Budgeting & Saving / Cash in bank all that bad?
Jun 25, 2022
Cash in bank all that bad?
I have saved up about $15,000, and it's sitting in a high yield savings account at Ally. Is that all that bad? I've had it in the bank for the last year. Honestly I'm glad it wasn't in the market because of what's happening now with stocks but I also understand you can't time investing. But I've had enough people tell me I should invest some of it. I don't have any debt and don't have any plans to make big ticket purchases soon, maybe a home in like 5 or 7 years. I would also consider about half of this as an emergency savings. I've also been saving in my 401k for the last year. Should I invest all of it or at least some of it now? I'd appreciate any constructive feedback.
Replies (12)
Jul 02, 2022
@YousiNLV, I would invest in an S&P 500 index fund there are plenty good firms with great mutual funds like the Vanguard VFAIX for instance or ( ETF )VOO . Unless you are looking at retirement soon then that Series I bond sound great !
Jul 05, 2022
@Mark225, Thanks!
Jun 25, 2022
@YousiNLV, no, I don't think it's all that bad, especially with interest rates going up on those savings accounts. But I do think that in your situation based on how you've painted it, it's a good idea to invest a good chunk of that. If half of it is for an emergency, put the other half in an index fund and call it a day. I'd also seriously go through the exercise of listing out all your financial goals and your expected timeline of meeting those goals and any requirements you have for each goal, like expected return, if applicable.
Jan 16, 2023
@StanSBM, I agree with this. When in doubt, split it up (half savings, half investing) - you'll learn from it and adjust as you need.
Jun 30, 2022
@YousiNLV, No it's not bad as long as you have just the bare minimum you need there. Anything more than that yes is bad IMO. 2 ideas that I can think of is to increase your 401(k) contribution or stash it away into a Roth IRA.
Jun 30, 2022
@Nico154, Or the Series I bond that's yielding almost 10% and guaranteed by the US gov. Everyone is talking about it and it's a great savings tool beyond that rainy day savings stash and for those too afraid to invest more than they already are these days. But be sure to understand it as it locks you up for at least 12 months, the I bond that is.
Jul 05, 2022
@Whitney974, Yes, the I bond is a great idea.
Jul 21, 2022
@YousiNLV, Do what feels right for you. If I were you, I'd invest all of it, but that's just me. At least some portion of it should be invested with long horizon in mind - some amount that will keep you asleep at night.
Aug 10, 2022
@Richard193, This is spot on and so me!
Aug 26, 2022
@YousiNLV, No it's not all that bad now that Ally's savings rate is going up to 1.85% soon. But Inflation is like 9%, so you are effectively yielding around -7%. Like others are saying here, a combo approach into I bonds and increasing your 401k contribution is probably a smart approach. GL to you.
Sep 17, 2022
@YousiNLV, of course not it's not all bad. We need cash and having just enough to keep us sleeping nicely at night is very personal to you. If keeping all that 15k in the bank gives you that peace of mind that's great. If not, put some of it into a low cost well diversified ETF and keep the rest in cash. If you do that don't sell out of the investment (ETF) when the market goes sideways. I've learned to just keep it there, set and forget.
Nov 04, 2022
@JasonMV6, I'm with you on this one. Like how you tied this to piece of mind. That is what matters to me esp right now.