What to do savings account

[Deleted member 28227]

Too much homework for me.

SMH

 

[jtm307]

I'm in the "sell cash secured puts" camp. It's not for everyone, but I'm in the markets enough to know when to be risk off, like now.

 

[Benjamins]

Here's the thing... let's say your invested in VTI.

You miss out on the best year because you don't invest your emergency money ouch... could have been up 33.51%, you missed out on upside. But you still have your emergency money and your job, so you're doing fine.

You invest your emergency fund hit 2008, you lose -36.97% of your money and then you lose your job, and the value of your house craters, and.... and...

It's an emergency fund. The entire point is to be there in catastrophic circumstances.

I'm not saying your logic isn't spot on, because it is. All those things could line up perfectly wrong, you could dump a lump sum of money into the market on the worst possible day, get fired on the worst possible day, wife shacks up with the neighbor, dog runs away and you could have to get back in your feet with 63.03% of the original investment. However I feel like there are so many what if scenarios that at a certain point you are better off looking at realistic odds, and gradually building up a emergency funds in an investment account. Full disclosure, my wife and myself both have about as stable of government jobs as possible, maybe that plays a roll in my point of view.

 

[MarvB]

All those things could line up perfectly wrong, you could dump a lump sum of money into the market on the worst possible day, get fired on the worst possible day, wife shacks up with the neighbor, dog runs away and you could have to get back in your feet with 63.03% of the original investment.

BUT… you would have a new hit country song, just sayin!

 

[Deleted member 28227]

I'm not saying your logic isn't spot on, because it is. All those things could line up perfectly wrong, you could dump a lump sum of money into the market on the worst possible day, get fired on the worst possible day, wife shacks up with the neighbor, dog runs away and you could have to get back in your feet with 63.03% of the original investment. However I feel like there are so many what if scenarios that at a certain point you are better off looking at realistic odds, and gradually building up a emergency funds in an investment account. Full disclosure, my wife and myself both have about as stable of government jobs as possible, maybe that plays a roll in my point of view.

Totally agree, I’m a fiscal pessimist, I run the retirement calculator at 4%, and I work in one of the more volatile industries around. Just the nature of industry for ever 6 month period I think I have a 50/50 chance of losing my job.

Also… I know a lot of folks who got crushed in 08’.

…that and my moms real Scottish

Biases abound

 

[BenInMT]

Here's the thing... let's say your invested in VTI.

You miss out on the best year because you don't invest your emergency money ouch... could have been up 33.51%, you missed out on upside. But you still have your emergency money and your job, so you're doing fine.

You invest your emergency fund hit 2008, you lose -36.97% of your money and then you lose your job, and the value of your house craters, and.... and...

It's an emergency fund. The entire point is to be there in catastrophic circumstances.

If I wanted to convert a years salary into VTI which I don’t, I’d probably average in over a period of time instead of dumping it all in on one day or week.

 

[TheGrayRider]

You can’t take it with you. Go hunt or rehunt Alaska or Africa.

Anyone can make more money; no one can make more time.

 

[Wind Gypsy]

I have just been using the highest interest rate online savings account I can find and also ibonds now that I discovered the upside in this forum (thanks!).

What amount is reasonable for a rainy day fund is up to each individual. At one point a few years back I was so stressed and beaten down by my work that I was on the verge of taking a significant sabbatical to get my life back. Since then I try to make sure we’d be covered for a year without work if possible.

The other part of that is I like having cash on hand in case an urgent opportunity pops up like the right rental property investment or maybe even a forever home type land or land/house combo. I’d hate to lose out because of assets not being liquid enough.

 

[Deleted member 28227]

Just a little more information. I have roughly over $50,000 in this account and more than likely will try and find a high yield savings account and move others over to my ROTH account. My wife and I are more of a pay cash type people and are debt free besides the house. We have roughly $40,000 in our ROTH accounts and also will have a rental paid off in in a few years. The problem is being in our early 40's we missed why to many years not maxing out the ROTH account because we paid everything in cash when we could. We had some medical stuff come up in our 20's that cost us about $50,000 and were grateful to have the cash to pay for it. We are not to risky with our money and have good government jobs with a good retirement built in. We just don't feel we are using our money to make money. Anyways that's the background.

Thanks

Honestly sounds like you are in good shape. I definitely would look at a high APY account, currently the rates aren’t that great but in 2017 they were around 2.5%. Roth’s have a 10% penalty if you pull them before 59.5, and can’t be pulled tax free no mater your age for 5 years.

I don’t think there is a right or wrong answer, I think in general opinions are going to range based more on peoples pessimism or optimism more than anything else.

Personally, I try to strike a balance between retirement savings, emergency, and enjoying life now. It’s not an exact science and I don’t have a specific split I use but since I was 17 I have tried to build all three.

 

[Wind Gypsy]

Honestly sounds like you are in good shape. I definitely would look at a high APY account, currently the rates aren’t that great but in 2017 they were around 2.5%. Roth’s have a 10% penalty if you pull them before 59.5, and can’t be pulled tax free no mater your age for 5 years.

I know you can withdraw contributions from a Roth IRA anytime penalty free but early withdrawn earnings are subject to taxes and penalties. Just learned that last week after discovering my wife went in the front door on a Roth contribution when the rules say we have to use the back door.

I wonder how that would actually work though. It must just be strictly contribution $ value and have nothing to do with # of shares to work without penalties?

 

[Deleted member 28227]

I know you can withdraw contributions from a Roth IRA anytime penalty free but early withdrawn earnings are subject to taxes and penalties. Just learned that last week after discovering my wife went in the front door on a Roth contribution when the rules say we have to use the back door.

I wonder how that would actually work though. It must just be strictly contribution $ value and have nothing to do with # of shares to work without penalties?

Roth IRA Withdrawal Rules - NerdWallet

In general, two criteria need to be met for penalty-free withdrawals of all funds from a Roth IRA: The account has been open for at least five years and the account owner is age 59 ½ or older.

www.nerdwallet.com