6 ms·

I would suggest researching how to invest your savings, otherwise it's being eaten away by inflation, and there is no savings account that has enough interest t

by novok 7y ago

I would suggest researching how to invest your savings, otherwise it's being eaten away by inflation, and there is no savings account that has enough interest to match that rate currently. It's harsh to say it, but that statement is a demonstration of your ignorance.

hndamien 7y ago
Thanks for providing insults rather than enlightenment.
journalctl 7y ago
I see this a lot online, but this is not good advice. Savings are meant to provide liquidity in an emergency. If you have $20,000 in a savings account, you can walk to an ATM and withdraw some of that immediately. If you have $20,000 locked up in mutual funds, well... you’d better hope your rainy day has some lead time. Investing is great. Put $10,000 in something diverse and passive and sit on it. But also keep a savings account for immediate emergencies, and keep some cash on hand for even more immediate emergencies.
- novok 7y ago
  Yes, that is called an emergency fund. I didn't want to go into a big explainer of how a typical pre-tax & post-tax index fund savings brokerage works + cash emergency fund in savings works to a random on the internet while there are many other better resources out there.
- gowld 7y ago
  What emergency requires $20K in less than a week? A kidnapping?
  - journalctl 7y ago
    The number was illustrative. If it helps, feel free to imagine a different one.
- sokoloff 7y ago
  I can wire money out of my Vanguard (mutual funds) account before 4 PM today and it will be in receiving bank tomorrow mid-day. I can withdraw money from my ETrade or IB margin accounts using the debit card that came with those accounts (or write a check on them), same as you can with a savings account. I do keep a few thousand at a local bank and have a separate checking account at USAA that I use for most daily/monthly transactions, but that's for convenience not access/liquidity reasons.
  - deleted 7y ago
    [deleted]
sifar 7y ago
Losing 2-3% per year is better than losing 10/20/30 % or god forbid >50% of your savings - which you cannot recoup. It depends on what they are saving for - if they need the 20-30K a year down the line it is alright to keep it in the savings account. If it is for general long term asset building - may be they haven't yet figured out how best to start investing. Again no harm to keep it parked till you figure it out instead of investing in haste and then regret later - for the rest of your life.
- simplecomplex 7y ago
  Yup. You’ve got it right. I am far more interested in preserving capital than chasing returns at this point. So keeping it parked while using it to capitalize cash flow from businesses and real estate is more to my liking than making one giant bet on an index fund over 30-40 years. Don’t get me wrong I’m not knocking index funds they have their place.
  - sifar 7y ago
    May be you can start with small steps to test the waters. Amount that you are ok to lose in an extreme event. Which might cause you some inconvenience but not great distress. Perhaps 5-10% of your savings in equities. Watch how you repond to the market swings (both up and down) and factor that in for your future investments.
- sokoloff 7y ago
  I know people who have been sitting on the sidelines afraid to invest in what must be the tail end of the longest bull market we've ever seen. One in particular has been sitting on the sidelines since before the 2016 election season. They have foregone about a 50% gain that they'd have gotten over that period. That money also can never be recouped. https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ https://awealthofcommonsense.com/2014/02/worlds-worst-market...
  - simplecomplex 7y ago
    It’s not a gain unless it’s realized. If one owns a stock and the price goes up 10% they don’t make any money. They would have to sell to make money. At some point “Bob” needs to retire, hopefully that’s not during a downturn.

by novok 7y ago

hndamien 7y ago

Thanks for providing insults rather than enlightenment.

journalctl 7y ago

I see this a lot online, but this is not good advice. Savings are meant to provide liquidity in an emergency. If you have $20,000 in a savings account, you can walk to an ATM and withdraw some of that immediately. If you have $20,000 locked up in mutual funds, well... you’d better hope your rainy day has some lead time. Investing is great. Put $10,000 in something diverse and passive and sit on it. But also keep a savings account for immediate emergencies, and keep some cash on hand for even more immediate emergencies.

novok 7y ago
Yes, that is called an emergency fund. I didn't want to go into a big explainer of how a typical pre-tax & post-tax index fund savings brokerage works + cash emergency fund in savings works to a random on the internet while there are many other better resources out there.
gowld 7y ago
What emergency requires $20K in less than a week? A kidnapping?
- journalctl 7y ago
  The number was illustrative. If it helps, feel free to imagine a different one.
sokoloff 7y ago
I can wire money out of my Vanguard (mutual funds) account before 4 PM today and it will be in receiving bank tomorrow mid-day. I can withdraw money from my ETrade or IB margin accounts using the debit card that came with those accounts (or write a check on them), same as you can with a savings account. I do keep a few thousand at a local bank and have a separate checking account at USAA that I use for most daily/monthly transactions, but that's for convenience not access/liquidity reasons.
- deleted 7y ago
  [deleted]

sifar 7y ago

Losing 2-3% per year is better than losing 10/20/30 % or god forbid >50% of your savings - which you cannot recoup. It depends on what they are saving for - if they need the 20-30K a year down the line it is alright to keep it in the savings account. If it is for general long term asset building - may be they haven't yet figured out how best to start investing. Again no harm to keep it parked till you figure it out instead of investing in haste and then regret later - for the rest of your life.

simplecomplex 7y ago
Yup. You’ve got it right. I am far more interested in preserving capital than chasing returns at this point. So keeping it parked while using it to capitalize cash flow from businesses and real estate is more to my liking than making one giant bet on an index fund over 30-40 years. Don’t get me wrong I’m not knocking index funds they have their place.
- sifar 7y ago
  May be you can start with small steps to test the waters. Amount that you are ok to lose in an extreme event. Which might cause you some inconvenience but not great distress. Perhaps 5-10% of your savings in equities. Watch how you repond to the market swings (both up and down) and factor that in for your future investments.
sokoloff 7y ago
I know people who have been sitting on the sidelines afraid to invest in what must be the tail end of the longest bull market we've ever seen. One in particular has been sitting on the sidelines since before the 2016 election season. They have foregone about a 50% gain that they'd have gotten over that period. That money also can never be recouped. https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ https://awealthofcommonsense.com/2014/02/worlds-worst-market...
- simplecomplex 7y ago
  It’s not a gain unless it’s realized. If one owns a stock and the price goes up 10% they don’t make any money. They would have to sell to make money. At some point “Bob” needs to retire, hopefully that’s not during a downturn.