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What to do with savings after you have enough for an emergency?


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#1 Kendro

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Posted 12 November 2011 - 03:51 PM

I find that the closer you are to thirty, the more pressure there is to start saving. I miss the days when I was in my early twenties when I didn't make a lot of money and basically blew my paycheck on whatever I wanted.

I have a year's worth of living expenses in an emergency fund but I'm not sure if it is smart to keep dumping surplus money into a low interest savings account. Does anyone have any tips to keep with the rate of inflation because the 0.2% that most banks offer for savings account just won't cut it.

I dabbled in day trading but after all the losses and gains, I'm pretty much at a net balance from when I started. Then again I didn't profess to be the next Warren Buffett, that was more for shits and giggles than anything else.

#2 Jodou

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Posted 12 November 2011 - 03:59 PM

Retire. There's never enough money for an emergency lol. CDs are the safest investment with higher interest really. As long as you have a 401k going, then I'd say just use the money for leisure or set a goal for something to buy while it earns interest.

#3 DuelLadyS

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Posted 12 November 2011 - 04:12 PM

There's always more to save for- do you own a home? Buy one or be ready for repairs. Buy or fix a car. Retirement. Vacations. It's never a bad idea to be putting money away- if for no other reason than to have it when you find something you really want, or need.

#4 dmaul1114

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Posted 12 November 2011 - 04:20 PM

Start putting more away for retirement, kids college education and other things along those lines.

If you have a 401(k) through work, make sure you're maxing that out first. If not (or after maxing that out) dump money into an IRA or college savings fund depending on your needs.

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#5 dothog

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Posted 12 November 2011 - 04:23 PM

Take it out in ones, MAKE IT RAIN.
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#6 DestroVega

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Posted 12 November 2011 - 04:26 PM

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#7 bobo2k4

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Posted 12 November 2011 - 04:26 PM

Vegas. Bet on black.
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#8 zionoverfire

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Posted 12 November 2011 - 04:31 PM

Stock up on guns and ammo?:D

I'm actually a little bit in the same boat. I don't trust the stock market, CD rates are pretty low and other options seem even more risky so currently I just let that little bit of extra money sit, after all the holidays are right around the corner.

#9 mtxbass1

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Posted 12 November 2011 - 04:33 PM

Why are you only getting .2% when there are plenty of online banks that pay .9-1.2%?

I'm in the same position you are OP. I have no debt and I have plenty in savings for a rainy day.

Personally, I max out my Roth IRA, then 401k, then invest where I see fit after that. I'm to the point where I want very little, so I don't have any short term goals. Any emergencies (albeit rare) come out of my checking account. For now, I continue to stockpile money where I see fit.



#10 diaeresis

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Posted 12 November 2011 - 05:32 PM

Save for a home downpayment. Buying the right home will fix all problems concerning too much saving. :)
Increase investments at work (stock plan, 401k, etc.)
Invest in a mutual fund.
As stated, look for a better interest rate -- ING and USAA are two. CNN money and the Consumerist have articles on banks that don't suck.

You might consider investing in other currencies or commodities, but unless you're trained in finance, that and day-trading are indistinguishable from gambling, as it sounds like you've learned.

#11 blindinglights

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Posted 12 November 2011 - 07:07 PM

Why are you only getting .2% when there are plenty of online banks that pay .9-1.2%?



This. I switched to ING for my savings a little over a year ago and I wish I switched sooner. Hell, the ING checking account has a better interest rate than savings at my B&M bank.
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#12 TheBigAndy

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Posted 12 November 2011 - 07:27 PM

I am 25, and in a similar position that you are in, and here are my priorities as of right now....

1) Buy a house (I live in Vegas and it is a buyers market)
2) Furnish said house
3) Start a Roth IRA (I have my 401K contributions past the max matched by my company, so anything above that I want to start dumping into an IRA)
4) Save for a new car. (Currently drive a paid for 2006 Charger with almost 90,000 miles, would like to pay cash for a new car in 3-4 years)

#13 TheBigAndy

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Posted 12 November 2011 - 07:28 PM

This. I switched to ING for my savings a little over a year ago and I wish I switched sooner. Hell, the ING checking account has a better interest rate than savings at my B&M bank.


Yeah I have ING direct and HSBC savings accounts online. I love that with ING you can have a bunch of sub accounts for different savings goals.

#14 The Gifuto

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Posted 12 November 2011 - 07:51 PM

Yeah I have ING direct and HSBC savings accounts online. I love that with ING you can have a bunch of sub accounts for different savings goals.


I will third this ING comment. I've been with them for over 4 years; checking, savings and brokerage account. I would highly recommend.
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#15 Kendro

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Posted 12 November 2011 - 08:51 PM

I have direct deposit with Chase through my company. Is it advisable to transfer all of my savings into an ING account, and still have my Chase for bills and checking? That 0.9% rate is a lot better than the 0.2% that I'm getting now.

I prefer to keep my Chase checking account since I live in NYC and there are tons of Chase ATM's everywhere.

#16 blindinglights

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Posted 12 November 2011 - 09:20 PM

I have direct deposit with Chase through my company. Is it advisable to transfer all of my savings into an ING account, and still have my Chase for bills and checking? That 0.9% rate is a lot better than the 0.2% that I'm getting now.

I prefer to keep my Chase checking account since I live in NYC and there are tons of Chase ATM's everywhere.



ING requires you to have a checking account from a brick and mortar linked to your ING account since they have no actual locations.

#17 mtxbass1

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Posted 12 November 2011 - 10:41 PM

I have direct deposit with Chase through my company. Is it advisable to transfer all of my savings into an ING account, and still have my Chase for bills and checking? That 0.9% rate is a lot better than the 0.2% that I'm getting now.

I prefer to keep my Chase checking account since I live in NYC and there are tons of Chase ATM's everywhere.


That's what I do, just swap "Chase" with "Wells Fargo."



#18 TheBigAndy

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Posted 13 November 2011 - 01:23 AM

That's what I do, just swap "Chase" with "Wells Fargo."


Yeah that is what I do too. I don't even havea debit card for my HSBC savings, which means I can't spend the money without doing a transfer, thus I can't impulse buy.

#19 Dead of Knight

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Posted 13 November 2011 - 01:31 AM

That's what I do, just swap "Chase" with "Wells Fargo."


Same with me and TD (used to have PNC back in Ohio but switched since there's no locations out here).
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#20 BillyBob29

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Posted 15 November 2011 - 04:13 PM

OP, you mentioned Warren Buffett and daytrading in the same sentence. Buffett is in no way a daytrader. When he buys a stock he is holding for 5 years+.

Daytrading is no place for your savings funds. Daytrading is only for funds that you are willing to lose. Regardless of what people say, it is gambling. I've been trading for close to 20 years now and it is gambling.

That being said, investing....not daytrading....in the stock market for the long term is still your best bet IMO. CD's pay nothing, savings accounts pay nothing and they will continue to pay nothing for years to come thanks to the Fed's policy to keep rates low in an attempt to force additional investment into the stock market.

I find the best values to be large cap US multinationals......outside of financials.

Buying a rental property is also a pretty good option but obviously you would have to have the time to maintain the property and deal with the tennant or find a decent management compnay, which would obviously mean forking over a sizeable portion of your rental income.

#21 nasum

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Posted 15 November 2011 - 07:27 PM

OP, you mentioned Warren Buffett and daytrading in the same sentence. Buffett is in no way a daytrader. When he buys a stock he is holding for 5 years+.

Daytrading is no place for your savings funds. Daytrading is only for funds that you are willing to lose. Regardless of what people say, it is gambling. I've been trading for close to 20 years now and it is gambling.

That being said, investing....not daytrading....in the stock market for the long term is still your best bet IMO. CD's pay nothing, savings accounts pay nothing and they will continue to pay nothing for years to come thanks to the Fed's policy to keep rates low in an attempt to force additional investment into the stock market.

I find the best values to be large cap US multinationals......outside of financials.

Buying a rental property is also a pretty good option but obviously you would have to have the time to maintain the property and deal with the tennant or find a decent management compnay, which would obviously mean forking over a sizeable portion of your rental income.



Agree with almost everything here, though you may also want to consider individual high yield dividend stocks as well. Setup a DRIP (Dividend ReInvestment Plan) with your eTrade or Fidelity or whatever and get thee some stable bluechips that pay you to own their stock. If you set it up with dollar cost averaging, you could end up owning 100's of shares of a company that trades at $50 for literally pennies to the dollar in actual out of pocket costs.
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#22 silentevil

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Posted 15 November 2011 - 07:34 PM

Keep saving never know how big an emergency is going to be. I keep saved at minimum enough to survive for 3 months at all times.
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#23 kill3r7

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Posted 15 November 2011 - 07:56 PM

Agree with almost everything here, though you may also want to consider individual high yield dividend stocks as well. Setup a DRIP (Dividend ReInvestment Plan) with your eTrade or Fidelity or whatever and get thee some stable bluechips that pay you to own their stock. If you set it up with dollar cost averaging, you could end up owning 100's of shares of a company that trades at $50 for literally pennies to the dollar in actual out of pocket costs.


I think DRIP accounts are a great way to invest a small amount of money over a long period of time as long as you realize the risk. They are the equivalent of pressing your bets at the craps table without an option of cashing out (sorry for the use of the gambling analogy but it's fitting).

#24 crushtopher

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Posted 15 November 2011 - 08:22 PM

Retire. There's never enough money for an emergency lol. CDs are the safest investment with higher interest really. As long as you have a 401k going, then I'd say just use the money for leisure or set a goal for something to buy while it earns interest.


CDs are actually a bad idea. They are considered a negative return because the 1099 you get at the end of the year will negate, and usually cost you, whatever you earned with their low interest rate.

Just keep saving man. 401k is nice but there are plenty of other options out there to put your money to good use - without relying on the market.

#25 Jodou

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Posted 15 November 2011 - 08:33 PM

CDs are actually a bad idea. They are considered a negative return because the 1099 you get at the end of the year will negate, and usually cost you, whatever you earned with their low interest rate.

Huh, good to know. Didn't realize you had to file them on your tax return. Then again, I've never dabbled in them.

#26 mtxbass1

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Posted 15 November 2011 - 08:49 PM

Huh, good to know. Didn't realize you had to file them on your tax return. Then again, I've never dabbled in them.


Earnings are treated as income and are subject to taxes. Same with earnings on your checking/savings accounts.



#27 Jodou

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Posted 15 November 2011 - 08:53 PM

Earnings are treated as income and are subject to taxes. Same with earnings on your checking/savings accounts.

No, it makes sense. It's just one of those things you don't really think about until you've done it.

#28 bigpimpin24

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Posted 15 November 2011 - 08:55 PM

Go to the casino and bet on red

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#29 nasum

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Posted 15 November 2011 - 09:30 PM

I think DRIP accounts are a great way to invest a small amount of money over a long period of time as long as you realize the risk. They are the equivalent of pressing your bets at the craps table without an option of cashing out (sorry for the use of the gambling analogy but it's fitting).


at that point it isn't gambling. You're not "betting on red", you're using a factual basis to determine the safety of long term investment. While the price of the stock will fluctuate, most companies will be very steady with their dividend yield. I have one in particular that now trades at $50 give or take $5 per month. When the quaterly payout comes along, I have enough shares that I usually get 1.5 shares these days for free. Imagine if I could bump that by 10x! That'd be $2k per year (10x50x4) in free money. The amount of investment to get there would probably earn me $40-60 at current rates in CDs. And taxed at 15% too. Seriously, there is NO reason to not have some decent drips in your 401k/IRA/Personal account.

And you can cash out whenever you want too. Not sure where that gem of misinformation came from.
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#30 mtxbass1

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Posted 15 November 2011 - 09:33 PM

No, it makes sense. It's just one of those things you don't really think about until you've done it.


heh. Trust me. You think about it come tax time when you get like 8 1099-INT forms.