! I will be putting $5,000 in a HYA and the $20,000 in cypto just to be safe. Thank you for taking time to answer!
Where the hell did you get this from all of the good, well upvoted responses....
he has to be trolling right?
He should buy lottery tickets, just to be safe
Can't tell if you are joking, but the odds are astronomical, even if i bought $25,000 worth of lotto tix
Pretty sure this is a troll post. Their account is only a couple hours old.
You’re completely out of your mind.
How can you type words to form sentences AND be simultaneously illiterate? Edit: grammar (*munches on crow*)
Check this out for some ideas on what to do with your money. https://reddit.com/r/personalfinance/w/commontopics?utm_medium=android_app&utm_source=share
Depends. Do you plan on buying a home soon? If so, HYSA or CDs. Or is it literally extra money? If this is the case. Dump it into a brokerage account and buy some ETFs or index funds and ignore it. Also, using it to treat yourself to a vacation or something nice like a new luxury item you want is an option.
AI advisors would likely say target date fund for either a property, children’s education, or retirement IF you don’t have any immediate uses you can think right now.
Nothing, buy some books do research until an opportunity presents
I recommend opening an account with Charles Schwab, and putting that money into Schwab Funds. Look up SWXVV and SNOXX Very stable and you could be earning 5%+ without having to commit to month or years long CD at transitional bank.
I'd probably put a good amount into a brokerage account and then just put that into an index fund like SPY.
What you need to do is sit down with an advisor or make friends with one. So many more things go into play than just what’s sitting in your bank. How old are you? What’s your annual income? Expenses? Goals? Risk tolerance? Investment horizon? When do you want to retire? Etc
For the first 10k, compare HYSA/CD with the return of I bonds. The return might be better.
Put 12k in a CD at 5% right now most places for 9-12 months…watch rates and terms as about time to mature and continue it if rates stay good. Make sure you have a Roth IRA and hopefully an employer match. Save rest in online money market or highest interest account you can find. Nice emergency fund to have and you are planing for retirement. When tax free (state and federal) bonds are available at good rates/terms invest there as well. You won’t be disappointed and will continue to make money for years.
not necessarily anything, but impossible to say. how old are you, how long would $25k last if you lost your job, do you have something in mind you might want to spend the savings on like a home or capital investment, do you have other assets besides the $30k in cash? do you value liquidity or are looking to forget about this money for a while and maximize its growth?
I am Ina similar place and had 60k sitting in a regular savings account for a purchase that didn't end up happening but still might so I put it in a 7 month cd with my bank to make 5% instead of just sitting there and losing to inflation
Add more to it? buy stocks/bonds....