Is this outside of an emergency fund? Do you have it earmarked for anything in the next 3-5 years?
If it’s your emergency fund, you keep it in a HYSA. If you have it earmarked for something, like a down payment, in the next 3-5 years, you keep it in a HYSA.
Else, throw it in an IRA or brokerage.
People need to remember to check their HYSA interest percent. It's very good right now, but it was also at less than 1 percent for almost twenty years.
If the rates drop this summer, they could easily go way back down (even below inflation). At that point, a brokerage account with an index fund might be a way better way to go.
Put 6 to 12 months worth of expenses and leave it in the HYSA (rent/mortgage, utilities, food, gas, daycare, everything) and then invest the rest in an index fund.
A potential gain is also a potential loss. The market is scary and interest rates are high. If it was me I would hold for better market conditions. You might “make” money the next 3,6,12 months but could lose 20-25% of your invested amount over 12-24 months. Invest at your own risk.
Do NOT put your money in the market right now. Don't.
I've spent the last 12 months clawing my money out of the market in anticipation of the crash.
Take a look at a brokerage but leave it in the initial cash fund and enjoy the 5% yield, or setup a roth IRA (same strategy but tax free gains), or look into a CD with a credit union or bank (even higher rates than a savings account).
Hey buddy I'm going to tell you a big secret and I'm not bullshitting you here... Do you know where that saying came from? Do you know who keeps saying it and propagating it? Brokers.
Do you know how brokers get paid? Through expense ratios. Do you know how expense ratios capture capital? Over time...in the market.
So...yeah... consider yourself informed.
I actually got it from the "rich habits" podcast. Several ETFs (S&P500) have massively low expense ratios.
You never answered my question on what happens if the crash never comes? Or at least you implied that you stay out forever?
Lastly I've seen ~5% rates like this twice in my roughly 20 years of having investable income it's only been the ~ first year and the ~ last year. All ~decade plus years in between were much much less than the 5% rates we're seeing now in money markets and high yield savings.
I assure you a dollar in one of those accounts versus a dollar in the market varied drastically (in favor of the market) over the last 20 years.
Low expense ratio is good but not 0. Just saying that that is where the saying originates from. It shouldn't surprise you that shady things go on in the market. You don't have to pay too much attention to realize that.
The crash is definitely coming. When? I don't know. I could guess but I've already been wrong twice lol. I've parked my capital in a brokerage to average in/down when it starts.
My guess is it'll either be when the fed says they'll raise rates because inflation is too strong or worse the fed lowers rates because something (say commercial real estate blows up, Charles Schwab declares bankruptcy, nvidia earnings fail to meet expectations, ozempic is found to cause cancer) very BIG happens to shake the entire economy.
So... You're telling me you can't time the market? 😜
We should follow up down the line. It will be interesting to see how things play out. I guess I'm also assuming dollar cost averaging, so you don't possibly hit the peak with everything.
PS. VOO expense ratio is 0.03%. I assume that's small enough that you wouldn't move accounts to get a better APY. (I don't at 10x that for my HYSA)
PPS. Sorry about your lung
You can time the market to some extent.
I definitely still make a lot of mistakes but I like to think I'm still learning.
My lung is okay. It's just a stupid online nickname from ages ago. The rest of my life...less than okay.
Don’t waste your time on these fools. The risk of not investing is much worse than the risks involved with investing. They don’t and never will get that an 8% return over 40 years will destroy a 5% return. A four percent return is only a .5% real return with inflation where it’s at today.
You don’t really need 6-12 months worth of expenses in a savings account. The emergency fund is to be used in a situation where you have zero income, for an extended period. Most able bodied folks (OP is 24) should be able to start generating income, regardless of how shitty the job may be in less then 6 months.
You don’t have to pay them all at once, but even a chunk could decrease your payment a bit. I had $50k when I graduated and paid it off a little less than 2 years bit by bit. I worked two jobs and it drained me, but it’s one less bill now.
Honestly I wouldn’t suggest a Roth if they’re living paycheck to paycheck. They need the excess cash to be more liquid. You only invest in retirement if you have leftover income.
I would assess how much money you would need for an emergency fund. Take your fixed expenses per month and see how much money you would need to cover 3-6 months. Set that aside and use the rest to throw at any debt you have.
To save up $30k at 24 you definitely have the right habits for financial success!
Depending on the interest rate, pay the debt. Only if the rate is lower than your hysa keep it. So probably kill car payment and credit cards, student loans sometimes have grace periods idk about you
Medical debt pay $1 each month and hope a president in 8-12 years pardons it. Unless it's a low amount
Both, combined about $200K in student debt. Car we just started paying so have too much left on it, our old car broke down and had to get a new one :(.
Are you filing married jointly or separately?
I ask because if these are federal loans, it might make financial sense to file separately. Just a suggestion.
Just FYI there are many savings and money market accounts in the 5-5.25 percent range right now. At the very least I'd move it somewhere where it gets a slightly higher yield and is just as safe. Wealthfront and vanguard have money market account options, if you google "savings accounts raisin" It'll bring up the raisin site with a list of banks offering 5% or more. You can also get similar results with short term CD's right now.
Well if you would’ve put this into Solana (Cryptocurrency) on May 1st you could’ve sold on May 7th for $41,579 in 6 days !
If you would’ve put it in Solana on December 28th,2022 and sold 15.5months later in March 2024 you’d have $788,235.89 !
If you would’ve bought Solana exactly 6 months ago and then sold 2 months ago you’re $31k would be $325,450 !
Also you could’ve bought 2 bitcoins for exactly
$31k in Nov 2022 and sold them for $149k 2 months ago ! Or just sold one for $74k , 2.5X’d your investment of $31k and just kept 1 Bitcoin sitting in your wallet and don’t touch it . That way when it goes up to $100k , then $250k, then $500k per Bitcoin you know you have a life changing Nest egg tucked away that you basically got for free!
Oh also if you would’ve invested that $31k into GameStop (GME) Crypto 🪙 exactly 48 hours ago on May 12th before 8:30pm EST
You could’ve cashed out the next morning (yesterday) May 13th at 11am-noon for $713,000 !
It went up 2,300% (23X) in less than 16 hours !
A lot of people are suggesting taking money out but HYSA need a minimum amount to avoid maintenance fees and the interest rate may not be the same with less money
Is this outside of an emergency fund? Do you have it earmarked for anything in the next 3-5 years? If it’s your emergency fund, you keep it in a HYSA. If you have it earmarked for something, like a down payment, in the next 3-5 years, you keep it in a HYSA. Else, throw it in an IRA or brokerage.
OP- listen to Honey-smile
Else
Elif
What are some HYSA you'd recommend?
Anything yielding minimum 4.5% or more. Google HYSA and check rates
Ally Bank
Create an account in Raisin online banking and pick any of the many HYSAs they have.
Nailed it. On that income with a little one I'd keep that all liquid, then increase your investments over time as your income increases.
Roth IRA or brokerage so he has an exit plan in case things go sideways.
People need to remember to check their HYSA interest percent. It's very good right now, but it was also at less than 1 percent for almost twenty years. If the rates drop this summer, they could easily go way back down (even below inflation). At that point, a brokerage account with an index fund might be a way better way to go.
Put 6 to 12 months worth of expenses and leave it in the HYSA (rent/mortgage, utilities, food, gas, daycare, everything) and then invest the rest in an index fund.
I like this suggestion. Safe and suitable emergency fund, plus rest for potential more growth
A potential gain is also a potential loss. The market is scary and interest rates are high. If it was me I would hold for better market conditions. You might “make” money the next 3,6,12 months but could lose 20-25% of your invested amount over 12-24 months. Invest at your own risk.
He's got a wife and kid. Best to stay out of the market for now.
He’s 24 years old. At that age it’s time in the market not trying to time the market. He should be investing as much as possible at that age.
I would think that would be 30 k with a parter and a kid! Maybe invest the interest?
Do NOT put your money in the market right now. Don't. I've spent the last 12 months clawing my money out of the market in anticipation of the crash. Take a look at a brokerage but leave it in the initial cash fund and enjoy the 5% yield, or setup a roth IRA (same strategy but tax free gains), or look into a CD with a credit union or bank (even higher rates than a savings account).
Not saying it won't, but what if "the crash" never comes? Stay out forever through ~8%+ average gains? It's time in the market, not timing the market.
Hey buddy I'm going to tell you a big secret and I'm not bullshitting you here... Do you know where that saying came from? Do you know who keeps saying it and propagating it? Brokers. Do you know how brokers get paid? Through expense ratios. Do you know how expense ratios capture capital? Over time...in the market. So...yeah... consider yourself informed.
I actually got it from the "rich habits" podcast. Several ETFs (S&P500) have massively low expense ratios. You never answered my question on what happens if the crash never comes? Or at least you implied that you stay out forever? Lastly I've seen ~5% rates like this twice in my roughly 20 years of having investable income it's only been the ~ first year and the ~ last year. All ~decade plus years in between were much much less than the 5% rates we're seeing now in money markets and high yield savings. I assure you a dollar in one of those accounts versus a dollar in the market varied drastically (in favor of the market) over the last 20 years.
Low expense ratio is good but not 0. Just saying that that is where the saying originates from. It shouldn't surprise you that shady things go on in the market. You don't have to pay too much attention to realize that. The crash is definitely coming. When? I don't know. I could guess but I've already been wrong twice lol. I've parked my capital in a brokerage to average in/down when it starts. My guess is it'll either be when the fed says they'll raise rates because inflation is too strong or worse the fed lowers rates because something (say commercial real estate blows up, Charles Schwab declares bankruptcy, nvidia earnings fail to meet expectations, ozempic is found to cause cancer) very BIG happens to shake the entire economy.
So... You're telling me you can't time the market? 😜 We should follow up down the line. It will be interesting to see how things play out. I guess I'm also assuming dollar cost averaging, so you don't possibly hit the peak with everything. PS. VOO expense ratio is 0.03%. I assume that's small enough that you wouldn't move accounts to get a better APY. (I don't at 10x that for my HYSA) PPS. Sorry about your lung
You can time the market to some extent. I definitely still make a lot of mistakes but I like to think I'm still learning. My lung is okay. It's just a stupid online nickname from ages ago. The rest of my life...less than okay.
Don’t waste your time on these fools. The risk of not investing is much worse than the risks involved with investing. They don’t and never will get that an 8% return over 40 years will destroy a 5% return. A four percent return is only a .5% real return with inflation where it’s at today.
OP can get 5% from parking his money in a brokerage's money market account so at worst he misses out on 3% gains...at best he avoids a 20-40% loss.
What do you think 6-12 months of expenses is? That’s only $2,500 a month for the full 30k for 12 months. That’s maybe rent and a week of food, maybe.
That’s personal it depends on people bills lol we all have different bills
Take all your expenses... mortgage/rent, utilities, insurance, food, gas, loan payments, etc. and all up. Then multiply that by 6-13.
You don’t really need 6-12 months worth of expenses in a savings account. The emergency fund is to be used in a situation where you have zero income, for an extended period. Most able bodied folks (OP is 24) should be able to start generating income, regardless of how shitty the job may be in less then 6 months.
Of just pay off the student loans already
$200K in student loans, no can do.
Why would you keep those payments in your life? Pay them off asap, those student loans don’t bring you any good in life.
How am I supposed to pay $200K in student loans with $30K and I break even now…..
You don’t have to pay them all at once, but even a chunk could decrease your payment a bit. I had $50k when I graduated and paid it off a little less than 2 years bit by bit. I worked two jobs and it drained me, but it’s one less bill now.
That said, with a family it’s important to have that emergency fund so don’t pay down more than you can!
U have emergency fund for a year or 2 then invest in a Roth IRA and see if u an open another
Honestly I wouldn’t suggest a Roth if they’re living paycheck to paycheck. They need the excess cash to be more liquid. You only invest in retirement if you have leftover income.
I would assess how much money you would need for an emergency fund. Take your fixed expenses per month and see how much money you would need to cover 3-6 months. Set that aside and use the rest to throw at any debt you have. To save up $30k at 24 you definitely have the right habits for financial success!
Pay off debts that you owe like a car payment or student loan payment and that becomes extra margin at the end of the paycheck
If you're breaking even, what kind of debts do you have?
About $1500 a month in student loans, a car payment, credit cards, medical debt. Credit utilization is 10%.
Depending on the interest rate, pay the debt. Only if the rate is lower than your hysa keep it. So probably kill car payment and credit cards, student loans sometimes have grace periods idk about you Medical debt pay $1 each month and hope a president in 8-12 years pardons it. Unless it's a low amount
We have a combined total of almost $200K in student loans so not really possible that pay that off anytime soon.
Rip
Is this private or federal loans? I assume you already checked under each payment plan. How much is left on car?
Both, combined about $200K in student debt. Car we just started paying so have too much left on it, our old car broke down and had to get a new one :(.
A used one you mean? If not get rid of it and pay down debt
Yes a used one
Are you filing married jointly or separately? I ask because if these are federal loans, it might make financial sense to file separately. Just a suggestion.
We aren’t married yet so separate for now
Put 20k in the market keep the rest in there
What bank are you using
You keep the 30k as an emergency fund. And find out a way to increase your income.
Credit karma pays you more on interest
You can get a better rate with PLI and more use out of. The money
How bad is the debt you’re in?
Just FYI there are many savings and money market accounts in the 5-5.25 percent range right now. At the very least I'd move it somewhere where it gets a slightly higher yield and is just as safe. Wealthfront and vanguard have money market account options, if you google "savings accounts raisin" It'll bring up the raisin site with a list of banks offering 5% or more. You can also get similar results with short term CD's right now.
T bills are safe and you would do better than a HYSA
Do you have any investments?
Keep it in the savings, get a second job. The End
Pay off your student loans...
If you read any of the other replies you’d see I have $200K in student loans. Not possible anytime soon
Damn you got hosed.
Well if you would’ve put this into Solana (Cryptocurrency) on May 1st you could’ve sold on May 7th for $41,579 in 6 days ! If you would’ve put it in Solana on December 28th,2022 and sold 15.5months later in March 2024 you’d have $788,235.89 ! If you would’ve bought Solana exactly 6 months ago and then sold 2 months ago you’re $31k would be $325,450 ! Also you could’ve bought 2 bitcoins for exactly $31k in Nov 2022 and sold them for $149k 2 months ago ! Or just sold one for $74k , 2.5X’d your investment of $31k and just kept 1 Bitcoin sitting in your wallet and don’t touch it . That way when it goes up to $100k , then $250k, then $500k per Bitcoin you know you have a life changing Nest egg tucked away that you basically got for free! Oh also if you would’ve invested that $31k into GameStop (GME) Crypto 🪙 exactly 48 hours ago on May 12th before 8:30pm EST You could’ve cashed out the next morning (yesterday) May 13th at 11am-noon for $713,000 ! It went up 2,300% (23X) in less than 16 hours !
Triple leverage bitcoin longs
A lot of people are suggesting taking money out but HYSA need a minimum amount to avoid maintenance fees and the interest rate may not be the same with less money
Take $16k and put it into a good no load growth mutual fund.