z31maniac

I'll admit I'm not the most savvy when it comes to things of this nature. I dump money in low fee company sponsored 401k and don't worry about it.

What is the best thing to do with "savings" money besides a savings account, that also allows me quick access to the money, well um, like a savings account? I like to be able to jump on deals for car parts, guitars, etc, if they present themselves.

What do you folks use/do?

codrus

You mean aside from buying Miata parts?

My savings setup looks like this:

- enough liquid cash in checking account to run monthly bills/budget, etc.
- enough cash or safe, easily-converted cash-equivalents in a savings or other investment account to cover 6 months' worth of bills ("rainy day fund").
- max out 401(k) contributions, put into a set of 401(k) funds appropriate to age & retirement timeline (aggressiveness inversely related to length of time until retirement)
- when changing jobs, roll 401(k) into IRA for more/better control and choice of lower load funds.
- any additional long-term savings into a mix of low-load index funds appropriate to age (see above).

easily-converted cash equivalents is things like money markets or CDs (may need a set of these with staggered expiration dates). There's a case to be made that the returns on these kinds of investments are so low these days that it's not worth the effort and one should just keep the rainy day fund in cash instead.

--Ian

Stealth97

iTrader: (5)

Good advice there

aidandj

iTrader: (5)

My checking account has a 1.75% interest rate. So all my liquid cash lives there.

I'm saving for a house, so having cash is more important for me. If the market dips/crashes I want to be buying.

olderguy

iTrader: (19)

What bank?

TNTUBA

iTrader: (1)

1) Fully fund your 401K to the extent of your employer match at a minimum.....ideally to the IRS limit

2) If you have a high deductible Health Insurance plan and you aren't fully funding your Health Savings Account.....you are doing it wrong. If you are young and healthy.....you need to be on a HDP

The single limit is $3,400 a year and family is $5,400.

Money goes in tax free, comes out tax free and can be willed to a member of your immediate family tax free.

3) If you are putting money savings instruments that are earning less that the current rate of inflation....you're also doing it wrong. Keep 2 to 6 months living expenses is a same day or next day liquid investment. Put everything else to work.

The targets are kinda like this.
Buy 35 you should have 1 years gross salary in savings, by 40 2 years, 45 3 years..etc etc etc. That being said, the average 50 year old has less than 50 grand saved for retirement....and that scares the hell out of me. If you think about the fact that the Social Security Trust fund will become insolvent in around 18 years if nothing changes, and in 18 years these broke 50 year olds are going to start retiring......we are in the early stages of a financial collapse that will make the "Great Recession" look like a "single day sell off"

Be responsible and fully fund your 401K, HSA and other tax advantaged retirement planning tools..........so those of us who are planning a head wont have to take care of you when you are old

aidandj

iTrader: (5)

Local credit union. Up to $25k (or $50k with 2 people)

https://www.advantiscu.org/checking-and-savings/checking-accounts/fusion-checking.html

thirdgen

iTrader: (26)

I bought a whole life life insurance policy for my kids. It has a savings account attached to it that gets 3%.

aidandj

iTrader: (5)

I think avg inflation right now is 1.6%ish. so 3% is solid. My 1.75% is just scraping by, but I expect to need all my cash as a down payment in the next couple years.

adryargument

iTrader: (1)

savings, never heard of it. build a 100l - 3 vessel brewery.

shuiend

iTrader: (24)

MKTurbo will gladly take your savings in exchange for copius amounts of stickers and turbo hardware.

DNMakinson

iTrader: (3)

For short term savings:

I have some $ in MITFX at Scottrade. It is a mutual fund that is made up of mostly tax-free bonds. Returns about 3%. However, for withdrawals, the $ is 1 week away, not 1 day. IIRC, I could get it in about 2 days if I pay for an electronic transfer rather than snail-mail check. The other negative is that there is a fee for trading (not one of Scottrade's free mutuals). So I transfer money there every month, but only buy once every 3 months to reduce losses due to fees.

The mostly tax-free means that the 3% is after taxes which makes it real. State taxes are levied, but I admit I haven't tried to sort out how much that is costing me.

Schroedinger

As others have mentioned, max 401(k), get your healthcare straight and put enough into cash or liquid instruments to cover six months living expenses. Beyond that debt comes into the discussion. So many people store money away at low returns, then carry high interest debt without thinking twice about it. You're better off using every available penny to pay off interest-bearing debt before saving anything.

Here's the unconventional advice... get a good financial manager, and pay them what they're worth. Interview them like you're making a hire, because you are. When it comes to money management and legal issues, good advice is never too expensive.

albumleaf

iTrader: (7)

100% buttcoin allocation hth

Scrambles

iTrader: (7)

Good info here from Codrus and TNTUBA. Since nobody's mentioned Vanguard, I thought it was worth posting. Get an account opened and start an IRA with them. Assuming you're a young-ish dude, max out your annual contributions in their total stock market index fund (VTSAX) and don't sweat the small fluctuations, you're playing the long game. Here's a screen capture from my IRA since I started working in '08. YTD returns are around 20%. Expecting a correction in the near future, so it might be good to jump in when everything is on sale.

Don't over complicate it. Saving for retirement is much easier than selecting a daily-driver.

mreakus

This

And this.

There is no simple answer because everyone's personal situation is different. I see you talking about purchasing a house soon. I'll assume your downpayment is a separate account - so your next steps are to create an emergency fund. Then, assuming the debt is solely your responsibility, you'll want 6 months of cash-equivalents. As codrus mentioned, this does not have to be in a savings account, but you'll want it in easily accessible options provided something happens and you need the funds for expenses. Once those two boxes are checked, you then evaluate your goals and go from there - it could be maxing 401k contributions, maxing HSA contributions, Roth/Traditional IRAs, taxable investments, the list goes on and on. This is when it is important to seek out financial counsel. Schroedinger gave excellent advice on this - interview many and make sure they are transparent and the right fit.

- Matt

z31maniac

Guys already take advantage of the 401k and my HSA account.

It was more of a suggestion on what to do with the $10k or so I like to keep on hand, that will be better than a savings account that will still allow near immediate access to the money if necessary. IE, suggestions for the liquid assets that will do better than a savings account.

Ryan_G

iTrader: (8)

If it's only $10k in cash it is better to just keep it in cash. You are taking on extra risk for what is presumably a small percentage of your net worth and inherently making it less liquid. Cash in a bank account is as liquid as it gets. If you really want extra earnings on it then you can find a high yield account.

Chasing the last .01% of gains on your total portfolio by keeping no cash in the bank is just over-complicating the situation. If you are set on not keeping it in cash and chasing that last bit of return I would build out a vanguard brokerage account with a 50/50 equity bond split which will insulate it from a lot of short term volatility in exchange for a reduced overall return but you could probably still manage 4-6% return in the current market this way. However, you will not have instant access to this money as you would need to sell positions when you need it. I don't think it's worth the hassle personally.

Stealth97

iTrader: (5)

I don't see that really being realistic... I assume you are excluding retirement accounts. I'm 36, I certainly don't have that much in liquid savings, but I could "get by" unemployed for a year without loosing any real estate.

aidandj

iTrader: (5)

​​​​​​
that rule includes retirement accounts. Your total retirement savings should match what TNTUBA outlined.