You probably don't want individual stocks if you don't know much about the market. I think a stock/bond mix via Vanguard index funds is likely close to optimal for most people.
-
Hey Guest. Check out your NeoGAF Wrapped 2025 results here!
Anyone here who does not have a savings account?
- Thread starter Kraftwerk
- Start date
- Status
You probably don't want individual stocks if you don't know much about the market. I think a stock/bond mix via Vanguard index funds is likely close to optimal for most people.
Noisy Ninj4
Member
I would say investing in one stock/fund is a good first step, though. Balancing your portfolio is a bit more involved.
I have a savings account and I just have it automatically take 500 dollars a month. I opened it back in 2006 maybe. I haven't touched it but once for some car down payment. That's it.. Will tap back into it at a later date .
Feels good to have all expenses paid from my checking and and have spending money , all while letting my savings grow seperately
Feels good to have all expenses paid from my checking and and have spending money , all while letting my savings grow seperately
phosphor112
Banned
Word.
A "high" interest savings account is a useful tool for risk averse people with near term financial goals. If you're saving for a down payment on a house or tuition or a vacation then a savings account is a reasonable place to put money. If you're going to use the money in less than 5 years and you can't risk losing the principle then your options are limited. High interest savings or GICs are perfect for this. Yes, you probably aren't even beating inflation at the moment, but your money is safe.
I have a savings account for money that my wife and I can't afford to risk. I have other investment accounts for higher risk / higher reward with a longer term outlook. Next stock market crash happens (we're due in a year or two) and my principle gets destroyed? Whatever, don't need that money right now. I also use a very small amount of money to trade stock options with a huge risk / huge reward. Not for the faint of heart and it has to be money you are prepared to lose.
TLDR, savings accounts have their place in a diversified portfolio.
I have a savings account for money that my wife and I can't afford to risk. I have other investment accounts for higher risk / higher reward with a longer term outlook. Next stock market crash happens (we're due in a year or two) and my principle gets destroyed? Whatever, don't need that money right now. I also use a very small amount of money to trade stock options with a huge risk / huge reward. Not for the faint of heart and it has to be money you are prepared to lose.
TLDR, savings accounts have their place in a diversified portfolio.
Ace Harding
Member
This is a pretty terrible idea, unless you really have no use for the money in the next 5 years. If its an emergency fund - do NOT invest in equities. Sure, it could go up 20% in a year. Or it could go down. Sometimes it is OK to simply protect principal at the risk of losing a very small amount to inflation. Smart companies do this. Governments do this. There are some shorter term investments that are OK and safe but stocks are not one of them. After the emergency fund savings, or savings you need for that house down payment in 2-3 years? Go ahead and invest in whatever.
Why not? Not like a checking account earns you anything.
Noisy Ninj4
Member
It didn't sound like he was talking about emergency money, just cash that he's amassed with nothing to spend it on.
It really depends on how long you can keep your hands off the money. Generally, in the long (10+ years) term a balanced portfolio of stocks and bonds will regularly outperform pretty much any "savings" or "money market" accounts or CDs, especially with consistent inflation. This is especially the case if you do your research and actually pick stocks accordingly, though then it can start feeling more like a part time job.
acheron_xl
Member
I don't have a savings account, but my GF and I always have about a paycheck's worth of money in our checking accounts.
Davey Cakes
Member
It's a credit union. I actually don't know why they don't allow withdrawals from checking. I haven't asked them about it.
But yeah I have a debit card as well as three credit cards.
Because there are so many investment options out there in todays world you'd be silly to have a savings account for anything other than you are terrible with your finances.
But in the case you fit that description, you probably dont have the money to invest anyways, so yeah, savings accounts are good in that light.
Wow, that's bizarrely aggressive.
I think there's an excellent case to be made, as Fong Ghoul does a few posts up, for using a savings account rather than investing for shorter term needs. Certainly if your job correlates to the market, I'd rather have emergency savings in cash than invested.
I'd also add that conservative with money != terrible with your finances. In fact, I'd expect the reverse.
Never did I say anything of the such.
If you are conservative with your money, your checking account should have padding to it, and excess money can be invested in much better places with little impact of liquidity.
And if you have a lot of money in a savings account, it would be much better off elsewhere.
I believe its more of a name thing than anything else. Its a "savings" account so people save, when in reality its just as easy to save in a checking account. If you have enough in a savings account to make a meaningful return (nominally) you would be so much better off in another investment its not even funny.
whatsinaname
Member
Savings account in the US? A bit of a joke isn't it.
Savings Account India - 4%
Savings Account India (Fixed Deposit) 6 month term - 7%
Savings Account USA - 0.08%
Savings Account USA (CD) - 0.1%
Savings Account India - 4%
Savings Account India (Fixed Deposit) 6 month term - 7%
Savings Account USA - 0.08%
Savings Account USA (CD) - 0.1%
You said:
You might well have a savings account if you're conservative with your money. Again, there's no reason to have a padded checking account over a savings account. The interest isn't much, but it's not zero.
Again, it depends on what it's for.
See You Next Wednesday
Banned
Savings was pretty much wiped out when I bought a car 
Now I have nothing, NOTHING!
Now I have nothing, NOTHING!
Daaaamn close to it though. And like I said, if youre making any nominal return on a savings account (~.1%), you have too much in it IMO.
Noisy Ninj4
Member
Savings was pretty much wiped out when I bought a car
Now I have nothing, NOTHING!
You don't even have the car you bought?
If the cost of maintaining just a checking account is equivalent to maintaining both a checking and savings account, and you earn a 0% return in checking vs. >0% in savings, why wouldn't you want to utilize both types of accounts?
Zoe
Member
My goal is to have a couple of months worth of expenses in my savings account. Haven't been there in a while though.
Tax on interest income will never be more than the income. So why not?
Tax on interest income will never be more than the income. So why not?
Starwolf_UK
Member
Isn't it to do with lending rates and base rates which in turn are related to inflation. So fairly flat economies have low rates while countries with high growth have high interest.
Though that said, I seem to recall hearing the US savings rates are historically poor for some reason.
Because I really only have use for one. As there are tons of alternatives out there that are way better return than savings account.
I use a bank to have easy access to my cash while not carrying cash on me. I dont use banks to make a return on my money. They are the ones making all the returns.
Ok, but if you want to keep a certain quantity of money in cash at your bank, a checking account and a savings account strictly dominates a checking account alone.
Its tied to whatever floats the FEDs boat.
How so? Unless you just like shuffling money between accounts.
Thats a horrible plan. You should never ever touch your Roth. You say you have investments on the side? Cash those out before you dip into your Roth
It strictly dominates. It is the same as only having a checking account, except that you get a small amount of interest.
40% into a Total US stock market index fund
40% into a total world (minus US) stock index fund
20% into a total US bond index fund
keep those ratios and invest for the long term. Profit
Practically EVERYONE should follow that investment philosophy since you will simply make greater returns in the long run, and you should be investing for the long term
Plus, its super easy to do and you dont need to know a damn thing about a companies financials. You simply follow the entire stock and bond market
EnderWiggles
Member
IHaveCandy
Banned
Sadly, my credit card will have to act as my savings account for a while.
chixdiggit
Member
I used to think the exact same way. Problem was that I would never actually save anything. I would see extra money and spend it on crap I didn't need. When I put money into my savings it sits there until I need it for something important.
D
Deleted member 1235
Unconfirmed Member
Do you really think all people with savings accounts earn 6 figures?
Slayer-33
Liverpool-2
Thank you baby Jebus.
I'm also fairly new to this, so bear with me;
Don't most investment require money to begin with? My bank has GIC's, and the minimum amount you can put in is $1000.
Again, savings accounts are stepping stones to get to a certain point, then you can start thinking about those things. Even if the rates are shit, it helps people who usually 'waste' money to manage it better and get that $1000 required for their first investment, GIC whatever.
youngwerther
Banned
I work minimum wage so I can't really save.
When I go into work I don't think of it in terms of "today I'm going to make x amount of dollars", I think, "today I'm doing my water bill"
When I go into work I don't think of it in terms of "today I'm going to make x amount of dollars", I think, "today I'm doing my water bill"
Basically this, though the ratios might vary based on your risk tolerance.
Yes, since it's pretty much one of the most important things in life.
Broder Salsa
Banned
Well I'm a student who works a bit here and there, if I had a permanent job I would have a savings account.
ETFs dont have a minimum. Personally, I prefer mutual funds because i think dollar cost averaging is easier and I like whole numbers.
So yea, even with 1k, you can still follow the investing philisophy i listed above. Though id probably dump it all into a Total US stock market index ETF and just fund the other two parts when you have more money
Ace Harding
Member
So for people saying "LOL savings accounts are dumb you should be investing in stocks" are you just that safe with your jobs and that confident in the economy that you are ruling out getting laid off and the market going down?
Why gamble with short term money you need access to?
I would say:
Checking: whatever keeps you running for 2-4 weeks
Savings: Enough to live off of for 6-12 months, plus whatever you might be saving for in the next 5 years.
Investments: Everything else.
Also, if you are getting <.5% in a savings account you are doing it wrong. Yeah it's not much but I get like .85% now. Interest rates will go back to "normal" a few years from now. But it's better than zero. And it's really not hard to transfer money if you need to.
Why gamble with short term money you need access to?
I would say:
Checking: whatever keeps you running for 2-4 weeks
Savings: Enough to live off of for 6-12 months, plus whatever you might be saving for in the next 5 years.
Investments: Everything else.
Also, if you are getting <.5% in a savings account you are doing it wrong. Yeah it's not much but I get like .85% now. Interest rates will go back to "normal" a few years from now. But it's better than zero. And it's really not hard to transfer money if you need to.
I think having your 6-12 month fund in a short-term bond index fund is a viable alternative. Sure its a bit more risky (barely), but you will get an okay return along with the dividends as well
- Status