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Is Keeping money in Savings account Wise ?

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Contributor

Is Keeping money in Savings account Wise ?

All -- Newbie here when it comes to Investments. Not even sure if this post belongs here at first place. 

 

I have been thinking a lot lately with the Savings i have in my BOA Account. i have about $25000 in savings there. Saved it primarily for Rainy day. Some savings in other bank.  However, i'm having slepless nights thinking that this money sitting in BOA Savings account is NOT doing anything but sitting out there. The Rate of interest is very very very less. I just checked my Monthly Statement and the interest that i got was less than the breakfast money. What do you all suggest ?

 

  1. Move this money to a different Bank which will pay me higher Interest rate on Savings ?. If yes, would you know which ones are the ebst ?
  2. Invest this $25000 + Additional $5k in some Mutual Funds which can give me a good average reate of return. I'm a novice when it comes to investment and really scared to lose money that i'm working really hard to save. 

Need your guidance as what to do to make this money work for me. I know the amount is very small but i want to make use of it in the most optimal way possible.  I want to grow my money while my rebuilding phase is going on .

 

Thank you again.

11/10/18 EX: 540 TU: 525 EQ: 535
10/20/19 EX: 671 TU: 665 EQ: 671
11/07/19 EX: 676 TU: 673 EQ: 676
12/31/19 EX: 669 TU: 679 EQ: 673
01/06/20 EX: 670 TU: 682 EQ: 682
Paid Charge off to $0 in Dec 2019, reported Jan 2020
01/15/20 EX: 666 TU: 655 EQ: 660
02/07/20 EX: 676 TU: 668 EQ: 668
05/08/20 EX: 685 TU: 685 EQ: 682
05/18/20 EX: 690 TU: 685 EQ: 682


Mortgage Middle Score 682
Message 1 of 38
37 REPLIES 37
Highlighted
Super Contributor

Re: Is Keeping money in Savings account Wise ?

Depends on if you just want a savings or a CD. Goldman, Disco, and Sync are up there over 2% for CD's. Regular savings with the same banks are around 1.70%. There are guys on here with accounts I'll never have and will help out. But these popped into my head when I was looking for a CD.

Message 2 of 38
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Epic Contributor

Re: Is Keeping money in Savings account Wise ?


@Chestnut1 wrote:

All -- Newbie here when it comes to Investments. Not even sure if this post belongs here at first place. 

 

I have been thinking a lot lately with the Savings i have in my BOA Account. i have about $25000 in savings there. Saved it primarily for Rainy day. Some savings in other bank.  However, i'm having slepless nights thinking that this money sitting in BOA Savings account is NOT doing anything but sitting out there. The Rate of interest is very very very less. I just checked my Monthly Statement and the interest that i got was less than the breakfast money. What do you all suggest ?

 

  1. Move this money to a different Bank which will pay me higher Interest rate on Savings ?. If yes, would you know which ones are the ebst ?
  2. Invest this $25000 + Additional $5k in some Mutual Funds which can give me a good average reate of return. I'm a novice when it comes to investment and really scared to lose money that i'm working really hard to save. 

Need your guidance as what to do to make this money work for me. I know the amount is very small but i want to make use of it in the most optimal way possible.  I want to grow my money while my rebuilding phase is going on .

 

Thank you again.


@Chestnut1  .. Might find some better rates here  >> https://www.bankrate.com/banking/savings/rates/

 

Message 3 of 38
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Frequent Contributor

Re: Is Keeping money in Savings account Wise ?

Depends on how much access you need to this money. If you need to be able to access it in emergencies I suggest finding a high interest savings account. If however you can go years without needing it a CD might be better, I think they get above 3% for 5yr CD's. Both of these options are safe, unless you try to pull the CD early.

You could definitely invest this money and earn [potentially] higher yields, but with great reward comes great risk. I've had accounts that yielded 7%-28% in one year, and I've had investments where I lost everything hoping it would bounce back. I'm no expert, I just get lucky sometimes. As always YRMV.

Or you could split it up among several of these options, some in a saving, some in a 3/5yr CD, some in investments. Diversity is usually good and will limit risk.



Goal: Mortgage/Chase Trifecta






Message 4 of 38
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Valued Contributor

Re: Is Keeping money in Savings account Wise ?

If you can do 5k monthly in direct deposits, now is a good time to do the HSBC Premier bank bonus for $750 and that opens up around 2.05 APY Savings with no minimum or fees. 

Citibank has a similar $700 bank bonus with their Accelerated HYS account earning close to the same rate however it is regional if you can get this savings account. You will need to check on their website. 

1. If you need to be liquid, absolutely, move your money to at least a HYS account. 

2. A lot of things to consider depends on your income, age, short/long term goals, how much money you have (anything else besides what you listed), and what type of investment vehicles you have open to you. 

3.  Investment options - First, for long term investments, it is often recommended and prudent to put some money in pre-tax investments such as 401k, HSA, IRA, etc.. This is a much deeper conversation. You should consult with a fiduciary investment advisor regarding this. Fiduciary advisors are important for clients because they are legally required to put clients' interests ahead of their own. 

4. Depending on your income, age, and debt, you can determine how much you can safely invest. Age is important because it plays a factor on when you want to retire and how much you have invested so far. At the minimum if you have a company that offers 401k match or HSA contributions, you most likely want to max that out because it is basically free money. There are certain maximums you can contribute a year overall to each one of these investment vehicles that you need to consider. 

 

5. Suggest having a 6 month emergency fund. This money needs to be someone liquid where you can withdraw without a penalty. This should cover all expenses in the event you cannot work due to unemployment or disability or some sort of emergency. 

Lastly, I am by no means and expert but these are some items you should consider and do more research on. The most important thing is to make an educated decision and not fully trust some random person on how you should invest your money as it is a very personal thing that is entirely dependent on unique to the individual's personal factors and goals. 

Message 5 of 38
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Valued Contributor

Re: Is Keeping money in Savings account Wise ?

5 year CDs at 3% are way too conservative for me. Yes low risk but very limited returns that could be made elsewhere. 

Message 6 of 38
Highlighted
Contributor

Re: Is Keeping money in Savings account Wise ?

After Reading all the Amazing sugesstions, couple of points come to my mind.

 

  1. CDs are low risk, however they don't yield much, especially in my case since i will be putting in only 25K. Which means i might make Approx ~500 a yar ( 2% Interest ). That boils down to < $50 a month.  I might consider some of hte suggenstions given about suh as opening an HSBS Premier for a Bonus Incentive etc. 
  2. I don't intend to put money in 401K because when i take the money out, i will have to pay taxes and i might feel crashed paying out huge taxes out of my savings. Hence, i'm thinking about RothIRA. 

Anyone know about RothIRA ?. What is it about ?. Is there any return on that investment ?. What are the Pros and Cons ?

11/10/18 EX: 540 TU: 525 EQ: 535
10/20/19 EX: 671 TU: 665 EQ: 671
11/07/19 EX: 676 TU: 673 EQ: 676
12/31/19 EX: 669 TU: 679 EQ: 673
01/06/20 EX: 670 TU: 682 EQ: 682
Paid Charge off to $0 in Dec 2019, reported Jan 2020
01/15/20 EX: 666 TU: 655 EQ: 660
02/07/20 EX: 676 TU: 668 EQ: 668
05/08/20 EX: 685 TU: 685 EQ: 682
05/18/20 EX: 690 TU: 685 EQ: 682


Mortgage Middle Score 682
Message 7 of 38
Highlighted
Contributor

Re: Is Keeping money in Savings account Wise ?


@randomguy1 wrote:

If you can do 5k monthly in direct deposits, now is a good time to do the HSBC Premier bank bonus for $750 and that opens up around 2.05 APY Savings with no minimum or fees. 

Citibank has a similar $700 bank bonus with their Accelerated HYS account earning close to the same rate however it is regional if you can get this savings account. You will need to check on their website. 

1. If you need to be liquid, absolutely, move your money to at least a HYS account. 

2. A lot of things to consider depends on your income, age, short/long term goals, how much money you have (anything else besides what you listed), and what type of investment vehicles you have open to you. 

3.  Investment options - First, for long term investments, it is often recommended and prudent to put some money in pre-tax investments such as 401k, HSA, IRA, etc.. This is a much deeper conversation. You should consult with a fiduciary investment advisor regarding this. Fiduciary advisors are important for clients because they are legally required to put clients' interests ahead of their own. 

4. Depending on your income, age, and debt, you can determine how much you can safely invest. Age is important because it plays a factor on when you want to retire and how much you have invested so far. At the minimum if you have a company that offers 401k match or HSA contributions, you most likely want to max that out because it is basically free money. There are certain maximums you can contribute a year overall to each one of these investment vehicles that you need to consider. 

 

5. Suggest having a 6 month emergency fund. This money needs to be someone liquid where you can withdraw without a penalty. This should cover all expenses in the event you cannot work due to unemployment or disability or some sort of emergency. 

Lastly, I am by no means and expert but these are some items you should consider and do more research on. The most important thing is to make an educated decision and not fully trust some random person on how you should invest your money as it is a very personal thing that is entirely dependent on unique to the individual's personal factors and goals. 


Yes, ofcourse. The decision i will take eventually will be totally mine. However, i want to pick brians to see how others do thier investments. Based on that and based on my Situation, i will take a decision only When i feel it is safe. But, i appreciate your suggestions. Thank you.

11/10/18 EX: 540 TU: 525 EQ: 535
10/20/19 EX: 671 TU: 665 EQ: 671
11/07/19 EX: 676 TU: 673 EQ: 676
12/31/19 EX: 669 TU: 679 EQ: 673
01/06/20 EX: 670 TU: 682 EQ: 682
Paid Charge off to $0 in Dec 2019, reported Jan 2020
01/15/20 EX: 666 TU: 655 EQ: 660
02/07/20 EX: 676 TU: 668 EQ: 668
05/08/20 EX: 685 TU: 685 EQ: 682
05/18/20 EX: 690 TU: 685 EQ: 682


Mortgage Middle Score 682
Message 8 of 38
Highlighted
Valued Contributor

Re: Is Keeping money in Savings account Wise ?


@Chestnut1 wrote:

After Reading all the Amazing sugesstions, couple of points come to my mind.

 

  1. CDs are low risk, however they don't yield much, especially in my case since i will be putting in only 25K. Which means i might make Approx ~500 a yar ( 2% Interest ). That boils down to < $50 a month.  I might consider some of hte suggenstions given about suh as opening an HSBS Premier for a Bonus Incentive etc. 
  2. I don't intend to put money in 401K because when i take the money out, i will have to pay taxes and i might feel crashed paying out huge taxes out of my savings. Hence, i'm thinking about RothIRA. 

Anyone know about RothIRA ?. What is it about ?. Is there any return on that investment ?. What are the Pros and Cons ?


There's a lot you can research about this. Income is something that is a factor here. 

this blog is a good start 

https://obliviousinvestor.com/are-most-investors-better-off-with-all-in-one-funds/

Message 9 of 38
Highlighted
Frequent Contributor

Re: Is Keeping money in Savings account Wise ?

You said when you feel safe. Investments are not safe. There are no sure things.

A high yield savings and CD's are FDIC insured well above the amounts here. 100% safe, barring some apocalyptic event. Small gains, guaranteed, $50/mo isn't bad, it keeps growing, then it's $80/mo. Slow, but safe.



Goal: Mortgage/Chase Trifecta






Message 10 of 38
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