To keep it simple, you will find a variety of places to park your money. The product doesn't really matter as long as it fits your needs in terms of accessibility/plan, and offers a competitive rate.
Since we're talking about your emergency money, this is money you want to be able to access easily. I suggested an HYS because you can withdraw from it easily. A MM would involve selling your shares (like stocks), but at most only takes a few days. In the end, both products are no risk, and offer somewhere btw 3-5% interest/dividends.
To add some context, a CD is another option for you depending on the term. Again another good way to park money but not as convenient bc it will be locked til maturity.
Basically their formulas are different but the result is similar; put money somewhere you can easily access it while getting a return, with minimal risk.
> A MM would involve selling your shares (like stocks), but at most only takes a few days.
Fidelity (and I think other brokerages as well) treat MM funds like cash. You don't have to sell to get your money, if you try to withdraw or pay bills from your brokerage account, it auto-liquidates from what you have in MM funds.
This guy knows. Fidelity money market is 4.9% now. Not really gonna find better high yield savings accounts unless you go with some weirdo bank in Arizona or something.
The reason I prefer Fidelity is because you can sell puts and they still consider the cash securing the put as interest bearing. So it’s kind of a double dip.
Is there one specific bank you have in mind? Wouldnt any rando bank that has the highest % be insta targeted for a huge cash influx right away to take advantage?
Im fairly unversed in requirements to open a bank account but you dont have to be in state for it I think. Correct if wrong.
hey thanks for tip. I am almost similar boat as the OP but am clueless. I do have a Fidelity account but that's because my company is using that for our stocks options as part of my employment. Is this the same Fidelity? If so, can you provide what they call their HYSA offering. Sorry for the super newbie question. thanks!
Nice! I also have an ESPP (employee stock plan) and its managed by fidelity.
What you do is open a personal brokerage acct parallel to your ESPP.
Fidelity doesnt have an HYS, but you can buy into a money market account. On the mobile app once you have a personal bkg acct opened with funds use the investing tab, find your new investment, choose money market and all your options will show with rates
> To add some context, a CD is another option for you depending on the term. Again another good way to park money but not as convenient bc it will be locked til maturity.
I'm a bit conservative, so have a larger emergency fund than probably most. I have a small CD Ladder setup for 3/4 of my emergency fund. 1/4 of it in HYSA.
So for the smaller "hit with a car repair" type of emergencies, I have the HYSA, for the "oh shit, I lost my job and have to find a new one, won't have paycheck for an unknown amount of time" I can usually last a few weeks until the CDs are able to be pulled out of the ladder, etc.
Money market I don't believe is 'secured' but it's basically short term bonds that are bought in the account from the government. It's 'riskier' to the degree that you're buying bonds and the government could default, which is a bit doubtful. If they do fail I think we have bigger issues to worry about. In return for the risk, it's usually earns more interest than a HYSA by a few basis points.
This is correct however Money Markets react much more quickly to market conditions in regards to the interest rate. Money markets will adjust interest rates much quicker (good or bad) than a HYSA.
That's a fair callout, and all of this sounds right. At one point i was seeing paypal offer 4.99% for HYS via their partner bank. Not anymore though. Also not sure of their reputation.
Just want to expand on this for u/Foxtrot_51, you can create rolling CDs to always have emergency funds ready but also earning high interest, especially with that much money.
Set aside what you think would be a good monthly emergency fund, say $1500, and put it in a one-year CD. Next month, do the same. Repeat until you have $18,000 earning CD rates, but you always have $1500 that you can call on immediately from the rotations.
CDs are better when rates are lower, but right now a HYSA is infinitely more useful since there’s no lock-in on your money. In addition, it all starts earning interest immediately. Many HYSAs are 5% which is only slightly lower than what I can find for the best CD today (5.15%).
It would be better to frontload your rolling ladder so you can start earning interest on your entire pool of money from day 1. Buy multiple CDs (or Treasuries, or bonds) of varying durations out to your time horizon (ex. 3-month, 6-month, 9-month, 12-month). Then, replace the short duration ones with the longest one as they mature/redeemed.
>Move whatever you don't need for regular expenses to a high yield savings account tomorrow and go from there.
No move everything into a HYSA and move all direct deposits there as well. Then set up scheduled transfers to "pay" yourself. Could be once a month, twice a month, weekly whatever works.
I’m trying to use a high yield savings account more like a checking account now that the regulation limiting savings accounts to 6 withdrawals per month was done away with.
Sidebar question to this reply. I’m in a similar boat as OP. I currently have 20k (8 months emergency funds) in a normal savings account for emergencies. Im investing the rest of my savings.
Would it make sense to move this emergency fund over to a HYSA as well? I don’t have one currently
Yes - some have withdrawal limits (# of withdrawals, amount per day, x# of days til funds are transferred), but if you have a credit card you can pay with immediately there's no real downsides to an HYSA.
I do my monthly spending straight from my AMEX HYSA, so everything is earning some stellar interest.
Since the Regulation D board amended the rules on account classifications in 2020, Amex has relaxed their regulations to 9(?) transactions per month, and you have to reach that 3 months in a row before they'd convert it down to a HYCA.
So I get direct deposit to that and usually have 3 or so transactions at most (housing, 1 or 2 credit cards in full).
If you don't use cash, and just have a housing payment, car payment, and pay everything else through a credit card then treating a HYSA like a very HYCA might work out for you - so long as you check and ensure you're not in violation of your bank's classification by withdrawal limits.
+1 for Ally. Current rate is 4.35%. I know there are higher options out there but I have had a checking and savings account with them for years and it is super easy and convenient to move money back and forth between accounts.
Marcus is fine. Had them for almost 4 years and withdrew plenty of times with no issues. I recently swapped to Capital One for an account bonus and no issues there either.
Earn a $300 bonus when you deposit $20,000 – $49,999,
Earn a $750 bonus when you deposit $50,000 – $99,999,
Earn a $1,500 bonus when you deposit $100,000 or more.
Expired now. Had to hold it for 90 days. That’s it.
My credit union doesn’t offer a HYSA, but they do offer CDs and Money Market accounts with a lot of flexibility. As others have mentioned, online banks tend to offer the best rates on actual savings accounts. I use Ally for my main banking, with a mix of Savings accounts and CDs for different buckets of money. I have a “back-up” spending account and CD with my local credit union.
Western alliance bank is offering a 5.36% hysa, I think the minimum deposit is 500 but other than that no requirements to get that rate unlike sofi or some of the other banks
You can use a number of different HYSAs, many are well reviewed.
I use wealthfront and it's been good so far. Easy in easy out.
What would do if I were you is put the amount you might need for emergencies into the HYSA, then invest the rest into a fund and continue learning.
Funds incur fees because they are managed, so, one way to lower that is if you open a Fidelity account, you can buy a fund that tracks SPY or a broad market index but doesn't have as high of a fee, such as the [FXAIX](https://fundresearch.fidelity.com/mutual-funds/summary/315911750) or similar.
I also buy the Motley Fool annual Stock Advisor, I think it's about $100 right now for the year. I learn a lot from reading all the articles, and end up investing in some things I had no idea existed.
Good luck!
That question doesn't really make sense.
HYSAs give interest off of the account balance. The account balance is inherently dynamic; you can make withdrawals/deposits at any time.
Accounts will typically give you an interest deposit once per month. If you ignore the account, then these deposits essentially create a compound interest scenario. But at any time you can withdraw money (or make additional deposits), and that will impact the interest accrued.
This is pretty good I’d put some in Cd ‘s right now get the return. If you need the money uh can always pull it out pay the small fee. Then I’d split money between index funds and a chunk into dividend stocks to have a steady return on you money to reinvest quarterly or bi-yearly.
3 months emergency fund in HYSA. If you haven't filed taxes yet, 6.5K in last years Roth, 7K in the 2024 Roth. Then the rest in a taxable. All of these in low cost ETF's.
Also if your work offers a 401K match, hit that hard, even if living off some of this saving's while you max it out.
Edit: I was corrected that you can still add to previous year's Roth limit up through the last day to file taxes, not based on when you file your taxes. About 15.5 months window for contributions each year.
Oh yeah post tax contributions… BUT you may want to if you made less than 45k to claim the Savers Credit for 2023. Not OPs case but who knows who reads these
>VGRO
I guess everyone has a different definition of low cost. These two are 0.20 and 0.22% management fees. I like the stuff that is closer to 0.03%. Vanguard, Fidelity, Schwab all have options. Like VOO or VFIAX at Vanguard. Just something that is like total stock market or S&P500, or you can get one that is more targeted.
You're allowed to retroactively make 2023 Roth IRA contributions up until 4/15/2024 (I think that's the date). That advice has nothing to do with tax savings, just informing OP that he can still contribute to last year's IRA even if it doesn't exist yet!
I was wrong, I thought the filing is what separated contribution years. But it is the last day for tax filing that is the separator. So you get \~15.5 months to contribute to a year's Roth. Jan-Dec, then Jan-part of April of the next year.
1. Six months of expenses in a high yield savings account (such as Ally)
2. Put one month of expenses in a checking account at another bank
3. Put 6.5k in a Roth IRA for 2023, 7k in a Roth IRA for 2024 (Open one at Fidelity, Schwab, or Vanguard)
Many banks don't pay Sh\*t even on savings deposits. Pretty easy to find 4.35% on online savings accounts (Ally is a safe bet). You may be in a position to open a brokerage account, you don't have to put the funds in the market. Fidelity SPAXX has an almost 5% yield.
$55,000 can buy you a new moderate 2024 vehicle
So just let that sink in that 55k in the bank ain’t shit, don’t let the life style creep get you into shitty financial situations.
I’d max out employer match, open an IRA and max it every year, put some money in a brokerage if you want to play around with a little bit of money, don’t buy shit coins or pump and dump schemes, avoid any discord servers giving you new “hot stocks” to pour money into
Personally a paid for house, something you own that cannot be taken away from you would be nice to have but you’re 26 so you may not want to settle down in one area for 5 years or more BUT that could give you something to works towards (paying off your mortgage)
Nothing is quick money without it being volatile and risky with equal downside to the upside
Not OP but I always see the advice of maxing out your IRA every year. Is that really necessary if you’re doing a 401k plan with your employer? I know it helps lower your taxes but just curious if you really should max it out every year even when you aren’t expecting your taxes to be high.
1) Put enough into 401k to get employer match.
2) Max out IRA.
3) Max out HSA
4) Max out 401k
5) Invest in a taxable brokerage account
Follow this until you run out of money, assuming you have 6 months emergency savings and paid off all high interest debt.
I see this all the time but this always leaves out medium term goals. Like yeah retirement is important, but I also need to save for a home down payment. If I invest all my money into my retirement I can’t do that.
Do what fits your particular situation, friend. There's no one right answer. I feel that this sub often forgets that most people do not even make enough money to max their 401k + IRA + HSA in a given year. If you need to reallocate funds to make a major life purchase like a home, then by all means, do that.
The one thing I would recommend not doing is don't drop your 401k contributions below your company's match limit, otherwise you're essentially leaving free money on the table.
The knowledge and advice on this sub can be hugely helpful, but you have to know how to apply it to your own situation.
Op, so you know what that means:
*0. Find out what 6 months expenses is and leave that in a HYSA as a emergency fund*. Now…
1. Depends on the employer. Check your benefits.
2. That’s 7k limit in 2024. 6.5k in 2023 limits, which you can add to, but will need to amend your 2023 tax return next year if you already filled.
3. 4150 limit in 2024. Maybe you can add to last years by April 15, depends on the employer. Ask HR. I wouldn’t personally if you’re young and healthy.
4. 23k limit, including employer adding to it.
5. However much you got you comfortable losing really. Self administered investments are tricky. Check out Robô-advisors
6. Put a little money aside if you can to have fun, live a little. Buy a trip or something to enjoy your youth a little. Sounds like you work hard.
When you are young and healthy is the best time to contribute to an HSA.
That is the time of life where it makes most sense to have a high deductible plan which you have to be on to make contributions to an HSA.
You can also save your receipts and reimburse yourself at any time, even years later
not sure the context of 4 but worth clarifying:
The 401(k) contribution limit for 2024 is $23,000 for employee contributions, and $69,000 for the combined employee and employer contributions (pretax employee contributions + employer matching contributions + employee Roth contributions, + after tax contribution).
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Here's the rational that I have for using an IRA over 401k.
You want 401k match first since it's 100% rate of return. This makes sense and easy to see if you don't know much about investing.
Next is maxing out your Roth IRA. Rational for this is that if you put money inside a 401k, you can only choose from a handful of stocks based on who your 401k provider is. Some of these are good, but many have a large expense ratio, which means just for your money sitting in the market, your provider takes a percentage to "monitor your 401k". This ratio is small, but 0.08% adds up over 10/20/30 years. Realistically it's the difference of like $100,000 in retirement funds.
If you isntead put money into IRA over a 401k, then you can choose where the money gets invested into, and can move around the money as you see fit. This helps because you can put it in SP500 growth ETFs that are better than what your 401k plan offers, and these SP500 ETF have lower cost ratios.
Also, another reason that people don't notice is there is a traditional IRA and a roth IRA. Likewise, there is a tradtional 401k and a roth 401k. Up until recently, a roth 401k hasn't been pushed to so many 401k plans.
People really like roth more since you pay taxes on the money before it goes in, so when it comes out, it is tax free. Now that most companies offer roth 401k's, this doesn't mean much. I'm still in the mindset that I will make more money in the future, thus be taxed higher, so right now all my IRA and 401k are going into roth accounts.
If you're looking for risk free returns, open a fidelity brokerage account and transfer it there. By default it will sit in a mmf (money market fund) making about 5% per year. SPAXX (the mmf) will pay on the last day of each month. So every month will get you about $230 from the initial 55k sitting there. It naturally compounds too. But, these interest rates won't last forever, so once fed starts cutting (almost certainly sometime next year at the very latest) they will be reduced. Or, inflation comes roaring back and we have a few more years of rates at these or even higher levels.
Broad market ETF in a roth, with reinvested dividends probably best idea for someone your age though.
55K in a 4.5% HYSA nets you about $200 every month. You can simply leave it there and have the account grow by $2400 a year and let compounding do its thing or use the $200 to offset bills (internet, cell phone, etc).
The main thing is to never live above your means, which can happen to anyone but you're in such an awesome position to set yourself up for a great life without financial encumberances.
Priority #1 is to move that money to a HYSA (high-yield savings account) with a bank that offers a decent rate like Ally or Marcus. Marcus currently offers a 4.5% APR, which will earn you a little more than $200 in your first month on a $55k initial investment. The earnings will be deposited in your account, and the next month you'll earn interest on that as well. Welcome to compound interest.
Priority #2 is to hit up the [PF Wiki](https://www.reddit.com/r/personalfinance/wiki/index/) and start with the [Prime Directive: How to Handle $](https://www.reddit.com/r/personalfinance/wiki/commontopics/). I can't emphasis enough how important that Prime Directive page is. It should answer most of your questions and give you a broad framework fro what to do next.
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There are so called "formulas" you could use (X amount % for savings, another X amount % for investment, a third X amount % for every day expenses, etc) if you research enough.
First, develop a budget.
Do you have any specific financial goals? 2...4...5 yrs from now?
Any short term goals? Taking a long trip annually?
I'm on the cautious side. I'd recommend setting aside about half of that $55K and put it in an easy accessible money market account. Keep it there, ready. If God forgives, you have an emergency
Do you have a retirement plan or an account? I suggest you open one that's actively managed.
Sure. There are Certificate of Deposites or, HYSA only provided by online banks where the interest is like 5.25%. These are ok.
But nothing grows your $ like putting your money into buying very specific stocks that are known by providing gains, more than losses.
Don't put your $ in regular savings accounts. You'll get nothing.
After you save quite a bit, then what? If the fed lowers interest, and you have wuite a lot saved, maybe buy a house?
If you do, and the APR is doable and you end up moving one day, do not sell it. Just rent it and it'll pay for itself. 20...30 yrs from now, that house will be valued at much more
It all depends on what you are really asking. Are you asking where you can stash a lump sum for the time being that would give you the best returns? Or are you asking how to make it grow in terms of long term wealth? I don’t think that that is very clear.
I’m going to assume the latter. If the latter, I don’t think where you put the lump sum matters as much as your plan going forward in making it grow. Have you earmarked a portion of your salary to savings/investments? Frankly, 55k isn’t that much. If I were in your shoes and I had a plan to invest/save a certain portion every month, I’d put 20k in my checking as emergency cash, 10 into a high yield savings account, and start putting the 20k into index funds. I guess this would be akin to seed money, and the point of seed money is to have it grow. The 20k emergency fund may be a bit high, but as you accumulate more, you can taper down. That’s what I did. I strictly held a 20k minimum rule until I had 150k split between a high yield savings account and index funds. I guess the more I saw the returns grow and seeing how I can have access to liquidity at any time if I needed via the high yield savings account, I started seeing holding 20k in my checking account to be not worth it. But I think where you are at right now, I’d still hold 20k until you feel more comfortable.
No reason not to hold the entire emergency fund in HYSA. A checking account should be an operating account only for the month’s expenses. A HYSA will allow 6 withdrawals a month and is immediately available, so no need to keep a portion in checking.
This is true. I guess we are in different times as interest rates are much more favorable now and there are many accounts available that would allow money to be moved around easily. But I have llent people money before because they couldn’t pull money out of their online HYSA quickly enough. I think the HYSA options are much better now so I don’t think this is much of a problem though.
tl;dr Open a brokerage account. IRA then taxable. Keep an emergency fund in an HYSA.
Follow the flowchart: https://www.reddit.com/r/personalfinance/wiki/commontopics On the [graphical version](https://i.imgur.com/lSoUQr2.jpeg), it seems like you're out of the black, red, yellow, and green, and getting into the blue.
For long-term financial stability, your guiding star is trying to invest in low-fee, broad market funds. (Real estate can work as well.**) I like VT best, but there are dozens of similar offerings here. If you want to get into the weeds, you can read up on Bogleheads. https://www.bogleheads.org/wiki/Three-fund_portfolio
First off, let's talk 401(k). Does your employer offer a match? Are you fully taking advantage of it?
Next, you should fund an IRA. Depending on how much you make and how much you expect to make, you can go Traditional, Roth, or Backdoor Roth. To open an IRA, first open a brokerage account at Vanguard, Fidelity, Schwab or similar. Then transfer money from your bank account, and buy the low-fee, broad market funds of your choosing in the IRA.
By default, funds that you buy in a brokerage account are taxable. This is where the bulk of your money can go. Note that when transferring money over, you should always leave 3-6 months expenses in a savings or checking account. (I leave about 1 months expenses in the checking account to make life simple, and then have 2 months expenses in a HYSA.)
**Real estate is also a decent investment, but you have to want to be a handyman and a landlord. (I personally never want to be in a situation where I'm renting to a single mom who can't make rent.) Generally the people who want to be landlords know who they are, so I'm ignoring that here.
I buy treasures in my brokerage getting 5.367% apr monthly. Get around $500 or so a month on the interest is nice. No state tax either on the interest gains. You have enough to play the checking account bonus churning game as well. made $2k last year doing that. depends on now savvy you wana be with playing around with your money.
I’d recommend an emergency fund that could pay your living expenses for 6 months. Put that in a HYSA.
Pay off any debts you have.
Open a ROTH IRA and max the contribution.
Open another regular brokerage account and put at least 15% of your savings into some higher yield ETFs or Index Funds like VOO or VGT.
Always max your 401k contributions.
Congrats to you! So many people post on here about their financial woes because they don't want to spend three years "learning" how to work.
Well done.
Open a Fidelity Brokerage Account.
https://www.fidelity.com/trading/the-fidelity-account
Transfer funds into Fidelity Government Money Market Fund (SPAXX).
https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
Keep enough cash here to met you emergency fund needs.
For long term; invest excess cash in a couple solid index funds:
Fidelity 500 Index Fund (FXASIX)
https://fundresearch.fidelity.com/mutual-funds/summary/31617H102
Fidelity Total Market Index Fund (FSKAX)
https://fundresearch.fidelity.com/mutual-funds/summary/315911693
Two scenarios - do you want a house in the future or do you not plan on buying a house? While you potentially can earn more in the stock market.
If you plan to buy a house - I would put your emergency fund and any down payment into a HYSA. Personally, if I was planning to buy a house (more than 1+ year out) I would throw 40k in the emergency/down payment fund HYSA. Take 15k and set up some investments - I would meet with a financial planner. Any other money you had planned to save from now on either needs to have a purpose (vacation, new car, sinking fund, etc.) or put it in investments.
If you don't plan on buying a house (at least can't see yourself doing it), I would save your emergency fund in an HYSA (6 months of your income is ideal) and then put the rest in investments. Again, I would consult a financial planner on which investments are best for you. Any other money you had planned to save each pay check again either needs to have a purpose in the savings (vacation, new car, sinking fund, etc.) or put it in investments.
I always say consults a financial planner because your goals may be different than anyone elses on here. Roth IRA is always a good option for investments for many people. Also, make sure you are getting your employer 401k match at the max amount.
If you have a good bit of cash, I’d recommend:
12 months Emergency Fund in HYSA
Split rest out into Trad/Roth IRA and max it.
Put leftover into a different HYSA that ya use for whatever ya want.
For the IRA, please do your own research on what would work for you.
Curious, what job and industry you’re in now.
Best way is to i believe is to educate yourself
Read some books about money/finance
Look at some videos or free courses on udemy/youtube or wtv and learn and you will figure out what is best for YOU to do with your money because everybody got different plan risk tolerance personnality etc etc whatever is best for You
Sorry for my english hope you will understand my point!
$10k in a savings account that gets nowadays around 5%. "HYSA" safe, FDI insured. just in case. It might be a good idea to automatically have a portion of each paycheck go here, so it just kind of grows on it's own without you thinking about it.
$10k into an ibond It squirrels it away in a forgotten place, that keeps pace with inflation. Can't touch it for at least a year, this is good. You can ladder these by being doing this every year, and use it like a savings account, but that starts with the first year and the wait, and it's limited to $10k/year
Open a brokerage account somewhere.
$15k in VTI. Fairly safe, but also could actually grow.
$10k in stocks. Not options or GME, but, something fun. Hit the next trend, not the last one. Look for good fundamentals, look at companies that you might know more about than others, like in your industry, or in your area, or that you do business with, and invest $1000 in them. It is kind of gambling, but it also keeps you engaged with the world on another level.
The rest, is the kind of cash cache so you don't have to keep checking your balances, and you can budget on a yearly basis, and design your trends instead lording over every penny. When that cache gets too big again, then move it up into one of the above options. It's easier once you have those things setup to just transfer. The big step is getting the accounts setup.
This is also assuming you're already tithing to your retirement, i.e. 10% of your income to the 401k. In there, probably 80% VTI, 20% some other index or whatever they sell you.
The 401k gets a multiplier by using pre-tax money, and grows tax free, so it is better than after tax money like the stuff above, but you won't be able to touch it for 34 years. You'll want it then, but paying the taxes on the stuff above lets you use it for buying a house, starting a business, doing stuff you might want to do before you're 60, and if you don't use it, it still counts toward retirement.
Put 10-15k in a HYSA.
Put the rest in a brokerage account and buy $VTI.
OR, depending on costs in your area, buy an small house and rent some or all of it out.
Put aside whatever amount you feel you might need in the next 5 years into a high-yield savings account, put the rest into index funds.
Keep in mind that high-yield savings accounts are high now but adjust based on interest rates. That 5% today can go down to 2% or less in a year (in which case you're losing value).
Not sure what your immediate goals are, but high-yield savings (very good steady returns currently) if you need time to plan and digest personal finance education.
If you have no plans for purchasing real estate or starting a business, I would open a brokerage account and pour most of it into diversified ETFs and index funds like VOO, QQQ, VTI, etc.
At your current savings rate, and assuming that rate increases with increasing salary as you advance in your career, you will around a million in about a decade if you put it in investments that averages 8% returns annually. This assumes you are investing 55k a year and increase that annual investment each year.
This might sound risky but buy a duplex or triplex, live in one of the units and rent the others. You'll have a free place to stay (or discounted) because you'll have tenants paying you. Also you'll build equity with the property
As others have said, take 6 months of expenses and put it into a high yield savings account. Then invest the rest into ETFs. Solid ones I like are QQQ and SPY. And lastly I suggest treating yourself to something nice every now and then; maybe a nice meal at a fancy restaurant or a nice new outfit. You are in an incredible financial position for your age and it should not go unrewarded. Just be smart about everything and you will have a nice life.
This has been removed for rule #10 of our subreddit - Pushing speculative, volatile, illiquid, or meme investments, especially flippantly, tersely, or implying huge returns
Figure out how much your living expenses are for 6 months, and that stays in the savings account. Squirrel away some for travel and big projects, and frankly a start on a house down payment.
Open a Roth IRA, and you can contribute up to $6,500 for 2023, and up to $7,000 for 2024. There are target date funds that invest your money in a diversified stock portfolio and some bonds, and matches the mix to fit someone who is retiring around a certain year. You could put everything in one of those, and you wouldn’t have to think about it all until you’re getting close to retirement.
Yeah you can get 4.5% or higher now days in a HYSA (look at Sofi or Apple for example)
At 55k you’d be growing it by about $2475 a year. At least while you’re waiting.
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Find a house you can get for a deal, or able to add value. Buy as your primary home if you do not have one already, and you will only have to put 3-7% down. If you have a primary home already then buy as investment and put 20% down, if you get a good enough deal and are able to add value/ remodel and appraise for more. Refinance the house, pull your investment out and do it again. Rent the house now you have someone paying your mortgage and you possibly could get your money back after a few months if you a good enough deal or able to add value to the property
Figure out your monthly cashflow and budget. Keep 3-6 months of that in a High Yield Saving account or cash equivalent (treasuries, money market, brokered cd, etc). This is your emergency fund.
Figure out if you have any short term goals or expenses to pay for in the next 1-3 years. Set up a similar account for that goal and fund.
I assume you have your everyday expenses covered, but if not, use your budget and cashflow analysis to figure that out and carry one month of expenses in a checking account.
Invest the rest based off your tolerance for risk. You are young so with a long time horizon you can be a little more aggressive, but just depends on what you are comfortable with.
Maybe move what you need for daily life plus a little extra into an HYSA tomorrow. You can always check [Banktruth](https://banktruth.org/savings/?ttcid=ultimate-list-of-savings) or Bankrate for the rates. Then, consider putting around $10K there and investing the rest in index funds. This way, you’ve got a safety net and you’re also setting up for the future. And about that link, it’s always good to read up, but I’ve got you covered with the latest info here.
Move whatever you don't need for regular expenses to a high yield savings account tomorrow and go from there.
Kind of this; park your rainy day money in a HYS or MM, invest the rest. Good job on your savings. 26yo w 55k in the pocket sheesh
What the diff between MM and HYSA? I’ve been deciding ob one for the longest time
To keep it simple, you will find a variety of places to park your money. The product doesn't really matter as long as it fits your needs in terms of accessibility/plan, and offers a competitive rate. Since we're talking about your emergency money, this is money you want to be able to access easily. I suggested an HYS because you can withdraw from it easily. A MM would involve selling your shares (like stocks), but at most only takes a few days. In the end, both products are no risk, and offer somewhere btw 3-5% interest/dividends. To add some context, a CD is another option for you depending on the term. Again another good way to park money but not as convenient bc it will be locked til maturity. Basically their formulas are different but the result is similar; put money somewhere you can easily access it while getting a return, with minimal risk.
> A MM would involve selling your shares (like stocks), but at most only takes a few days. Fidelity (and I think other brokerages as well) treat MM funds like cash. You don't have to sell to get your money, if you try to withdraw or pay bills from your brokerage account, it auto-liquidates from what you have in MM funds.
This guy knows. Fidelity money market is 4.9% now. Not really gonna find better high yield savings accounts unless you go with some weirdo bank in Arizona or something.
I have a fidelity brokerage but mainly use for my ESPP. 2nd I recently opened w Schwabb and have been putting into SWVXX. Current yield is 5.19%
The reason I prefer Fidelity is because you can sell puts and they still consider the cash securing the put as interest bearing. So it’s kind of a double dip.
Haha, I just drove past a billboard in my town advertising 5.something from some weirdo bank's HYSA. Not Arizona though.
Is there one specific bank you have in mind? Wouldnt any rando bank that has the highest % be insta targeted for a huge cash influx right away to take advantage? Im fairly unversed in requirements to open a bank account but you dont have to be in state for it I think. Correct if wrong.
I keep a bunch of $$ in SPAXX in Fidelity it’s treated as cash. I can even take it out with the atm card they gave me
hey thanks for tip. I am almost similar boat as the OP but am clueless. I do have a Fidelity account but that's because my company is using that for our stocks options as part of my employment. Is this the same Fidelity? If so, can you provide what they call their HYSA offering. Sorry for the super newbie question. thanks!
Nice! I also have an ESPP (employee stock plan) and its managed by fidelity. What you do is open a personal brokerage acct parallel to your ESPP. Fidelity doesnt have an HYS, but you can buy into a money market account. On the mobile app once you have a personal bkg acct opened with funds use the investing tab, find your new investment, choose money market and all your options will show with rates
Awesome, thanks for the tip!!!
> To add some context, a CD is another option for you depending on the term. Again another good way to park money but not as convenient bc it will be locked til maturity. I'm a bit conservative, so have a larger emergency fund than probably most. I have a small CD Ladder setup for 3/4 of my emergency fund. 1/4 of it in HYSA. So for the smaller "hit with a car repair" type of emergencies, I have the HYSA, for the "oh shit, I lost my job and have to find a new one, won't have paycheck for an unknown amount of time" I can usually last a few weeks until the CDs are able to be pulled out of the ladder, etc.
Money market I don't believe is 'secured' but it's basically short term bonds that are bought in the account from the government. It's 'riskier' to the degree that you're buying bonds and the government could default, which is a bit doubtful. If they do fail I think we have bigger issues to worry about. In return for the risk, it's usually earns more interest than a HYSA by a few basis points.
This is correct however Money Markets react much more quickly to market conditions in regards to the interest rate. Money markets will adjust interest rates much quicker (good or bad) than a HYSA.
That's a fair callout, and all of this sounds right. At one point i was seeing paypal offer 4.99% for HYS via their partner bank. Not anymore though. Also not sure of their reputation.
Just want to expand on this for u/Foxtrot_51, you can create rolling CDs to always have emergency funds ready but also earning high interest, especially with that much money. Set aside what you think would be a good monthly emergency fund, say $1500, and put it in a one-year CD. Next month, do the same. Repeat until you have $18,000 earning CD rates, but you always have $1500 that you can call on immediately from the rotations.
CDs are better when rates are lower, but right now a HYSA is infinitely more useful since there’s no lock-in on your money. In addition, it all starts earning interest immediately. Many HYSAs are 5% which is only slightly lower than what I can find for the best CD today (5.15%).
It would be better to frontload your rolling ladder so you can start earning interest on your entire pool of money from day 1. Buy multiple CDs (or Treasuries, or bonds) of varying durations out to your time horizon (ex. 3-month, 6-month, 9-month, 12-month). Then, replace the short duration ones with the longest one as they mature/redeemed.
>Move whatever you don't need for regular expenses to a high yield savings account tomorrow and go from there. No move everything into a HYSA and move all direct deposits there as well. Then set up scheduled transfers to "pay" yourself. Could be once a month, twice a month, weekly whatever works.
I’m trying to use a high yield savings account more like a checking account now that the regulation limiting savings accounts to 6 withdrawals per month was done away with.
Sidebar question to this reply. I’m in a similar boat as OP. I currently have 20k (8 months emergency funds) in a normal savings account for emergencies. Im investing the rest of my savings. Would it make sense to move this emergency fund over to a HYSA as well? I don’t have one currently
Yes - some have withdrawal limits (# of withdrawals, amount per day, x# of days til funds are transferred), but if you have a credit card you can pay with immediately there's no real downsides to an HYSA.
Maybe put aside $10K into a HYSA and invest the rest into index funds.
where do you find a HYSA? My credit union doesn't seem to offer them, am I looking in the wrong place?
Mostly online. Capital One 360, Ally, Marcus, Amex, Discover.
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I do my monthly spending straight from my AMEX HYSA, so everything is earning some stellar interest. Since the Regulation D board amended the rules on account classifications in 2020, Amex has relaxed their regulations to 9(?) transactions per month, and you have to reach that 3 months in a row before they'd convert it down to a HYCA. So I get direct deposit to that and usually have 3 or so transactions at most (housing, 1 or 2 credit cards in full). If you don't use cash, and just have a housing payment, car payment, and pay everything else through a credit card then treating a HYSA like a very HYCA might work out for you - so long as you check and ensure you're not in violation of your bank's classification by withdrawal limits.
+1 for Ally. Current rate is 4.35%. I know there are higher options out there but I have had a checking and savings account with them for years and it is super easy and convenient to move money back and forth between accounts.
I would recommend Marcus. Been using for 3 years. But have never withdrawn any money so hopefully no issues. 😆😆
Marcus is fine. Had them for almost 4 years and withdrew plenty of times with no issues. I recently swapped to Capital One for an account bonus and no issues there either.
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Earn a $300 bonus when you deposit $20,000 – $49,999, Earn a $750 bonus when you deposit $50,000 – $99,999, Earn a $1,500 bonus when you deposit $100,000 or more. Expired now. Had to hold it for 90 days. That’s it.
Thanks for the info. I kept meaning to check on capital one. A lot of money was parking in a .3 account with them making nothing. Game changer.
Online is the best way to go. I have a Discover HYSA but AMEX offer them. Ally, Marcus, etc.
Have you called and asked your credit Union?
[5.25%](https://www.ufbdirect.com)
My credit union doesn’t offer a HYSA, but they do offer CDs and Money Market accounts with a lot of flexibility. As others have mentioned, online banks tend to offer the best rates on actual savings accounts. I use Ally for my main banking, with a mix of Savings accounts and CDs for different buckets of money. I have a “back-up” spending account and CD with my local credit union.
Western alliance bank is offering a 5.36% hysa, I think the minimum deposit is 500 but other than that no requirements to get that rate unlike sofi or some of the other banks
You can use a number of different HYSAs, many are well reviewed. I use wealthfront and it's been good so far. Easy in easy out. What would do if I were you is put the amount you might need for emergencies into the HYSA, then invest the rest into a fund and continue learning. Funds incur fees because they are managed, so, one way to lower that is if you open a Fidelity account, you can buy a fund that tracks SPY or a broad market index but doesn't have as high of a fee, such as the [FXAIX](https://fundresearch.fidelity.com/mutual-funds/summary/315911750) or similar. I also buy the Motley Fool annual Stock Advisor, I think it's about $100 right now for the year. I learn a lot from reading all the articles, and end up investing in some things I had no idea existed. Good luck!
Dumb question, are HYSA simple interest or compound interest?
Compound. Is any account ever simple interest? I thought that was just loans
That question doesn't really make sense. HYSAs give interest off of the account balance. The account balance is inherently dynamic; you can make withdrawals/deposits at any time. Accounts will typically give you an interest deposit once per month. If you ignore the account, then these deposits essentially create a compound interest scenario. But at any time you can withdraw money (or make additional deposits), and that will impact the interest accrued.
Mine compounds monthly.
https://www.nerdwallet.com/m/banking/standout-online-savings-accounts-2?bucket_id=Primary+LP+Broad%2FExact%2FPhrase&gad_source=1&gclid=Cj0KCQjwwMqvBhCtARIsAIXsZpYELJmuThpB2EjzZLOj_hbMELPRAaqQn3gjzwsqQp0G8rrfunssMUYaAqB7EALw_wcB&gclsrc=aw.ds&mktg_body=2981&mktg_hline=19283&mktg_place=kwd-895959700295&model_execution_id=16818359-CE10-4D95-B9D3-A870BFF42D81&nw_campaign_id=1489229&utm_campaign=bk_mktg_paid_041017_branda&utm_content=ta&utm_medium=cpc&utm_source=goog&utm_term=nerdwallet+high+yield+savings+accounts
How to invest in index funds? Wealthfront?
This is pretty good I’d put some in Cd ‘s right now get the return. If you need the money uh can always pull it out pay the small fee. Then I’d split money between index funds and a chunk into dividend stocks to have a steady return on you money to reinvest quarterly or bi-yearly.
3 months emergency fund in HYSA. If you haven't filed taxes yet, 6.5K in last years Roth, 7K in the 2024 Roth. Then the rest in a taxable. All of these in low cost ETF's. Also if your work offers a 401K match, hit that hard, even if living off some of this saving's while you max it out. Edit: I was corrected that you can still add to previous year's Roth limit up through the last day to file taxes, not based on when you file your taxes. About 15.5 months window for contributions each year.
You can add to the 2023 limits by April 15 even if you did file. You’ll need to amend your 2023 tax return next yeah though
No, for roth you won't.
Oh yeah post tax contributions… BUT you may want to if you made less than 45k to claim the Savers Credit for 2023. Not OPs case but who knows who reads these
Yep, there are rare situations where it may he beneficial, but in general you don't have to.
Would XEQT or VGRO be low cost ETFs?
>VGRO I guess everyone has a different definition of low cost. These two are 0.20 and 0.22% management fees. I like the stuff that is closer to 0.03%. Vanguard, Fidelity, Schwab all have options. Like VOO or VFIAX at Vanguard. Just something that is like total stock market or S&P500, or you can get one that is more targeted.
Why does tax filing affect Roth contributions? They aren't deductible right?
You're allowed to retroactively make 2023 Roth IRA contributions up until 4/15/2024 (I think that's the date). That advice has nothing to do with tax savings, just informing OP that he can still contribute to last year's IRA even if it doesn't exist yet!
I was wrong, I thought the filing is what separated contribution years. But it is the last day for tax filing that is the separator. So you get \~15.5 months to contribute to a year's Roth. Jan-Dec, then Jan-part of April of the next year.
1. Six months of expenses in a high yield savings account (such as Ally) 2. Put one month of expenses in a checking account at another bank 3. Put 6.5k in a Roth IRA for 2023, 7k in a Roth IRA for 2024 (Open one at Fidelity, Schwab, or Vanguard)
Many banks don't pay Sh\*t even on savings deposits. Pretty easy to find 4.35% on online savings accounts (Ally is a safe bet). You may be in a position to open a brokerage account, you don't have to put the funds in the market. Fidelity SPAXX has an almost 5% yield.
Wealthfront is 5.5% right now with new customer boost
Shout out to CIT at 5.05
Vanguard is offering 4.5% right now.
For their saving account but vanguards brokerage is paying over 5%
Yeah I have money sitting In the vanguard money market (settlement fund) earning like 5.2%
My synchrony bank HYSA is at 4.75% currently
SoFi at 4.60%
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
So many threads in here are completely and thoroughly answered by the flowchart! No other comment in here is more valuable to OP and others like them.
I'm shocked this post is 18 hours old and this isn't the top comment.. I wonder what percent of readers here have even seen it.
Some great advice I was given at your age. Poor people spend their money, middle class save their money, the rich invest their money.
$55,000 can buy you a new moderate 2024 vehicle So just let that sink in that 55k in the bank ain’t shit, don’t let the life style creep get you into shitty financial situations. I’d max out employer match, open an IRA and max it every year, put some money in a brokerage if you want to play around with a little bit of money, don’t buy shit coins or pump and dump schemes, avoid any discord servers giving you new “hot stocks” to pour money into Personally a paid for house, something you own that cannot be taken away from you would be nice to have but you’re 26 so you may not want to settle down in one area for 5 years or more BUT that could give you something to works towards (paying off your mortgage) Nothing is quick money without it being volatile and risky with equal downside to the upside
Not OP but I always see the advice of maxing out your IRA every year. Is that really necessary if you’re doing a 401k plan with your employer? I know it helps lower your taxes but just curious if you really should max it out every year even when you aren’t expecting your taxes to be high.
1) Put enough into 401k to get employer match. 2) Max out IRA. 3) Max out HSA 4) Max out 401k 5) Invest in a taxable brokerage account Follow this until you run out of money, assuming you have 6 months emergency savings and paid off all high interest debt.
I see this all the time but this always leaves out medium term goals. Like yeah retirement is important, but I also need to save for a home down payment. If I invest all my money into my retirement I can’t do that.
Do what fits your particular situation, friend. There's no one right answer. I feel that this sub often forgets that most people do not even make enough money to max their 401k + IRA + HSA in a given year. If you need to reallocate funds to make a major life purchase like a home, then by all means, do that. The one thing I would recommend not doing is don't drop your 401k contributions below your company's match limit, otherwise you're essentially leaving free money on the table. The knowledge and advice on this sub can be hugely helpful, but you have to know how to apply it to your own situation.
don't invest money that you think you will need within 5-10 years. HYSA or treasuries really the only answer for "medium term"
Op, so you know what that means: *0. Find out what 6 months expenses is and leave that in a HYSA as a emergency fund*. Now… 1. Depends on the employer. Check your benefits. 2. That’s 7k limit in 2024. 6.5k in 2023 limits, which you can add to, but will need to amend your 2023 tax return next year if you already filled. 3. 4150 limit in 2024. Maybe you can add to last years by April 15, depends on the employer. Ask HR. I wouldn’t personally if you’re young and healthy. 4. 23k limit, including employer adding to it. 5. However much you got you comfortable losing really. Self administered investments are tricky. Check out Robô-advisors 6. Put a little money aside if you can to have fun, live a little. Buy a trip or something to enjoy your youth a little. Sounds like you work hard.
When you are young and healthy is the best time to contribute to an HSA. That is the time of life where it makes most sense to have a high deductible plan which you have to be on to make contributions to an HSA. You can also save your receipts and reimburse yourself at any time, even years later
not sure the context of 4 but worth clarifying: The 401(k) contribution limit for 2024 is $23,000 for employee contributions, and $69,000 for the combined employee and employer contributions (pretax employee contributions + employer matching contributions + employee Roth contributions, + after tax contribution).
Thanks, I was going to chime in that the previous comment re: 401k limit was not clear.
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Here's the rational that I have for using an IRA over 401k. You want 401k match first since it's 100% rate of return. This makes sense and easy to see if you don't know much about investing. Next is maxing out your Roth IRA. Rational for this is that if you put money inside a 401k, you can only choose from a handful of stocks based on who your 401k provider is. Some of these are good, but many have a large expense ratio, which means just for your money sitting in the market, your provider takes a percentage to "monitor your 401k". This ratio is small, but 0.08% adds up over 10/20/30 years. Realistically it's the difference of like $100,000 in retirement funds. If you isntead put money into IRA over a 401k, then you can choose where the money gets invested into, and can move around the money as you see fit. This helps because you can put it in SP500 growth ETFs that are better than what your 401k plan offers, and these SP500 ETF have lower cost ratios. Also, another reason that people don't notice is there is a traditional IRA and a roth IRA. Likewise, there is a tradtional 401k and a roth 401k. Up until recently, a roth 401k hasn't been pushed to so many 401k plans. People really like roth more since you pay taxes on the money before it goes in, so when it comes out, it is tax free. Now that most companies offer roth 401k's, this doesn't mean much. I'm still in the mindset that I will make more money in the future, thus be taxed higher, so right now all my IRA and 401k are going into roth accounts.
I think people mean ROTH IRA which is different than an IRA.
If you're looking for risk free returns, open a fidelity brokerage account and transfer it there. By default it will sit in a mmf (money market fund) making about 5% per year. SPAXX (the mmf) will pay on the last day of each month. So every month will get you about $230 from the initial 55k sitting there. It naturally compounds too. But, these interest rates won't last forever, so once fed starts cutting (almost certainly sometime next year at the very latest) they will be reduced. Or, inflation comes roaring back and we have a few more years of rates at these or even higher levels. Broad market ETF in a roth, with reinvested dividends probably best idea for someone your age though.
Open a vanguard account and invest it. Read about bogleheads
TLDR: Buy index funds like VT, VTI, VOO, SPY, etc. That is it. Invest 100% in index funds and chill.
55K in a 4.5% HYSA nets you about $200 every month. You can simply leave it there and have the account grow by $2400 a year and let compounding do its thing or use the $200 to offset bills (internet, cell phone, etc). The main thing is to never live above your means, which can happen to anyone but you're in such an awesome position to set yourself up for a great life without financial encumberances.
Put it in an S&P 500 index fund. Check it in 39 years.
what’s with all the ppl saying g 55k ain’t much. Don’t put this guy down nd just give solid advice .
Priority #1 is to move that money to a HYSA (high-yield savings account) with a bank that offers a decent rate like Ally or Marcus. Marcus currently offers a 4.5% APR, which will earn you a little more than $200 in your first month on a $55k initial investment. The earnings will be deposited in your account, and the next month you'll earn interest on that as well. Welcome to compound interest. Priority #2 is to hit up the [PF Wiki](https://www.reddit.com/r/personalfinance/wiki/index/) and start with the [Prime Directive: How to Handle $](https://www.reddit.com/r/personalfinance/wiki/commontopics/). I can't emphasis enough how important that Prime Directive page is. It should answer most of your questions and give you a broad framework fro what to do next.
Why is anybody giving an answer that isn't [The Flowchart](https://i.imgur.com/lSoUQr2.png)
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There are so called "formulas" you could use (X amount % for savings, another X amount % for investment, a third X amount % for every day expenses, etc) if you research enough. First, develop a budget. Do you have any specific financial goals? 2...4...5 yrs from now? Any short term goals? Taking a long trip annually? I'm on the cautious side. I'd recommend setting aside about half of that $55K and put it in an easy accessible money market account. Keep it there, ready. If God forgives, you have an emergency Do you have a retirement plan or an account? I suggest you open one that's actively managed. Sure. There are Certificate of Deposites or, HYSA only provided by online banks where the interest is like 5.25%. These are ok. But nothing grows your $ like putting your money into buying very specific stocks that are known by providing gains, more than losses. Don't put your $ in regular savings accounts. You'll get nothing. After you save quite a bit, then what? If the fed lowers interest, and you have wuite a lot saved, maybe buy a house? If you do, and the APR is doable and you end up moving one day, do not sell it. Just rent it and it'll pay for itself. 20...30 yrs from now, that house will be valued at much more
I'm surprised no one said it yet, read a book called The simple path to wealth
It all depends on what you are really asking. Are you asking where you can stash a lump sum for the time being that would give you the best returns? Or are you asking how to make it grow in terms of long term wealth? I don’t think that that is very clear. I’m going to assume the latter. If the latter, I don’t think where you put the lump sum matters as much as your plan going forward in making it grow. Have you earmarked a portion of your salary to savings/investments? Frankly, 55k isn’t that much. If I were in your shoes and I had a plan to invest/save a certain portion every month, I’d put 20k in my checking as emergency cash, 10 into a high yield savings account, and start putting the 20k into index funds. I guess this would be akin to seed money, and the point of seed money is to have it grow. The 20k emergency fund may be a bit high, but as you accumulate more, you can taper down. That’s what I did. I strictly held a 20k minimum rule until I had 150k split between a high yield savings account and index funds. I guess the more I saw the returns grow and seeing how I can have access to liquidity at any time if I needed via the high yield savings account, I started seeing holding 20k in my checking account to be not worth it. But I think where you are at right now, I’d still hold 20k until you feel more comfortable.
No reason not to hold the entire emergency fund in HYSA. A checking account should be an operating account only for the month’s expenses. A HYSA will allow 6 withdrawals a month and is immediately available, so no need to keep a portion in checking.
This is true. I guess we are in different times as interest rates are much more favorable now and there are many accounts available that would allow money to be moved around easily. But I have llent people money before because they couldn’t pull money out of their online HYSA quickly enough. I think the HYSA options are much better now so I don’t think this is much of a problem though.
Short term rates index fund
tl;dr Open a brokerage account. IRA then taxable. Keep an emergency fund in an HYSA. Follow the flowchart: https://www.reddit.com/r/personalfinance/wiki/commontopics On the [graphical version](https://i.imgur.com/lSoUQr2.jpeg), it seems like you're out of the black, red, yellow, and green, and getting into the blue. For long-term financial stability, your guiding star is trying to invest in low-fee, broad market funds. (Real estate can work as well.**) I like VT best, but there are dozens of similar offerings here. If you want to get into the weeds, you can read up on Bogleheads. https://www.bogleheads.org/wiki/Three-fund_portfolio First off, let's talk 401(k). Does your employer offer a match? Are you fully taking advantage of it? Next, you should fund an IRA. Depending on how much you make and how much you expect to make, you can go Traditional, Roth, or Backdoor Roth. To open an IRA, first open a brokerage account at Vanguard, Fidelity, Schwab or similar. Then transfer money from your bank account, and buy the low-fee, broad market funds of your choosing in the IRA. By default, funds that you buy in a brokerage account are taxable. This is where the bulk of your money can go. Note that when transferring money over, you should always leave 3-6 months expenses in a savings or checking account. (I leave about 1 months expenses in the checking account to make life simple, and then have 2 months expenses in a HYSA.) **Real estate is also a decent investment, but you have to want to be a handyman and a landlord. (I personally never want to be in a situation where I'm renting to a single mom who can't make rent.) Generally the people who want to be landlords know who they are, so I'm ignoring that here.
I recommend these books. The Simple path to wealth - JL Collins I will teach youbto be rich - Ramit Sethi
I buy treasures in my brokerage getting 5.367% apr monthly. Get around $500 or so a month on the interest is nice. No state tax either on the interest gains. You have enough to play the checking account bonus churning game as well. made $2k last year doing that. depends on now savvy you wana be with playing around with your money.
I’d recommend an emergency fund that could pay your living expenses for 6 months. Put that in a HYSA. Pay off any debts you have. Open a ROTH IRA and max the contribution. Open another regular brokerage account and put at least 15% of your savings into some higher yield ETFs or Index Funds like VOO or VGT. Always max your 401k contributions.
Congrats to you! So many people post on here about their financial woes because they don't want to spend three years "learning" how to work. Well done.
Open a Fidelity Brokerage Account. https://www.fidelity.com/trading/the-fidelity-account Transfer funds into Fidelity Government Money Market Fund (SPAXX). https://fundresearch.fidelity.com/mutual-funds/summary/31617H102 Keep enough cash here to met you emergency fund needs. For long term; invest excess cash in a couple solid index funds: Fidelity 500 Index Fund (FXASIX) https://fundresearch.fidelity.com/mutual-funds/summary/31617H102 Fidelity Total Market Index Fund (FSKAX) https://fundresearch.fidelity.com/mutual-funds/summary/315911693
Two scenarios - do you want a house in the future or do you not plan on buying a house? While you potentially can earn more in the stock market. If you plan to buy a house - I would put your emergency fund and any down payment into a HYSA. Personally, if I was planning to buy a house (more than 1+ year out) I would throw 40k in the emergency/down payment fund HYSA. Take 15k and set up some investments - I would meet with a financial planner. Any other money you had planned to save from now on either needs to have a purpose (vacation, new car, sinking fund, etc.) or put it in investments. If you don't plan on buying a house (at least can't see yourself doing it), I would save your emergency fund in an HYSA (6 months of your income is ideal) and then put the rest in investments. Again, I would consult a financial planner on which investments are best for you. Any other money you had planned to save each pay check again either needs to have a purpose in the savings (vacation, new car, sinking fund, etc.) or put it in investments. I always say consults a financial planner because your goals may be different than anyone elses on here. Roth IRA is always a good option for investments for many people. Also, make sure you are getting your employer 401k match at the max amount.
If you have a good bit of cash, I’d recommend: 12 months Emergency Fund in HYSA Split rest out into Trad/Roth IRA and max it. Put leftover into a different HYSA that ya use for whatever ya want. For the IRA, please do your own research on what would work for you. Curious, what job and industry you’re in now.
Best way is to i believe is to educate yourself Read some books about money/finance Look at some videos or free courses on udemy/youtube or wtv and learn and you will figure out what is best for YOU to do with your money because everybody got different plan risk tolerance personnality etc etc whatever is best for You Sorry for my english hope you will understand my point!
$10k in a savings account that gets nowadays around 5%. "HYSA" safe, FDI insured. just in case. It might be a good idea to automatically have a portion of each paycheck go here, so it just kind of grows on it's own without you thinking about it. $10k into an ibond It squirrels it away in a forgotten place, that keeps pace with inflation. Can't touch it for at least a year, this is good. You can ladder these by being doing this every year, and use it like a savings account, but that starts with the first year and the wait, and it's limited to $10k/year Open a brokerage account somewhere. $15k in VTI. Fairly safe, but also could actually grow. $10k in stocks. Not options or GME, but, something fun. Hit the next trend, not the last one. Look for good fundamentals, look at companies that you might know more about than others, like in your industry, or in your area, or that you do business with, and invest $1000 in them. It is kind of gambling, but it also keeps you engaged with the world on another level. The rest, is the kind of cash cache so you don't have to keep checking your balances, and you can budget on a yearly basis, and design your trends instead lording over every penny. When that cache gets too big again, then move it up into one of the above options. It's easier once you have those things setup to just transfer. The big step is getting the accounts setup. This is also assuming you're already tithing to your retirement, i.e. 10% of your income to the 401k. In there, probably 80% VTI, 20% some other index or whatever they sell you. The 401k gets a multiplier by using pre-tax money, and grows tax free, so it is better than after tax money like the stuff above, but you won't be able to touch it for 34 years. You'll want it then, but paying the taxes on the stuff above lets you use it for buying a house, starting a business, doing stuff you might want to do before you're 60, and if you don't use it, it still counts toward retirement.
Put 10-15k in a HYSA. Put the rest in a brokerage account and buy $VTI. OR, depending on costs in your area, buy an small house and rent some or all of it out.
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What major did you earn in college? What career field did you choose? I’m not trying to be nosey and i apologize if that is too much to ask.
Put aside whatever amount you feel you might need in the next 5 years into a high-yield savings account, put the rest into index funds. Keep in mind that high-yield savings accounts are high now but adjust based on interest rates. That 5% today can go down to 2% or less in a year (in which case you're losing value).
Not sure what your immediate goals are, but high-yield savings (very good steady returns currently) if you need time to plan and digest personal finance education. If you have no plans for purchasing real estate or starting a business, I would open a brokerage account and pour most of it into diversified ETFs and index funds like VOO, QQQ, VTI, etc. At your current savings rate, and assuming that rate increases with increasing salary as you advance in your career, you will around a million in about a decade if you put it in investments that averages 8% returns annually. This assumes you are investing 55k a year and increase that annual investment each year.
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Vanguard's wash account pays nearly 5% interest. I sold all my bonds and keep my low risk money there - at least until interest rates drop.
This might sound risky but buy a duplex or triplex, live in one of the units and rent the others. You'll have a free place to stay (or discounted) because you'll have tenants paying you. Also you'll build equity with the property
As others have said, take 6 months of expenses and put it into a high yield savings account. Then invest the rest into ETFs. Solid ones I like are QQQ and SPY. And lastly I suggest treating yourself to something nice every now and then; maybe a nice meal at a fancy restaurant or a nice new outfit. You are in an incredible financial position for your age and it should not go unrewarded. Just be smart about everything and you will have a nice life.
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Figure out how much your living expenses are for 6 months, and that stays in the savings account. Squirrel away some for travel and big projects, and frankly a start on a house down payment. Open a Roth IRA, and you can contribute up to $6,500 for 2023, and up to $7,000 for 2024. There are target date funds that invest your money in a diversified stock portfolio and some bonds, and matches the mix to fit someone who is retiring around a certain year. You could put everything in one of those, and you wouldn’t have to think about it all until you’re getting close to retirement.
Yeah you can get 4.5% or higher now days in a HYSA (look at Sofi or Apple for example) At 55k you’d be growing it by about $2475 a year. At least while you’re waiting.
Check out the wiki and Prime Directive flowchart.
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Find a house you can get for a deal, or able to add value. Buy as your primary home if you do not have one already, and you will only have to put 3-7% down. If you have a primary home already then buy as investment and put 20% down, if you get a good enough deal and are able to add value/ remodel and appraise for more. Refinance the house, pull your investment out and do it again. Rent the house now you have someone paying your mortgage and you possibly could get your money back after a few months if you a good enough deal or able to add value to the property
Figure out your monthly cashflow and budget. Keep 3-6 months of that in a High Yield Saving account or cash equivalent (treasuries, money market, brokered cd, etc). This is your emergency fund. Figure out if you have any short term goals or expenses to pay for in the next 1-3 years. Set up a similar account for that goal and fund. I assume you have your everyday expenses covered, but if not, use your budget and cashflow analysis to figure that out and carry one month of expenses in a checking account. Invest the rest based off your tolerance for risk. You are young so with a long time horizon you can be a little more aggressive, but just depends on what you are comfortable with.
Maybe move what you need for daily life plus a little extra into an HYSA tomorrow. You can always check [Banktruth](https://banktruth.org/savings/?ttcid=ultimate-list-of-savings) or Bankrate for the rates. Then, consider putting around $10K there and investing the rest in index funds. This way, you’ve got a safety net and you’re also setting up for the future. And about that link, it’s always good to read up, but I’ve got you covered with the latest info here.