What to do with liquid assets?

[800who]

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

[Anonymous]

---

@800who wrote:

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

---

Learning more about investing is a great next step for you.  The best way to do that, in my opinion, is not to try to pick up tips from random people on the internet, because you'll lack a conceptual framework for evaluating them.  So what I would do instead is read a solid book on the basics of investing.  The one I'd suggest first is IF YOU CAN by William Bernstein.  It is short, sound, and easy to understand.  It is also free on the internet.

While you are working on that, can you answer the following questions?

How old are you?

If you had to make a guess as to when you might retire, when do you think that might be?

How much money do you think you will be able to put toward savings (including but not limited to retirement) each month?

With respect to the 15k, do you expect that you will need that in the next few years?  The most common need would be as a downpayment for a house.  (Note: buying a house is right for some people but not for everyone.  Some very financially shrewd people end up renting their entire lives, depending on their situation.)

By way of contrast, do you hope instead that the 15k could be left untouched (but compunding in value) for a long time?

Do you have a job in which there is a 401k or similar option?  If so are you contributing toward it?

Do you have an IRA?  If so, is it a Roth?

=============

As touches your specific question about high-interest deposit accounts (savings and/or checking) there are many options out there.  Anything less than 2.1% (currently) is not making you enough -- you could easily find a better option.

But as far as savings/checking accounts that make you money, the most profitable strategy is to open 2-4 bank accounts each year that have promotions going on -- where the bank pays you a bunch of money simply for opening the account.  You can easily make $1k a year doing that, which is far more than you'd make on a high-interest savings account with (say) 20k in it.

Let me know if you want to pursue that further and I can point you in the right direction.

[iced]

---

@800who wrote:

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

---

Tiers.

- Short-term cash needs (emergency funds, down payment on a home, cash to buy a car, vacation, or some other expense you expect in the next 12-24 months) should be in traditional savings earning around 2-2.5% today. Some people CD-roll part of this, though you most definitely do NOT want to CD-roll all off it. When you only have one or a few tens of thousands in total savings, this category should comprise a decent percentage of your total savings (30-40%, mostly because of emergency savings),  but as you save more and grow your funds, this should become much, much smaller. Someone with a $1 million portfolio should only need about 5% in short-term, and someone with a $5 million portfolio may only keep 1-2% in short-term.

- Long-term cash needs (retirement, something 5-10 years down the road) should be in equities or the like. ETF (index funds) are actually pretty smart if you don't know much about investing because they do a decent job of diversification for you. Instead of trying to figure out individual stocks and sectors, you can just put $X in large cap (big, established companies) domestic stocks, such as S&P 500 and $Y in international/mid-cap/real-estate/some-other-sector-you-like-to-diverisfy-even-further. You can hold as few as 3-4 positions in ETFs and have sufficient diversification across sectors/markets/regions.

[800who]

I am 20 years old, probably won't retire until 60-65. I originally started saving with the intent to build an emergency fund(that didn't take long) now, I'm trying to gather a down payment for a house. I was planning on buying a house in the next 3-4 years. I've always had the idea that I am going to buy a house pay it off quickly and rent it out and buy another one etc. That would be my ideal passive income for later down the road. I contribute towards my employers 401k 5% which is the max they'll match. I really never thought about getting an IRA. My biggest focus would be buying a house, I feel like I could make better use of the cash considering I don't plan on using it for 3-4 years. I do want to put $30-50k down on a house whent the time comes.

[Anonymous]

Then your situation is straightforward.  Get a high-interest savings account and put the money in there.

You can additionally pursue signup bonuses for opening 2-4 bank accounts per year, which will triple the amount you would have made from interest alone.

You could also chase credit card sign up bonuses during this time, which would get you tax-free money.  You'd just need to make sure that you opened no accounts for the 13 months before you went through pre-approval for the mortgage.

[CreditInspired]

---

@Anonymous wrote:

---

@800who wrote:

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

---

Learning more about investing is a great next step for you.  The best way to do that, in my opinion, is not to try to pick up tips from random people on the internet, because you'll lack a conceptual framework for evaluating them.  So what I would do instead is read a solid book on the basics of investing.  The one I'd suggest first is IF YOU CAN by William Bernstein.  It is short, sound, and easy to understand.  It is also free on the internet.

Thank you for this information. I just downloaded the pdf. 

Only yesterday, I got an email from NFCU regarding their EasyStart Investor. I knew I wanted to start something involving S&P 500 index (Buffet & Cuban say to do this), but I couldn't figure out how. But a quick scan through NFCU's list points me to Vanguard. 

But, I'm happy to learn as much as possible--not too complicated--so I'm definitely going to read Bernstein's article.

Again, thank you.

[SouthJamaica]

---

@CreditInspired wrote:

---

@Anonymous wrote:

---

@800who wrote:

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

---

Learning more about investing is a great next step for you.  The best way to do that, in my opinion, is not to try to pick up tips from random people on the internet, because you'll lack a conceptual framework for evaluating them.  So what I would do instead is read a solid book on the basics of investing.  The one I'd suggest first is IF YOU CAN by William Bernstein.  It is short, sound, and easy to understand.  It is also free on the internet.

Thank you for this information. I just downloaded the pdf. 

Only yesterday, I got an email from NFCU regarding their EasyStart Investor. I knew I wanted to start something involving S&P 500 index (Buffet & Cuban say to do this), but I couldn't figure out how. But a quick scan through NFCU's list points me to Vanguard. 

But, I'm happy to learn as much as possible--not too complicated--so I'm definitely going to read Bernstein's article.

Again, thank you.

---

I would suggest learning about no load mutual funds.

But just remember that any money invested in anything other than money market funds or bank accounts is at risk.

[CreditInspired]

---

@SouthJamaica wrote:

---

@CreditInspired wrote:

---

@Anonymous wrote:

---

@800who wrote:

I have roughly $15k in a regular checking account, I don't have any debts besides an auto lease. I was trying to determine what would be the best way to diversify in order to get more than .01% etc. I was looking into index funds, however it seems a little overwhelming considering I have less than zero fundamental knowledge on the stock market, I started looking into high yield savings... looking for a point in the right direction!

---

Learning more about investing is a great next step for you.  The best way to do that, in my opinion, is not to try to pick up tips from random people on the internet, because you'll lack a conceptual framework for evaluating them.  So what I would do instead is read a solid book on the basics of investing.  The one I'd suggest first is IF YOU CAN by William Bernstein.  It is short, sound, and easy to understand.  It is also free on the internet.

Thank you for this information. I just downloaded the pdf. 

Only yesterday, I got an email from NFCU regarding their EasyStart Investor. I knew I wanted to start something involving S&P 500 index (Buffet & Cuban say to do this), but I couldn't figure out how. But a quick scan through NFCU's list points me to Vanguard. 

But, I'm happy to learn as much as possible--not too complicated--so I'm definitely going to read Bernstein's article.

Again, thank you.

---

I would suggest learning about no load mutual funds.

But just remember that any money invested in anything other than money market funds or bank accounts is at risk.

---

Thanks for the reminder 😁

[Anonymous]

The major index funds  are spyders (standard and poors  500,) diamonds (dow jones 30 industrials and russell 2000, midcap

Vanguard has provided these with very low load cost. They also have treasury bill, bond and note funds  that have low load cost.

Just recall investing in stocks is a zeroe sum game every winner also has a loser. Warren Buffett is the only person who continuely outpreforms the market and now his results are not what they used to be. 

[800who]

Not sure if everyone would agree with it, but I decided to put a majority of the funds into a high yield savings account which I will be contributing to frequently, I do hope to purchase a home in the next 2-3 years and this includes having a hefty down payment, thanks for the advice!