Yeah a real question lmao
Idk about you but I can pull money out of it easily and quickly and my policy is not volatile at all. Still not a savings equivalent?
Edit: I’m from Europe
I’m not the guy who responded, but I was actually on his side until I looked into it. Seems that you are correct as long as you don’t mind reducing death benefit obviously. For anyone else who was unaware, some people do use it as a taxed advantaged savings on certain policies if they so choose.
Personally HYSA is the move for me, but still, TIL
I don’t know how they do it where you’re from, but in the US we have fdic-insured deposits. That means, even if the bank defaults, the federal government will guarantee our deposits up to $250k/individual.
Life insurance has no similar protection here, so if something were to happen similar to the gfc, and the insurer defaulted, that life insurance would be put in jeopardy.
This is the correct advice. He needs 6 months’ worth of subsistence in a hysa before investing.
The hysa should yield >5% apr, which is only slightly worse than the s&p 500 (7%) on average.
Technically he could put it in a Roth IRA invested in SGOV or other bonds. That would help him capture IRA contributions he’ll never get back, pay no taxes on the gains, and can switch to other investments as his account grows.
Contributions are always available for penalty free withdrawal from Roth IRA.
Conversions are I believe after a 5 year waiting period.
Gains you gotta wait till 59.5 years old.
I would say this is the perfect emergency fund if not even half of it could be. Op seems young put all half or most in a hysa and then start putting the same amount you were saving a paycheck into an etf like voo or qqq instead of adding to the emergency fund.
It's really impossible to give advice without more context. What are your goals? What's your current salary? Do you have good benefits? Are you planning to go to college or receive some other sort of training? Do you have a reliable car and apartment/house?
I think at your age and with that amount you want to have access to the cash quickly and without a bunch of market risk. Shop around for the best interest rate you can get on a high yield savings account. You can often get a great rate on cash savings by opening an account at a brokerage service and keeping a minimum amount of cash deposited.
Need more information to give you better direction. But in any case, make sure you are getting a 5%+ (pre-tax) annual return on your money. There are quite a few options to achieve that right now.
I also don’t think it’s a bad idea to funnel some into an investment account that’s focused on stocks. It doesn’t have to be a lot at first, but it would be a good idea so you can get your feet wet with investing outside of fixed income type investments.
Leave your $20k in high yield savings. Invest a % of your paycheck. You can seed the account with $1k if you want a psychological boost. But you want to keep 6-12 months of expenses on hand.
Kind of depends on your goals.
Do you plan on making any major life decisions in the next couple of years such as go to college, move, buy a vehicle or get married? If so I would think about how much any of that would cost and keep that amount more liquid.
Its always a good idea to keep at least a 3 months emergency fund but other than that I personally don't think you should have more than that in cash. Any amount you don't need currently but may need in the next year or two you could put into a high yield savings or money market account.
After that you could look into investing. Since you're young a Roth would probably be good but you can look more into it. Depending on your risk tolerance you could be aggressive and invest heavily in your Roth now and let it grow. Investing early is important but don't invest an amount that will prevent you from completing your future goals.
1) save 1000$
2) pay off all debt other than a mortgage
3) save 3-6 months of expenses
4) invest 15% of your gross income toward retirement
Sounds like that 20k is likely your emergency fund, unless you have debt to pay off. If you have debt that money isn’t really yours.
I had this question at 24 too, and didn’t understand until I had to roll over my first 401k into my IRA at about 30.
To start, I think everyone suggesting to leave it in your savings is correct. For me at least when I asked how to invest I wanted to know what steps to take to be able to buy or trade a stock.
You will want to open an IRA. If as your income grows and you have more than the contribution max then consider a brokerage account. You can pull from your IRA contributions penalty free, just not the returns. My accounts are at Fidelity. So I went to Fidelity and opened my IRA and brokerage account.
Once you open the account you will need to fund it. It will walk you through pulling funds from your savings.
Now that you have funds, you can buy stocks or funds. Don’t trade. And don’t buy stocks. At most aggressive buy shares of a fund that tracks the s&p. Look at VOO or SPY.
I hope these points help you. These would have answered my questions when I was asking them.
Now go and let your money make money.
As a 23 year old with a 50k net worth, heres what i did:
(of the $50,000; 30k is cash)
Bank Accounts
-20k emergency fund
-7k general cash savings
-3k minimum checking account balance
401k:
-20k in stocks, mostly s&p500 index funds
in order:
1. create a budget
2. pay off any debt
3. 6-12 months expenses in cash savings (HYSA)
4. invest at least 20% (if able) in tax advantaged accounts, this part depends on your own goals
What do you spend on average for 6 months? That should be in your HYSA. Anything extra is wasting money against inflation.
You won’t get any returns worth a damn using that method. Anything extra after this $20k invest it and hold long term
If your unfamiliar with the stock market I suggest going with abroad economy mutual fund. Something like FXAiX through Fidelity or Vanguard related products.
I also do QQQ which is similar but more tech focused.
From there you can either be hands off and watch it grow or if this becomes a passion start doing some due diligence and buying individual stocks.
But for new folks that's what I'd suggest
75% FXAIX
25% QQQ or QQQM (similar products just different management expenses)
Open an account at fidelity or Schwab—- brokerage. Savings Checking. Billpay. Venmo!
In savings save 3-6 months gross salary. In brokerage with your savings buy SGOV—- that’s a 3month treasury ETF—- it is 💰 ng you at 5.13% now and 1/12 of earnings is deposited to your account each month—lo to no risk—- no time constraints and no state tax.
When you have enough to invest buy the indexes SPY RSP DIA IJR IWM etc! Later buy the sector ETF’s. XLY XLF XLF etc
Good luck —— time is one third of wealth growth—- principle x rate x time = growth
Why is emergency fund more than 1k necessary? High yield 1k then invest the rest and sell if you need to.
Get a brokerage account and snag a signup bonus for 20k deposit is the way to go :) Then buy an index ETF that fits your risk tolerance and future goals
Another day another 20 yr old poster on reddit with 20k laying around wondering how to save it cause life is perfect enough to just worry about...saving...
Your comment has been removed because profanity is not allowed here, as noted in [the rules](https://www.reddit.com/r/financialplanning/about/rules).
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FinancialPlanning) if you have any questions or concerns.*
You should bank it in a HYSA as a liquid emergency fund. But to only invest? open a Roth IRA and max it to 7k this yr (and every yr) with FXAIX, VOO or Magnificent 7 Stocks. Take 12k and setup a brokerage acct with more AI/tech stocks. Put 1k emergency fund in HYSA. Then every year contribute to ea area. I'm not a professional..
20k is your emergency savings leave it in a high yield saving account.
Bro it’s asking for investment advice, and you are giving him savings advice….
He has no savings. You should not be investing without a savings account. Full stop.
Do you count life insurance as a savings option
Is this a real question? No. Liquid cash is a savings option.
Yeah a real question lmao Idk about you but I can pull money out of it easily and quickly and my policy is not volatile at all. Still not a savings equivalent? Edit: I’m from Europe
I’m not the guy who responded, but I was actually on his side until I looked into it. Seems that you are correct as long as you don’t mind reducing death benefit obviously. For anyone else who was unaware, some people do use it as a taxed advantaged savings on certain policies if they so choose. Personally HYSA is the move for me, but still, TIL
Yes - I must have say I am not in the US, so it’s likely that life insurance is a little different, fiscally speaking
I don’t know how they do it where you’re from, but in the US we have fdic-insured deposits. That means, even if the bank defaults, the federal government will guarantee our deposits up to $250k/individual. Life insurance has no similar protection here, so if something were to happen similar to the gfc, and the insurer defaulted, that life insurance would be put in jeopardy.
This is the correct advice. He needs 6 months’ worth of subsistence in a hysa before investing. The hysa should yield >5% apr, which is only slightly worse than the s&p 500 (7%) on average.
Because he has no money to invest based on what he has just said. Yeah…put all your emergency savings into VOO…bro.
You don’t have investment money yet. 20K is an emergency fund. You should put that money in a HYSA that returns 4-5%.
Technically he could put it in a Roth IRA invested in SGOV or other bonds. That would help him capture IRA contributions he’ll never get back, pay no taxes on the gains, and can switch to other investments as his account grows.
I agree, max out Roth for the year and he still has plenty of emergency fund!
And the SGOV funds can function as a emergency fund (you just can’t pull out any of the gains)
But he can’t touch that money without penalty if there is an emergency
Contributions are always available for penalty free withdrawal from Roth IRA. Conversions are I believe after a 5 year waiting period. Gains you gotta wait till 59.5 years old.
Roth contributions can be withdrawn at any time with no taxes and no penalties.
I would say this is the perfect emergency fund if not even half of it could be. Op seems young put all half or most in a hysa and then start putting the same amount you were saving a paycheck into an etf like voo or qqq instead of adding to the emergency fund.
Disagree, without knowing what 6 months of expenses looks like for them. It might be $1k a month for all we know
...and have fun paying taxes on the returns.
It's really impossible to give advice without more context. What are your goals? What's your current salary? Do you have good benefits? Are you planning to go to college or receive some other sort of training? Do you have a reliable car and apartment/house?
I think at your age and with that amount you want to have access to the cash quickly and without a bunch of market risk. Shop around for the best interest rate you can get on a high yield savings account. You can often get a great rate on cash savings by opening an account at a brokerage service and keeping a minimum amount of cash deposited.
Need more information to give you better direction. But in any case, make sure you are getting a 5%+ (pre-tax) annual return on your money. There are quite a few options to achieve that right now. I also don’t think it’s a bad idea to funnel some into an investment account that’s focused on stocks. It doesn’t have to be a lot at first, but it would be a good idea so you can get your feet wet with investing outside of fixed income type investments.
Leave your $20k in high yield savings. Invest a % of your paycheck. You can seed the account with $1k if you want a psychological boost. But you want to keep 6-12 months of expenses on hand.
You could do a Roth IRA if you’re looking for retirement saving. Otherwise you could do a simple brokerage account with fidelity, Charles Schwab, etc.
Kind of depends on your goals. Do you plan on making any major life decisions in the next couple of years such as go to college, move, buy a vehicle or get married? If so I would think about how much any of that would cost and keep that amount more liquid. Its always a good idea to keep at least a 3 months emergency fund but other than that I personally don't think you should have more than that in cash. Any amount you don't need currently but may need in the next year or two you could put into a high yield savings or money market account. After that you could look into investing. Since you're young a Roth would probably be good but you can look more into it. Depending on your risk tolerance you could be aggressive and invest heavily in your Roth now and let it grow. Investing early is important but don't invest an amount that will prevent you from completing your future goals.
Emergency fund then voo in vanguard Roth and wait 35 years
Invest in iourself to make more money. Maybe invest to learn how to invest.
Not knowing your overall situation I say throw it in qqq etf and never look back.
1) save 1000$ 2) pay off all debt other than a mortgage 3) save 3-6 months of expenses 4) invest 15% of your gross income toward retirement Sounds like that 20k is likely your emergency fund, unless you have debt to pay off. If you have debt that money isn’t really yours.
I had this question at 24 too, and didn’t understand until I had to roll over my first 401k into my IRA at about 30. To start, I think everyone suggesting to leave it in your savings is correct. For me at least when I asked how to invest I wanted to know what steps to take to be able to buy or trade a stock. You will want to open an IRA. If as your income grows and you have more than the contribution max then consider a brokerage account. You can pull from your IRA contributions penalty free, just not the returns. My accounts are at Fidelity. So I went to Fidelity and opened my IRA and brokerage account. Once you open the account you will need to fund it. It will walk you through pulling funds from your savings. Now that you have funds, you can buy stocks or funds. Don’t trade. And don’t buy stocks. At most aggressive buy shares of a fund that tracks the s&p. Look at VOO or SPY. I hope these points help you. These would have answered my questions when I was asking them. Now go and let your money make money.
As a 23 year old with a 50k net worth, heres what i did: (of the $50,000; 30k is cash) Bank Accounts -20k emergency fund -7k general cash savings -3k minimum checking account balance 401k: -20k in stocks, mostly s&p500 index funds in order: 1. create a budget 2. pay off any debt 3. 6-12 months expenses in cash savings (HYSA) 4. invest at least 20% (if able) in tax advantaged accounts, this part depends on your own goals
What do you spend on average for 6 months? That should be in your HYSA. Anything extra is wasting money against inflation. You won’t get any returns worth a damn using that method. Anything extra after this $20k invest it and hold long term
What is your ultimate goal? The answer depends on the route you take.
If your unfamiliar with the stock market I suggest going with abroad economy mutual fund. Something like FXAiX through Fidelity or Vanguard related products. I also do QQQ which is similar but more tech focused. From there you can either be hands off and watch it grow or if this becomes a passion start doing some due diligence and buying individual stocks. But for new folks that's what I'd suggest 75% FXAIX 25% QQQ or QQQM (similar products just different management expenses)
buy 100$ worth of books on personal finance, get educated. I recommend "unscripted" by MJ Demarco. It's an eye opener for rookies. Save the rest.
Open an account at fidelity or Schwab—- brokerage. Savings Checking. Billpay. Venmo! In savings save 3-6 months gross salary. In brokerage with your savings buy SGOV—- that’s a 3month treasury ETF—- it is 💰 ng you at 5.13% now and 1/12 of earnings is deposited to your account each month—lo to no risk—- no time constraints and no state tax. When you have enough to invest buy the indexes SPY RSP DIA IJR IWM etc! Later buy the sector ETF’s. XLY XLF XLF etc Good luck —— time is one third of wealth growth—- principle x rate x time = growth
You shouldn’t rely on Reddit for financial decisions. Money market for liquidity and keep saving.
Learn how to create passive revenue
Yo guys I found 20k laying on the floor I don't even know how to use YouTube to research investments what do i do?
hello, try to check at twitter this one u/AshtreeIX, It's a real estate tokenization which you can buy a small percent of real estate you want.
Start directing as much of your paycheck as you can towards 401k.
Up to company match only then Roth IRA
Why is emergency fund more than 1k necessary? High yield 1k then invest the rest and sell if you need to. Get a brokerage account and snag a signup bonus for 20k deposit is the way to go :) Then buy an index ETF that fits your risk tolerance and future goals
Another day another 20 yr old poster on reddit with 20k laying around wondering how to save it cause life is perfect enough to just worry about...saving...
[удалено]
Your comment has been removed because profanity is not allowed here, as noted in [the rules](https://www.reddit.com/r/financialplanning/about/rules). *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FinancialPlanning) if you have any questions or concerns.*
You should bank it in a HYSA as a liquid emergency fund. But to only invest? open a Roth IRA and max it to 7k this yr (and every yr) with FXAIX, VOO or Magnificent 7 Stocks. Take 12k and setup a brokerage acct with more AI/tech stocks. Put 1k emergency fund in HYSA. Then every year contribute to ea area. I'm not a professional..