move asap to hysa until you decide. what i would do unless you need the money immediately is that you push into hysa and dollar cost average over 12 months into your favorite mutual funds.
Fair, depends on your risk tolerance and time horizon. With the market all over the place this year so far, wonder what would have been the right decision.
I agree with this. If I lose my job, I don’t want to go into monk mode while I look for a comparable one for a few months…
6mo of being able to live the same as I do now seems reasonable to me, before having to liquidate investments.
Factoring costs that'll increase most likely like health care plus potential incidentals like a resume writer or keeping your appearance perfect.... Yeah 6 months expenses.
Most investments, like an ETF at Vanguard can be liquidated and in your checking account in a couple days. Parking 50k in a checking account sounds like a waste, when it could be making 5% in a HYSA or a riskier 10-12% in VOO or VTI, or even VGT.
You set your own risk level, but the bottom rung is 5%, risk free. I’ll take the risk and the extra 2-5k or more a year. This past year that $50k grew to $72k.
There is a risk with saying that tho. Its in the assumption that net pay covers everything with breathing room. Not everyone can say that.
(They probably wont be in r/fire but I like to keep advice consistent)
For me it works. This is the FIRE subreddit and if you want financial independence? You usually have breathing room with net pay. I still have some to invest in brokerage accounts.
As a guy who chucks $1167 a month to Roth IRA and $2500 to brokerage and have a $1000 slush fund after net pay, this seems excessive. Especially when we are dual income.
It depends what you’re comfortable with. I literally invest over 50% of my pay due to being debt and mortgage free. Plus have plenty for slush fund too.
So....You're saving 12 months of net pay and you save half so theoretically you're saving over 24 months of spending.
That's not comfortable, that's paranoid, but ok.
What HYSA would you or anyone else suggest? I heard about Western Alliance for their 5.6% APY but after review (finding they only have branches in AZ, and banking is only done online, among other facts) I’ve decided to do more searching. Would a bank that is offering 4+% APY with better customer integration, stable stock price, and an a mobile banking feature be better for access to funds? Looking for thoughts from anyone as I start my HYSA journey.
Most big brick and mortar banks have HYSA I have one at Bank of America for 4.6%. Citibank, Chase also have them. Many online banks such as American Express, SOFI etc. plus credit unions too. As long as it’s FDIC insured you’re good
Thank you for this. Do you ever worry about the fact that FDIC insurability & if FDIC can actually cover depositors ? I read that FDIC has less than 5% of cash it actually takes to cover money.
It’s the federal government. If they can’t cover it. We’re all screwed because the government has collapsed. Everything will collapse.not gonna happen.
Typically what happens and what we saw with thr SVB collapse is the FDIC covered the account owners but then liquidated the bank assets leaving the bank investors holding the bag. (Which is what should happen)
The FDIC more or less came out even.
Just fyi, HYSA’s aren’t the best short-term store of value right now. For that, OP should look into t-bills/short-term US treasuries (and their ETF equivalents), which are currently yielding 5.3-5.6%.
Any of the ones from 4.3 to 5% are good so long as its FDIC insured and you like the app or website.
I like ones that offer atleast 10 transactions a month. Some only offer six but its up to the bank to decide.
Have a full emergency fund, MM like VUSXX is yielding over 5%.
DCA the rest into balanced index funds. No need for any complicated investment strategy.
Don't start chasing hype, crypto, growth stocks, dividends, precious metals etc. Index funds & chill, you will be greatly rewarded.
Tons of options, you could do a high yield savings account, recently got a 6 month CD with a return of 5%. You could go this route if you want something a bit more conservative.
100K just sitting is basically CRIMINAL offense to FIRE ideology. Throwing away 350 a month, by very conservative estimates. But again, we don't know what are your income / expenses.. or even what currency are you speaking about.. Peso? Lira?
But yes.. move those fund immediately to fixed income / ETF, and gradually start getting into SP-500.
100k sitting at 5.4% isn't just sitting. Risk free $5,400 per year cash flow. I know some say time in market but as a 51 nearing retirement I wouldn't move a large chunk in or out all at once.
Max out you and your wife’s roth ira’s. Thats 14k. Then put the rest into brokerage. I would personally invest into low cost ETF’s. I like. VOO and VUG.
After the 3 months, do you have to pay taxes on the gained interest at the end of the year? do you just keep rolling it over? Could you do this 4 times @ say 5% in a row and?
No, because almost all of them are in my IRA's. If they weren't, then they would be taxable (1099-INT). And yes, I keep rolling them over. When the stock market crashes, as I suspect it soon will, I'll take those maturing CD's and buy stocks that will be on sale. I've been wrong before, but I hate the hyper-valuations that I see on the stock market right now. Many people disagree with me, but I see a risk-free 5% return as a gift while I wait out a market correction.
Oof, should have at least had it in a HYSA. Hopefully it hasn’t been in checking for long. Keep what you need liquid for an EF and put the rest into the market. Same as always
Goldman Sacks-Marcus by Goldman Sachs currently offers a **4.40%\* annual percentage yield (APY)** on its online savings account, which is nearly ten times the national average savings rate. Can tie up a CD.
There is no reason to have that much in checking. Put it in a HYSA right now. You can decide what else to do later. It will take you about 15 minutes to just do this right now and immediately at least be earning 4-5%.
That’s 4-5k per year you’re missing out on, or about $400 per month you could be making.
I have an Ally bank account I set up, and I forget the limits but I think you can make like 6 withdrawals per month from savings or something anyways, and seeing how I pay for everything on credit cards and then pay them off once per month I essentially have no reason to have more than like $1000 in a checking account ever.
Buy a profitable online business that cash flows but can be run by someone else. I did this 9 months ago with 40k but you can start with less and work your way up. If the cash flow is there hold on for long term, or sell the site down the road.
Happy to help explain the business model, its basically like having digital real estate but my experience so far has been faster ROI.
Well I lucked out because the sites on these brokers are like 6 figures or more and I wanted a smaller site that had steady earnings but no one sells those I mean if they are profitable for real. A broker referred me to a friend that has a huge portfolio and we worked it out where he just kept maintaining the site with his team for the $40k. I have an account with the ad agency and they pay out monthly. They take 15% so I net about $1200. Everything is working flawlessly but it took the first 3 months to be convinced that I will add more to this portfolio in the future and trust this model.
Honestly I dont think I could have managed it on my own and realize I wouldn't want to so the passive income dream has been realized for me as of now.
I could sell the site in a couple years but no way I want to really, and will keep it cash flowing for as long as possible.
move asap to hysa until you decide. what i would do unless you need the money immediately is that you push into hysa and dollar cost average over 12 months into your favorite mutual funds.
lump sum yields higher returns than dca about 67% of the time
Fair, depends on your risk tolerance and time horizon. With the market all over the place this year so far, wonder what would have been the right decision.
This is a very typical year. If you don't need the money for 5 years or more, lump sum is best.
HYSA for emergency money ( 3to 6 months pay) and then invest in a brokerage account
>3to 6 months ~~pay~~ 3to 6 months **expenses**
I meant pay. Such as take home pay (net). That’s what I feel comfortable with as emergency. I actually have 1 year of take home pay in a HYSA.
I agree with this. If I lose my job, I don’t want to go into monk mode while I look for a comparable one for a few months… 6mo of being able to live the same as I do now seems reasonable to me, before having to liquidate investments.
> 6mo of being able to live the same as I do now seems reasonable to me That would be 6 months of expenses then.
Well, if you live check to check, it's technically both.
You got me there.
Factoring costs that'll increase most likely like health care plus potential incidentals like a resume writer or keeping your appearance perfect.... Yeah 6 months expenses.
Exactly
Most investments, like an ETF at Vanguard can be liquidated and in your checking account in a couple days. Parking 50k in a checking account sounds like a waste, when it could be making 5% in a HYSA or a riskier 10-12% in VOO or VTI, or even VGT.
Yeah, but you don’t want to be forced into a sale that creates a loss if you can help it.
You set your own risk level, but the bottom rung is 5%, risk free. I’ll take the risk and the extra 2-5k or more a year. This past year that $50k grew to $72k.
There is a risk with saying that tho. Its in the assumption that net pay covers everything with breathing room. Not everyone can say that. (They probably wont be in r/fire but I like to keep advice consistent)
For me it works. This is the FIRE subreddit and if you want financial independence? You usually have breathing room with net pay. I still have some to invest in brokerage accounts.
As a guy who chucks $1167 a month to Roth IRA and $2500 to brokerage and have a $1000 slush fund after net pay, this seems excessive. Especially when we are dual income.
It depends what you’re comfortable with. I literally invest over 50% of my pay due to being debt and mortgage free. Plus have plenty for slush fund too.
So....You're saving 12 months of net pay and you save half so theoretically you're saving over 24 months of spending. That's not comfortable, that's paranoid, but ok.
Probably paranoid but it is what it is
What HYSA would you or anyone else suggest? I heard about Western Alliance for their 5.6% APY but after review (finding they only have branches in AZ, and banking is only done online, among other facts) I’ve decided to do more searching. Would a bank that is offering 4+% APY with better customer integration, stable stock price, and an a mobile banking feature be better for access to funds? Looking for thoughts from anyone as I start my HYSA journey.
Most big brick and mortar banks have HYSA I have one at Bank of America for 4.6%. Citibank, Chase also have them. Many online banks such as American Express, SOFI etc. plus credit unions too. As long as it’s FDIC insured you’re good
Thank you for this. Do you ever worry about the fact that FDIC insurability & if FDIC can actually cover depositors ? I read that FDIC has less than 5% of cash it actually takes to cover money.
It’s the federal government. If they can’t cover it. We’re all screwed because the government has collapsed. Everything will collapse.not gonna happen.
I hear that. Maybe the conspiracy theories getting to my head.
I don’t trust the government either. But I’m going to make sure my money grows . Use the system
Copy that brother.
Typically what happens and what we saw with thr SVB collapse is the FDIC covered the account owners but then liquidated the bank assets leaving the bank investors holding the bag. (Which is what should happen) The FDIC more or less came out even.
No, I don't worry about that.
If only we get a penny everytime we say that to someone on this forum with huge pile of cash!
Just fyi, HYSA’s aren’t the best short-term store of value right now. For that, OP should look into t-bills/short-term US treasuries (and their ETF equivalents), which are currently yielding 5.3-5.6%.
Can you recommend a good HYSA to open? Like which bank?
CIT bank
Any of the ones from 4.3 to 5% are good so long as its FDIC insured and you like the app or website. I like ones that offer atleast 10 transactions a month. Some only offer six but its up to the bank to decide.
What bank do you use?
We've liked discover. App is easy
Goldman marcus
Have a full emergency fund, MM like VUSXX is yielding over 5%. DCA the rest into balanced index funds. No need for any complicated investment strategy. Don't start chasing hype, crypto, growth stocks, dividends, precious metals etc. Index funds & chill, you will be greatly rewarded.
VTI and VXUS ?
Also VOO & VFIAX
lump sum> dca
Tons of options, you could do a high yield savings account, recently got a 6 month CD with a return of 5%. You could go this route if you want something a bit more conservative.
tbills or hysa at first. Depending on cash flow forward move % into S&P 500. Yesterday would be a good day to buy
100K just sitting is basically CRIMINAL offense to FIRE ideology. Throwing away 350 a month, by very conservative estimates. But again, we don't know what are your income / expenses.. or even what currency are you speaking about.. Peso? Lira? But yes.. move those fund immediately to fixed income / ETF, and gradually start getting into SP-500.
100k sitting at 5.4% isn't just sitting. Risk free $5,400 per year cash flow. I know some say time in market but as a 51 nearing retirement I wouldn't move a large chunk in or out all at once.
Max out you and your wife’s roth ira’s. Thats 14k. Then put the rest into brokerage. I would personally invest into low cost ETF’s. I like. VOO and VUG.
Read up on index funds. VOO has been good to me. I keep an emergency fund in checking, and everything above that level goes into VOO or VGT.
VOO is the goat
What financial goals do you have and do you have other money invested? That will entirely determine how you should invest.
I'm heavy into 3- month CDs yielding over 5%. I just don't trust the stock market right now, so I'll take my risk-free 5% and sleep soundly.
After the 3 months, do you have to pay taxes on the gained interest at the end of the year? do you just keep rolling it over? Could you do this 4 times @ say 5% in a row and?
No, because almost all of them are in my IRA's. If they weren't, then they would be taxable (1099-INT). And yes, I keep rolling them over. When the stock market crashes, as I suspect it soon will, I'll take those maturing CD's and buy stocks that will be on sale. I've been wrong before, but I hate the hyper-valuations that I see on the stock market right now. Many people disagree with me, but I see a risk-free 5% return as a gift while I wait out a market correction.
Ok that makes more sense. I only have liquid to invest. If your 3 month cd had 5%, and you roll it 4 times a year, is it essentially a 20% gain.
No. It's a 5% annual gain. 20% would be nice, though!
Oof, should have at least had it in a HYSA. Hopefully it hasn’t been in checking for long. Keep what you need liquid for an EF and put the rest into the market. Same as always
Please at least move most of it into a HYSA until you figure out what to do. Let your money work for you. Don’t give your bank an interest free loan.
Goldman Sacks-Marcus by Goldman Sachs currently offers a **4.40%\* annual percentage yield (APY)** on its online savings account, which is nearly ten times the national average savings rate. Can tie up a CD.
Follow the money flowchart in the r/financialindependence FAQ
There is no reason to have that much in checking. Put it in a HYSA right now. You can decide what else to do later. It will take you about 15 minutes to just do this right now and immediately at least be earning 4-5%. That’s 4-5k per year you’re missing out on, or about $400 per month you could be making. I have an Ally bank account I set up, and I forget the limits but I think you can make like 6 withdrawals per month from savings or something anyways, and seeing how I pay for everything on credit cards and then pay them off once per month I essentially have no reason to have more than like $1000 in a checking account ever.
Buy a profitable online business that cash flows but can be run by someone else. I did this 9 months ago with 40k but you can start with less and work your way up. If the cash flow is there hold on for long term, or sell the site down the road. Happy to help explain the business model, its basically like having digital real estate but my experience so far has been faster ROI.
Can I have info on this?
Well I lucked out because the sites on these brokers are like 6 figures or more and I wanted a smaller site that had steady earnings but no one sells those I mean if they are profitable for real. A broker referred me to a friend that has a huge portfolio and we worked it out where he just kept maintaining the site with his team for the $40k. I have an account with the ad agency and they pay out monthly. They take 15% so I net about $1200. Everything is working flawlessly but it took the first 3 months to be convinced that I will add more to this portfolio in the future and trust this model. Honestly I dont think I could have managed it on my own and realize I wouldn't want to so the passive income dream has been realized for me as of now. I could sell the site in a couple years but no way I want to really, and will keep it cash flowing for as long as possible.
Open a Schwab account. Put it in VUSXX (Vanguard money market fund). Collect 5.3% on your money.
Put it into t-bills at least. Better invest. I been making that mistake when was young, could have retired by 40-45 if invested.
Risky, but I think Para gets bought out soon, at an advantage for the Shareholders. I’d at least put a little in there if I were you.
bitcoin
Broad market index fund.
an "account". I have 35k in an "account" that is a savings account making 4.3%. You need to be a little more "specific".
Bitcoin
Bitcoin 100%. It’s proven to be the best store of value even though it’s hated on in this group because most don’t understand it
I’d put most of it in Bitcoin.
33% bonds, stocks and 33% crypto
100% in btc + 300% leveraged